After a thorough analysis of GST returns and tax data received so far, the GST Council has started issuing scrutiny notices to businesses who have not paid tax in the line of their final tax returns. The step was taken after revenue authority noticed a difference between the tax estimation according to GSTR-3B and actual tax collections by about 34 percent.
The Council has also sent notices to companies whose GSTR-1 return data did not match GSTR-2A details auto-generated based on the information filed by the sellers in their return.
The analysis report released by the revenue department shows that around 34 percent of companies did not pay the correct tax amount while filing their GSTR-3B returns between July-December 2017. There is a gap of Rs 34,000 crore between tax liability and tax paid.
The analysis of GSTR-1 records of these businesses shows that while they were liable to pay Rs 8.50 lakh crore in taxes, the actual amount paid was Rs 8.16 lakh crore through GSTR-3B filing. The notices have been issued to the affected businesses asking them to explain the reason behind discrepancies in their GSTR-3B and GSTR-1 returns for October-December months by May 14.
“If no explanation is received by the aforesaid date, it will be presumed that you have nothing to say in the matter and proceedings in accordance with law may be initiated against you without making any further reference to you in this regard,” says the notice issued by Gujarat GST commissionerate on May 4.
In general, taxpayers need to reply to a scrutiny notice within 30 days time, however, in this case, the council has granted only 10 days time.
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Many businesses are reportedly not pleased with this initiative taken by the GST officials. “The government should issue strict guidelines for the officers to be reasonable and rational in disposing off the notice after giving the full opportunity of being heard to the taxpayers. In one of such notice tax officer has given 10 days (out of which four days weekly off) against a maximum 30 day period allowed in rules,” said AMRG & Associates Partner Rajat Mohan.
The data analytics activities are being performed by revenue authorities who are now issuing notices to various parties, asking them to provide clarification on the mismatch between their return data.
The facility on the GST portal allows authorities to reconcile details of GSTR-1 and GSTR-3B to verify the accuracy of tax payments. The reconciliation between GSTR-2A and 3B confirms that the credit claims filed by taxpayers are genuine and in line with the taxes actually paid by them and do not result in any loss to the exchequer of the government.
The overall GST collection in last fiscal reached to Rs 7.41 lakh crore, however, it is possible that the lack of proper anti-evasion measures might have resulted in leakage of tax.
The analysis was performed by the revenue department of the GST returns data provided by over 51.96 lakh registered businesses during the period of July to December 2017. As per the analysis report, only about 16 percent of the self-declared GSTR-1 returns matches with the final GSTR-3B returns filed for the period.
The analysis also shows that many businesses (49.36 percent to be exact) have paid more taxes than their actual liability. While the liability of these businesses, according to their GSTR-1 data, should have been Rs 5.59 lakh crore, they paid Rs 6.50 crore in GST. The excess amount is expected to be transferred to the e-ledgers of the said businesses.
