Clipped from: https://cleartax.in/s/gst-notices
GST Notices can be of many types- Show cause notice, Demand notice and scrutiny notice to mention a few. This article is an overview of all types of notices under GST and the options available for the taxpayer.
What is Notice under GST
Notices under GST are communications by the GST Authorities. These are sent to the taxpayers specifically to remind or caution them of any defaults being noticed, specifically for not following the GST laws. In other cases, notices can be sent out just to collect more information from the taxpayer. Few cases where tax authorities send out notices are – where any movement of goods/ provision of services occurs without coming under tax lens or taxpayers operate suspiciously. GST authorities act based on any hints collected on verifying the taxpayer’s GST Returns or received from another Government department or from any third parties . A notice can be called by different names like show cause notice (SCN), scrutiny notice or the demand notices, depending upon each case- the purpose or gravity of default or action required from the taxpayer. The common grounds for receiving notices under GST are lapses on the part of the taxpayers such as not registering under GST when otherwise required under law, non-filing or any delay in filing of GST returns, non-payment of GST or short payment of GST, excess Input tax credit claims, etc. A taxpayer must promptly act or reply to notices within the time limit specified in such notice. Any failure to do so can land the taxpayer in a legal soup. In such eventuality, the authorities can proceed to prosecution or consider that as a willful default and charge penalty.
1st February 2021
Union Budget 2021:
1. Seizure and confiscation of goods and conveyances in transit are now made as a separate proceeding from the recovery of tax from Section 74.
2. Self-assessed tax referred to under section 75 of the CGST Act shall also cover the outward supplies/sales as reported in GSTR-1 under section 37 of the CGST Act but which has been missed out while reporting in GSTR-3B under section 39.
3. The provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding till the expiry of a period of one year from the date of the order made thereunder.
Most common reasons for GST Notices
- Mismatch in details reported between GSTR-1 & GSTR-3B: scrutiny notice
- Differences in Input tax credit claims made in GSTR-3B vis-a-vis GSTR-2A
- Delay in filing of GSTR-1 and GSTR-3B consecutively for more than six months
- Inconsistent declaration in GSTR-1 and e-way bill portal
- Non-reduction of prices due to reduced GST Rates with effect from the date notified by CBIC. Thereby, a default is committed by taxpayer (seller) for non-passing of the benefit of reduced prices (or GST rates) to the ultimate consumers. The practice is known as profiteering. Several anti-profiteering measures are taken by GST authorities to address the default.
- Non-payment of GST liability (tax) or the short-payment of the tax with or without the intent to defraud: show cause notice (SCN)
- GST Refund is wrongly made with or without the intent to defraud: show cause notice (SCN)
- The Input tax credit is wrongly availed or utilised.
- Where a business is liable but has failed to obtain GST registration and not discharged the tax and other liabilities under the GST Act
- Inconsistencies in reporting of Exports in GSTR-1 with information available on ICEGATE. For example, Shipping Bill or the Bill of export lodged on ICEGATE but not reported in GSTR-1
- For furnishing any information related to records to be maintained by a taxpayer
- Conduct of the audit by tax authorities
- Where information return was required to be furnished before tax authorities, but not submitted within the time limit stipulated.
Types of Notices under GST law
A quick guide on the different types of notices that can be received by the taxpayers, action to be taken by such taxpayers and time limit to respond to notice is available below:
|Sl no||Name of the Form- Notice||Description||Reply or Action to be taken||Time limit to respond||Consequence of non-response|
|1||GSTR-3A||Default notice to non-filers of GST returns in GSTR-1 or GSTR-3B or GSTR-4 or GSTR-8||File the particular GST Returns, that is yet to be filed along with late fees for the delay and interest on the GST liability, if any||15 days from the date of receiving notice||Tax is assessed to the best judgment using the information available with the department. The penalty will be applicable of Rs. 10,000 or 10% of the tax due, whichever is higher.|
|2||CMP-05||Show cause notice – Questioning the eligibility to be a composition dealer||Must justify reasons as to why the taxpayer should continue to be eligible for the composition scheme||15 days of receipt of the notice||The penalty stipulated under section 122 and order in CMP-07 denying the benefit of composition scheme|
|3||REG-03||At the time of verifying the application for GST registration, a notice can be sent requiring the clarification for the information provided in the application or documents needed for verification. Also, the same form for the notice is applicable for amendment of GST registration||Reply letter in REG-04 with clarification or the information||Within 7 working days from the date of receiving the notice||Reject such application and inform the applicant electronically in REG-05.|
|4||REG-17||Show cause notice why should the GST registration not be cancelled for the reasons laid down in the notice||Reply letter in REG-18 with the reasons for non-cancellation of GST registration||Within 7 working days from the date of receiving the notice||Cancellation of GST registration in REG-19|
|5||REG-23||Show cause notice why the cancellation of GST registration must be revoked, for the reasons laid down in the notice||Reply letter in REG-24||Within 7 working days from the date of receiving the notice||Cancellation of GST Registration will be revoked|
|6||REG-27||In case of migration into GST by taxpayers of the VAT regime, a notice can be issued in REG-26 within the time limit prescribed, for not making application after obtaining provisional registration or not giving correct or complete details therein||Reply by applying in REG-26 and appear before the tax authority giving reasonable opportunity to be heard||None prescribed||Issue the cancellation of provisional registration in REG-28|
|7||PCT-03||Show cause notice for misconduct by the GST practitioner||Reply within the time prescribed in the show cause notice||Within the time prescribed in the show cause notice||Order the cancellation of the license as GST practitioner|
|8||RFD-08||Show cause notice as to why the GST refund must not be made to the applicant (taxpayer)||Reply letter in RFD-09||Within 15 days of receipt of notice||Make an order in RFD-06 for rejecting the GST Refund application|
