Why GST Notices Are “Today’s Biggest Trend” with Reply Format

Here, we’ll talk about the “GST Notices” that ask for certain information or documents and the “Reply Format” that should be used when responding to the GST Authorities.

‘GST Notices’ are communications sent by GST authorities to taxpayers to remind or caution them of any defaults discovered, specifically for failing to comply with GST laws. In other cases, notices may be issued solely to obtain additional information from the taxpayers.

However, there are a few cases where tax authorities issue notices when any movement of goods or provision of services occurs without coming under the tax lens or when taxpayers act suspiciously.

Instead, GST authorities make decisions based on information gathered while verifying taxpayers’ GST returns and information obtained from another government department or third parties. Depending on the circumstances, a notice may be referred to as a show cause notice (SCN), a scrutiny notice, or a demand notice. For such notices, a GST notices reply format is followed.

The reason for the default or action required of the taxpayer The most common reasons for receiving GST notices are lapses on the part of taxpayers, such as not registering under GST when otherwise required by law, non-filing or any delay in filing of GST returns, non-payment of GST or underpayment of GST, excess Input tax credit claim etc. 

A taxpayer must act or respond to notices within the time frame specified in the notice. Failure to do so may land the taxpayer in hot water. In such a case, the authorities may pursue prosecution or consider it a willful default and charge a penalty.

Has the GST Notice been issued to you? Discover the Most Common Reasons!

GST notices are issued for various reasons, and a GST notices reply format is required to tackle the notice given by the GST authority. In this section, we have listed some of the most common reasons for receiving GST notices:

i) Incorrect use of the GST Input Tax Credit;

ii) Mismatch in GST return entries discovered between GSTR-1 and GSTR-3B;

iii) GSTR-1 and GSTR-3B filings have been postponed;

iv) Inconsistent GSTR-1 and E-way Bill portal entries;

v) Suppose a seller fails to reduce prices when GST rates are reduced. This is considered ‘profiteering,’ and the seller may be issued a GST notice as an anti-profiteering measure;

vi) Incorrect information or documents submitted to the GST department;

vii) Claiming an ineligible GST refund or claiming it incorrectly;

viii) Inconsistent export reporting in GSTR-1;

ix) Tax evasion, etc.

What is the way to send a GST Notice? How will GST Authorities send GST Notices?

Section 169 of the CGST Act specifies the various methods for communicating GST notices. Any other method of distributing the notice will be invalid under the law. Therefore, taxpayers should be aware of the following practices for receiving notices:

i) Hand-delivery of the notice to the taxpayer or his representative directly or through a messenger or courier; or

ii) By registered mail, speed mail, or courier with acknowledgement, addressed to the taxpayer’s last known place of business; or

iii) Communication via the email address; or

iv) Making it available after logging in to the GST portal; or

v) By publication in a regional newspaper distributed in the taxpayer’s area based on the last known residential address.

If none of the above methods is used, affix it in a prominent location at his last known business or residence. Suppose the tax authorities do not think this is reasonable. In that case, they can post a copy on the notice board of the office of the concerned officer or authority as a last resort.

The taxpayer is not required to act on the notice or communication if it is received in a manner other than that specified by GST law from time to time. GST notices reply format is issued by the GST authorities.

Responding to ‘GST Notices’ and Consequences of Failure to do so

Any response to GST notices must be submitted online through the GST portal. A taxpayer may use the digital signature or e-signature of the taxpayer’s authorised personnel or himself. Where the payment of tax and interest is required, do so in the appropriate GST notices reply format and manner. 

Following such payment, the reply letter must be submitted to the tax authority that issued the notice. Suppose the taxpayer receiving the GST notices does not respond within the time limit specified. In that case, he will be subject to penalties and further proceedings as each case requires under GST law.

A taxpayer may delegate the investigation of GST notices to another representative or a practising chartered accountant. He can do so by issuing a GST Letter of Authorization. 

The GST authorisation letter grants the authority to respond to GST notices and take action on behalf of another representative.

Basic Guidelines for Responding to Any GST Notice

When responding to any notice pertaining to the GST, one should follow the following general guidelines in order to properly meet their obligations:

i) Verify to see if it is in the correct format,

ii) Determine whether the alleged default is the recipient’s fault and whether the notice is self-explanatory,

iii) Please contact the issuing authority to clarify if this is not the case,

iv) Do not make assumptions, and do not respond hurriedly or half-heartedly,

v) The facts of the case are critical and should be documented before writing a response, and

vi) Do not simply cite the case law; instead, write the relevant facts and ratio of the case cited.

In addition, GSTHero’s GST Suite also can aid in identifying and correcting errors in advance, allowing us to avoid further complications. You can try GSTHero’s super-intelligent GSTHero Litigation Management Solution (LMS) and experience the power of automation and AI in your GST compliance!

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