Mismatch in Returns: Show Cause Notices for GST Discrepancies should be taken seriously

The Goods and Services Tax (GST) department has issued show cause notices for mismatch input tax credit claims, errors in reports, and discrepancies in e-way bill and turnover.

The agency has begun scrutinising of returns filed from 2017-2018 to the present and issuing random notices to assessors.

In most cases, notices have been issued for discrepancies discovered in the tax liability shown in GSTR 1 and payment of tax through 3B, mismatches in the taxpayer’s input tax credit obtained through GSTR-2B, and non-matching of turnover and tax shown in the e-way bill with GSTR-3B and GSTR-1, among other reasons.

One of the Tax Practitioner stated, “Since the adoption of GST, there have been several modifications in the GST legislation and the structure of return forms that were once deemed to be impossible for the government to execute, causing confusion and increasing the miseries of businesses. The agency has issued many letters and has requested interest and penalties in addition to the tax amount.”

According to tax experts, the letters should be treated seriously, and the department may take ex-parte action if the response is not provided on time.

A Chartered Accountant stated, “If the demand is real, it should be met as soon as possible to avoid the penalty. If the taxpayer disagrees with such a demand, he or she should send a response together with the proper form, citing applicable provisions.”