From insurance companies to banks and cement manufacturers to travel services firms, Goods and Services Tax (GST) authorities are sending a flurry of notices as they approach the deadlines for sending out demand orders and notices for previous financial years. While public sector insurance major Life Insurance Corporation (LIC) has received five notices in February, with amounts ranging between 4 crore to over Rs 400 crore for wrongful availment of inputs tax credit (ITC), J&K Bank has received a notice of Rs 16,261 crore for not levying GST on interest receivable under Transfer Pricing Mechanism (TPM) between corporate headquarters and branches from common funds.
Cement company Shree Cement has received notice of Rs 12.52 crore this month for non-payment of tax on outward supplies and wrong ITC availment, while travel services firm EaseMyTrip has got a penalty notice of Rs 17.35 lakh on February 24 for mismatch in GST liability in GST returns and availment of ineligible ITC for FY21.
Most of these notices are coming ahead of the February 28 deadline for issuance of demand order for GST violations for reasons other than fraud or wilful misstatement or suppression for financial year 2020-21. The deadline for issuing demand order comes three months after the issuance of showcause notice, which is the first step of intimation by GST authorities in case of violations. So, for instance, since February 28 is the deadline for issuing demand orders for cases pertaining to FY21, the deadline for showcause notices for FY21 was November 30, 2024.
The month of February also saw another set of compliance deadlines for GST authorities. February 5 was the last date to issue demand orders for financial year 2017-18 for the extended period for cases involving fraud or any wilful misstatement or suppression of facts.
Under GST, the deadline for the order of payment is three years from the due date of filing of annual return for the year for which the amount is under dispute. GST authorities are required to issue the showcause notice three months before the end of this three-year deadline time limit.
This deadline differs in the case of frauds and wilful misstatement or suppression of facts, wherein GST authorities are required to issue the notice six months before the time limit of five years from the due date for filing of annual return for that year.
The taxpayers are then required to pay the amount due along with interest and penalty. The taxpayer can also file an appeal against the decision of the adjudicating authority within three months from the date of the order.
Most of these GST notices to companies have come ahead of the February 28 and February 5 deadlines. Such notices mostly pertain to the initial implementation phase of GST, when there were several teething troubles and constant tweaks in policy decisions.
Companies are likely to appeal against these notices. Hero Motocorp in its disclosure on stock exchanges had said that the company has rightly classified the parts and accessories following the rules, relevant sections’ notes, chapter notes, HSN (Harmonised System of Nomenclature) explanatory notes. “Therefore, the tax demand is not maintainable in law. However, the tax department has disputed the classification followed by the Company,” it had said.
J&K Bank also said that it would be appealing the order. “TPM is an internal allocation and measurement mechanism for determining the pricing of incremental loans/investments/deposits and for determining the profit contribution of various lending and borrowing units of a bank…since the Bank is, in law a single legal entity constituting of its corporate headquarter as also all the branches, it is legally obliged to reflect its financial statements prepared under the provisions of regulatory laws applicable to it for its whole entity,” it said.
Tax experts said companies need to plan and strategise for the expected increase in notices by GST authorities. “With deadlines for issuing notices and orders approaching, there is a widespread expectation of heightened activity in the dispute space. Revenue authorities are likely to issue an increased number of notices to prevent potential recoveries from being missed, while orders will be passed to ensure that recoveries do not become time-barred. Industry players should closely monitor these developments to ensure timely responses, strategise the way forward, and manage disputes effectively,” an tax expert said.
Source from: https://indianexpress.com/article/business/bank-insurance-companies-cement-travel-firms-gst-9860928/
