Chandigarh/ Keshav Garg: Now that the time limit for filing of annual return 2017-18 is reaching the final stage, most of the taxpayers would have filed their returns. But what after that. Is it the final step to close FY 2017-18 or still there is something left. Once you file your annual return, the GST department would begin its activism. As far as the taxpayer is concerned, data from his side will attain finality after filing of annual return. There shall be no further opportunity to amend your data. Let’s understand what is there in store for you and how to tackle it:
- Assessment notice from the department: If you really feel that FY 2017-18 would be a cakewalk with no accountability, you might be wrong. The revenue department is all set to bombard you with its notices and inquiries. Once these inquiries start, you must first check whether the department is authorized to conduct such inquiry or issue notices. At various junctures, it is seen that the department issues a notice without any power being given by law. Under these circumstances, the taxpayer can even challenge the validity of the notice. Remember notice can only be issued under the purview of the GST Law and not at the will of the department.
- Section 74 cannot be invoked, merely because of the difference of opinion: In various instances, it has been found that the department invokes section 74 without even understanding the circumstances under which such notice can be served. It is only in case of frauds, misrepresentations and alike cases that the department can go ahead under section 74. Also, the department must prove the intent to commit fraud at the hands of the taxpayer. Where because the department holds a different view from the taxpayer, section 74 cannot be invoked. For instance, there is a dispute whether an item is eligible for an input tax credit or not and there is no certainty in the law, the department cannot levy penalty u/s 74. Therefore as a taxpayer, you should first understand that as to why are you been penalized.
- Notice in respect of difference in ITC between GSTR 3B and GSTR 2A: Table 8 of GSTR 9 is something which as a taxpayer you should be concerned about. If you availed more ITC than that reflected in your GSTR 2A return, you must prepare a detailed working. It is most likely that automated notices will be served on such taxpayers. Now the question arises whether such excess claim of ITC is permitted under GST or not. There are a couple of views prevailing 1. That the credit in excess of GSTR 2A cannot be claimed and 2. That GSTR 2A is not the conclusive proof for Availment of Input Tax Credit. Though the department would go by the first view there has been various judgments that have favored the latter view. If you have fulfilled all the conditions for the Availment of Input Tax Credit, I would suggest you stick with the second option without doing any reversal.
- Interest on late deposit of tax: Once your GSTR9 and GSTR9C is filed, the department would surely work out the interest payable on late deposit of tax with the government. It has been found that most of the taxpayer has paid the amount which was retained in their electronic cash ledger, but did not set-off it against the tax liability. It is most likely that the department would raise the interest liability which the GST portal had not been doing. You must ensure that you diligently pay your tax along with interest, otherwise difficult awaits for you in the future.
- Audit by the GST Department: Once you file your annual return, you must prepare yourself for a departmental audit. Most of the states are rigorously working on conducting the audits. It is most likely that a large number of taxpayers based upon various risk parameters will be selected for audit. It is in total contrast to an audit of meager 5% taxpayers which was promised when GST was introduced. The revenue shortage coupled with the booming fake invoice industry has forced the government to cover as many taxpayers as they can. Provided government has a suitable infrastructure.
Under these circumstances, it is advisable that the taxpayer should take every precaution before and after the filing of GSTR9.