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GST is a trust-based taxation regime wherein the businesses are required to self-assess their returns and determine tax liability accurately. GST Notice will be raised if there is any non-compliance done by the business person. Section 61-64 of CGST Act, 2017 given power for assessment by GST department.
The GST returns filed by the business persons may be selected for scrutiny by the GST officer to verify its correctness or validity with the information available with him. In case of any difference during scrutiny, the GST officer will issue a notice to the business person by highlighting the differences noted and will ask for the explanations. Then the business person has to give the reply as to accepting the differences in the notice to pay Tax, Interest and Penalty (if any) and inform the same to the GST officer. If the business person does not accept the differences, then he has to submit the explanation regarding the non-acceptance to the GST officer.
If the explanations provided by the business person are not satisfactory to the GST officer, he can take the following recourse:
If the business person reported more turnover as per Income Tax and lesser turnover in GST, then there will be a greater possibility of receiving the notice from the GST department for the mismatch in the turnover.
As per the provisions of GST Act, business persons cannot claim more than 5% of ITC appearing in GSTR 2A/2B, then there will be a greater possibility of receiving the notice from the GST department for the mismatch in claiming of excess ITC.
As per the provisions of 17(5) of CGST Act, 2017, there are few ITC like Construction of Building, Motor Vehicles other than carrying the goods etc., where claiming ITC is blocked. If there is any evidence with the GST department that the business person has claimed this blocked credit, then there will be a greater possibility of receiving the notice from the GST department.
There might be many more situations like mismatch in Turnover as per GSTR 1 vs GSTR 3B or failure to file the GST returns for consecutive period of 6 months etc., So, the business person has to understand the reason for receiving the notice and take the corrective action (if required).
