Most GST Show Cause Notices issued in 2023-24 due to Data Discrepancies; Says CBIC Official

A large number of show cause notices issued to taxpayers under the GST regime in 2023-24 were due to data errors found in tax returns filed, said a senior indirect tax official on Tuesday. Efforts are now underway to use technology to correct these mismatches and reduce taxpayer compliance burdens.

As stated by Shashank Priya, Special Secretary and Member (GST) of the Central Board of Indirect Taxes and Customs (CBIC), just 555 of the nearly 1.13 lakh show-cause notices issued last year were connected to classification disputes over tax rates.

“The majority of the disputes were linked to data verification issues, not policy-level disagreements,” he said.

Based on the CBIC’s analysis, six of the seven major areas of dispute were due to data discrepancies, including short payment of GST in GSTR-3B in comparison to GSTR-1 liability, over input tax credit (ITC) claimed in GSTR-3B compared to ITC reported in GSTR-2A, and non-payment of GST under the reverse charge mechanism (RCM).

To address RCM issues, the GST Network is creating a new ledger system that will track all reverse charge liabilities, ensuring taxpayers do not claim more ITC than is available, stated Priya at Assocham’s national GST conference. This new technological endeavour intends to decrease disputes and make compliance easier for taxpayers.