|9||ASMT-02||Notice for Seeking Additional Information for provisional assessment under GST||Reply in ASMT-03 along with documents||Within 15 days from the date of service of this notice||Application for provisional assessment may be rejected|
|10||ASMT-06||Notice for seeking additional information for Final assessment under GST (for those who applied for provisional assessment)||Reply in 15 days of receipt of the notice||Within 15 days from the date of receipt of this notice||ASMT-07 can be passed without considering the views of taxpayer being assessed|
|11||ASMT-10||Scrutiny notice -Notice for intimating discrepancies in the GST return after scrutiny along with tax, interest and any other amount payable in relation to such discrepancy, if any||Reply in ASMT-11 giving reasons for discrepancies in the GST returns||Within the time prescribed in the show cause notice or a maximum time of thirty days from the date of service of notice or such deadline notified||Proceed to assess the taxpayer based on information at hand – may lead to prosecution and penalty|
|12||ASMT-14||Show Cause Notice for assessment under section 63- reasons for conducting the assessment on the best judgment basis||Reply in written form and appear before the GST authority issuing the notice||Within 15 days of notice||Assessment order in ASMT-15, may not be favouring the assessee|
|13||ADT-01||Notice for conducting audit by Tax authority under Section 65||Attend in person as directed in the notice or produce records||Within the time prescribed in the notice||If not, it is presumed that taxpayer does not possess books of accounts and proceedings will be initiated|
|14||RVN-01||Notice under section 108 issued to the taxpayer by the revisional authority before passing the revision order of appeals, giving the opportunity of being heard. Order of revision is usually passed to fix errors in order for appeals passed under section 108||Reply within the prescribed time and/or appear before the GST authority passing the order of revision on a given date and time||Within 7 working days from the date of service of the notice||The case will be decided ex parte on the basis of available records and on merits|
|15||Notice of Enquiry by Directorate of Anti-profiteering||Where the supplier has not passed on the benefit of ITC or reduced GST rates to the recipient/consumer, proceedings may be initiated by the Directorate of anti-profiteering. All interested parties will get a notice asking for more details.||Cooperate in the proceedings and provide evidence, if any||As may be specified in the notice||Proceedings will be initiated ex parte on the basis on available evidence.|
|16||DRC-01||Show cause Notice for Demand of Tax- Is issued for demanding tax paid shortly or not paid with or without an intent to defraud. It is served along with a statement of details in DRC-02||Reply in DRC-03 for paying the amount of tax demanded in the notice along with Interest and penalty*, if any applicable. Use DRC-06 to reply to the show cause notice *Note: Where no fraud is committed, the penalty is chargeable only if payment is made beyond the thirty days time limit||Within 30 days of receipt of the notice||Order can be passed with higher penalty or prosecution- within three years from the due date of annual returns for the particular financial year for which tax is demanded|
|17||DRC-10 And DRC-17||Notice of Auction of Goods under section 79(1)(b) of the Act- Reference to the order of demand will be given, being the order for recovery through specified officer under section 79 OR Recovery through execution of decree||Must be able to pay the outstanding demand as per DRC-09||As may be specified in notice before the sale. Note that the last day of the bid or the last day of the auction cannot be before 15 days from the date of issue of the notice||Proceed to e-auction and sale|
|18||DRC-11||Notice to the successful bidder||Pay the full bid amount||Within the 15 days from the date of the auction||The proper officer can conduct a re-auction|
|19||DRC-13||Notice of Recovery of outstanding tax from a third person||Deposit the amount specified in the notice and reply in DRC-14||Not applicable||Deemed to be a defaulter in respect of the amount specified in the notice and can be subject to prosecution and penalties|
|20||DRC-16||Notice for attachment and sale of immovable/movable goods/shares under section 79||A taxpayer receiving this notice is prohibited from transferring or creating a charge on the said goods in any way and any transfer or charge created by you shall be invalid||Not applicable||Any contravention of the notice can invite prosecution and/or penalties|
Valid modes of sending GST Notices
Section 169 of the CGST Act states the different means of communicating the notices under GST. Any other mode of sending out the notice will not be valid under the law. Taxpayers must note the different modes of getting notices can be as follows:
- Hand-delivering the notice either directly or by a messenger by a courier to the taxpayer or his representative.
- By registered post or a speed post or a courier with an acknowledgement- addressed to the last known place of the business of the taxpayer.
- Communication to the email address
- Making it available on the GST portal after logging in.
- By publication in a regional newspaper being circulated in the locality- that of the taxpayer based on the last known residential address.
- If none of the above means is used, then by affixing it in some prominent place at his last known place of business or residence. If this is not found as reasonable by the tax authorities, they can affix a copy on the notice board of the office of the concerned officer or authority as a last resort.
The taxpayer need not act upon the notice or communication if it is received in any other modes apart from what is notified by GST law from time-to-time.
Reply to GST Notices & effects of not replying
Any reply to the GST notices can be submitted online on the GST portal. A taxpayer can use the digital signature or e-signature of the authorised personnel of such taxpayer or himself. Where the payment of tax and interest is required, pay such liability in the requisite form and manner. After such payment, the reply letter in requisite form must be submitted before the tax authority who sent notice. In case the taxpayer receiving the GST notices does not reply within the stipulated time limit, he shall be liable for penalties and further proceedings as each case demands under the GST law. A taxpayer can authorise another representative or a practising chartered accountant to look into the matters related to GST notices. He can do so, by issuing Letter of Authorisation under GST. GST authorisation letter gives the power of replying to GST notices by another representative and taking action on behalf of him. ClearTax offers a FREE integrated tool for GST registered businesses to track and check their compliance level for GST Returns filed. Every GSTIN can now access the GST Health Check tool to get the following result in an excel form: