GOT NOTICE FROM GST DEPARTMENT – HERE’S THE REASON AND WHAT YOU NEED TO DO |
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The GST department has begun sending notices to registered taxpayers asking them to produce documents in respect of transitional credits claimed. Since, under GST, the businesses are allowed to claim credit for central taxes (excise and service tax) paid on the stock bought in the pre-GST regime but sold after July 1, when GST came into existence. The Govt. is stunned on the massive claim of Rs.1.6 lakhs crores claimed by the 9.5 lakh assesses. The government has also held the “unusually high” claim as one of the reasons for GST collections being below expectations.
In case the claim is in respect of un-utilised credit, the taxpayer must furnish a copy of the Trans-1 return along with the copies of returns filed under the excise and service tax for the last six months within the next two days of the receipt of the notice or the timeframe given in the notice. Further, in case of credit taken against capital goods, the copy of the Trans-I return along with the copies of purchase invoice and Cenvat credit register have to be furnished for verification. The Govt. is under suspicion of the large-scale malpractice under in these claims.
It is found that many businesses have claimed credit for services which were barred by courts and tribunals in the previous regime like catering services. And in few cases where contradictory judgments existed in earlier regimes, taxpayers have decided to go ahead with claims in GST.
However during verification such claims would be denied. Now the Government seems to be under the pressure of revenue collection growth and could force the tax department to take a rigorous view on the technical reading of the law.
For any updates and clarification please contact
Bharat Poplani
B.Com, FCA, LLB
+91-9646380245