GST Notice: Types of GST Notices, How to Respond, and Consequences of Not Responding?

GST (Goods and Services Tax) is a comprehensive, multi-stage, destination-based tax levied on the supply of goods and services in India. It replaced multiple indirect taxes and is designed to create a single, unified market, simplifying tax administration, and reducing the tax burden on businesses and consumers.

Recent Updates

In the Union Budget 2024, the Finance Minister proposed the introduction of Section 74A in the CGST Act. This aims to establish a unified time limit for issuing demand notices and orders related to demands for FY 2024-25 onwards, covering both cases involving charges of fraud, suppression of facts, or wilful misstatement, and those not involving such charges. Additionally, the time allowed for taxpayers to benefit from a reduced penalty by paying the demanded tax along with interest is extended from 30 days to 60 days.

*This provision will take effect once notified by the CBIC.

What is a GST notice?

A GST notice is an official communication issued by the tax authorities under the Goods and Services Tax (GST) regime in India. It is sent to taxpayers for various reasons related to GST compliance, such as discrepancies in GST returns, delays in GST payment, or mismatches in input tax credit claims. GST notices can be viewed and responded to through the GST portal.

Key reasons for issuance:

1. Discrepancies: Differences found between the data reported in different GST returns or between supplier and recipient returns.
2. Non-compliance: Failure to adhere to GST laws and rules, such as late filing of returns or non-payment of GST.
3. Input Tax Credit (ITC): Issues related to the claim of input tax credit, such as ineligible claims or mismatches.
4. GST refund: Clarifications are required for processing GST refund claims.
5. GST Registration: Issues or discrepancies found during the GST registration process.

Responding to a GST notice promptly is crucial to avoid penalties and ensure smooth GST compliance. The GST portal facilitates easy access and response to these notices, ensuring adherence to GST rules and regulations.

Check your business loan eligibility before applying, as good GST compliance can impact loan approval.

What are the reasons for receiving GST notices?

Below are some common reasons why GST authorities may raise concerns or take action against a business:

• Mismatch between GSTR-1 and GSTR-3B: If the sales details in GSTR-1 do not match with those in GSTR-3B, you may receive a notice for review.
• Difference in input tax credit (ITC): If the ITC claimed in GSTR-3B does not match with details in GSTR-2A or GSTR-2B, it can raise a red flag.
• Delay in return filing: If GSTR-1 and GSTR-3B are not filed for more than six months continuously, it may lead to action from tax officials.
• Mismatch between GSTR-1 and e-way bill data: If the sales data declared in GSTR-1 is not in line with e-way bills, it may lead to scrutiny.
• Not reducing prices after GST rate cut: If the GST rate is reduced but the business doesn’t lower prices and continues to charge customers the higher rate, it is considered ‘profiteering’. The GST department may take action under anti-profiteering rules.
• Failure to pay GST or short payment: If tax is not paid or paid less—whether by mistake or with the intention to cheat—you may get a show cause notice (SCN).
• Wrong GST refund: If a refund is wrongly claimed or processed, it may attract a show cause notice, even if it was unintentional.
• Wrong input tax credit: If ITC is wrongly claimed or used, the authorities may take action.
• Unregistered business: If a business should be registered under GST but hasn’t done so, and hasn’t paid tax, this can lead to penalties.
• Mismatch in export data: If the export details in GSTR-1 do not match with the information available on the ICEGATE portal (like shipping bills not shown in GSTR-1), it may cause issues.
• Missing records or information: If a taxpayer fails to maintain proper records or does not provide required information, they may be questioned.
• GST audit: Tax officers can conduct audits to review a business’s GST compliance.
• Failure to submit required returns: If a business does not file information returns on time when asked, it may lead to further enquiry or penalties.

Check your pre-approved business loan offer to see how GST compliance may enhance your loan benefits.

What are the types of notices under GST?

Here's a table summarising the various GST notices, action required, time limits, and consequences of non-response:

This table presents a clear summary of the actions required and the potential consequences related to various GST notices. However, please note that this information is subject to change. For the most accurate and up-to-date information, kindly refer to the relevant government website.

What are the valid modes of sending GST notices?

• Registered email: notices sent to the taxpayer's registered email address.
• GST portal: notices are posted on the taxpayer's account on the GST portal.
• Physical delivery: notices are delivered to the taxpayer's registered business address.
• Courier: notices sent through courier services.
• Fax: In some cases, notices may be sent via fax.
• SMS: Alerts for notices may be sent through SMS to the registered mobile number.
  

Consequences of not responding to a GST notice

• Penalties: Financial penalties for non-compliance and late responses.
• Interest: Accrued interest on any unpaid taxes.
• Legal action: Initiation of legal proceedings for non-compliance.
• Cancellation of registration: Potential cancellation of GST registration.
• Assessment orders: Tax authorities may pass ex-parte assessment orders.
• Seizure of goods: Goods and assets may be seized for recovery of dues.
• Impact on business: Negative impact on business operations and reputation.
  

How to view notices on the GST portal?

• Log in: Access the GST portal and log in with your credentials.
• Navigate to dashboard: Go to the "Dashboard" section.
• Services menu: Select "Services" from the top menu.
• User services: Under "User Services," choose "View notices and Orders."
• List of notices: A list of all notices issued to you will be displayed.
• Select notice: Click on the specific notice to view details and download it if necessary.
• Response: Use the portal to respond to the notice if required.
  

Filing appeals for GST notices

Getting a GST notice means the tax officer is giving the taxpayer a fair chance to explain their side. It allows the person or business to submit documents, evidence, or any clarifications to support their case. After reviewing everything, the officer will give a final decision or order.

If the taxpayer is not happy with the officer’s decision, they have the right to appeal. The appeal is usually made to a higher authority than the one who gave the original order.

Here are the different GST appeal forms and what they are used for:

Steps for filing an appeal

• Start by logging in to the GST portal.
• Click on the ‘Services’ section, then go to ‘User Services’ and select ‘My Applications’.
• Choose the correct form needed to file your appeal.
• Fill in the required details like the order number, date, and the reason for your appeal.
• Upload the order copy, supporting documents, and a signed verification form.
• Pay the required fee for submitting the appeal.
• Submit the appeal form online through the GST portal.

Conclusion

Viewing notices on the GST portal is crucial for timely compliance and avoiding penalties. Regularly checking and responding to these notices ensures smooth business operations and adherence to GST laws. Additionally, maintaining good GST compliance can positively impact your credibility, aiding in securing a business loan for future expansion.