More than Rs.80,000 Crore worth GST Notices issued for AY 2018-22

The investigation arm of the Goods and Services Tax (GST) authority has issued over 20,000 notices across India from assessment year (AY) 2017-18 to 2021-22, resulting in a tax demand of more than Rs.80,000 crore, according to preliminary estimates.

The Directorate General of GST Intelligence issued the notices for a variety of reasons, including alleged deficits in tax payment, reversal of input tax credit (ITC), and interpretation of key law provisions affecting a significant number of taxpayers and enterprises. The maximum number of show-cause notices were time-barred on August 5, 2017-18.

The investigation agency was required to send out notices at least six months before the end of the five years. As a result, notices were sent out before August 5, and final orders are expected by February 5, 2025.

“These are pre-GST notices that may or may not be converted into GST notices, depending on the companies’ responses,” said an official familiar with the case. Notably, the deadline for AY 2018-19 is June 30, 2025.

The notices were served under Section 74 of the Central GST Act, requesting a response to the apparent discrepancy between the sales data recorded in the GST filings and that in the annual financial statements.

Section 74 of the CGST Act states that the competent authorities may issue a notice to recover tax that has been underpaid or unpaid, or repaid in error, for grounds of fraud, willful falsification, or concealment of facts to escape tax during the extended period of limitation.

Stricter disclosure requirements, such as e-invoices for business-to-business transactions, improved data collecting, and digitized payment systems, have helped tax sleuths improve compliance over time.

Foreign airlines, shipping corporations, insurance firms, online gaming companies, information technology entities, and other industries have all received notices.

However, the Central Board of Indirect Taxes and Customs (CBIC) has often intervened and provided rules to improve uniformity in GST notice and audit procedures. When faced with interpretative issues, zonal chief commissioners must confer with GST policy specialists, according to the directive.

This approach intends to make the business environment more predictable by reducing inconsistencies in audit findings, reducing litigation, and streamlining the whole audit process. The CBIC’s emphasis on standardized interpretation demonstrates its commitment to fair business practices while maintaining strong GST compliance.

However, the majority of notices have been issued for fraud ITC. To combat the problem, the department has launched a specific drive to get rid of fake registrations. So far, over 1.2 trillion tax evasion cases have been found, with up to 59,000 companies identified for verification to determine whether they are fake.

The tax department has already processed around 49.8 million ITRs (income tax returns) and notified taxpayers. Of these, 39.2 million ITRs were processed within 15 days.