States may become more aware of the issue and be encouraged to carry out more risk-based assessments as a result of India Inc. receiving several show-cause warnings for failing to pay the goods and services tax (GST).
Many businesses have been receiving GST notices as a result of letters being bundled together before the due dates, according to sources from the Union Finance Ministry. For the most part, this has only been a seasonal or transient problem. It has also been noted that a greater number of GST notices may have been sent by certain states.
It's possible that some states issued more severe warnings than others. According to a senior official, "some of the states in the value added tax regime used to do 100% assessment of returns, meaning they would assess every return they received."
Only 1% of the returns are reviewed by the Central GST authorities under the GST regime; the remainder returns are assessed by the states. It is believed that the finance ministry examined the states that had issued more warnings relative to the total number of taxpayers.
One source stated that this would assist down the amount of notifications sent, saying, "We want to impress upon them that they should be doing more of risk based assessment and making their risk based systems more accurate and better so that the tax evaders get notices and not others."
The matter was recently brought to the attention of Central Board of Indirect Taxes Chairman Sanjay Kumar Agarwal, who also stated that show cause notices should only be issued after carefully evaluating the case's facts and circumstances and the pertinent documentation the taxpayer has presented. In a recent weekly newsletter, the CBIC Chairman had warned field officials that "issuing show cause notices recklessly will lead to unnecessary litigation in the future."
Recently, there was an extension to the deadline for distributing show cause notifications for GST for the fiscal years 2018–19 and 2019–20. January 31, 2024 was the new deadline for releasing SCNs for FY19, while May 31, 2024 was the new deadline for issuing notifications for FY20.
