This article will guide how to handle GST litigations in a proper way. The fragmented indirect taxes structure in India has been streamlined with the implementation of the GST. Like any other law relating to taxes, the GST has also been the subject of its fair share of disagreements and litigations. Tax refunds, input tax credit claims, and return filing are all included in this. Changes are frequently made at GST Council meetings, which makes it harder for taxpayers to comply. It consequently results in disagreements and litigations against authorities.
You should be aware of handling GST litigations if your company is subject to the Goods and Services Tax. This ensures that you are well-equipped to handle it. Here are the 5 tactics you should use to manage GST litigations effectively.
Regularly Update Yourself with GST’s Latest Changes
Since the introduction of GST in 2017, several major and minor changes have been made including GSTN portal updation multiple times. Moreover, more changes related to the taxation system are to be expected with every GST council meeting. Even after these changes to streamline GST, they may lead to significant issues. That’s why taxpayers may find it difficult to make their way through the changes.
Although ignoring the law is not at all a valid defence, business owners must stay above the law. The law becomes even more crucial for business owners with higher transaction volumes. To assist taxpayers in becoming acquainted with the law, respected publications have even created extensive GST guidelines.
If adhering to the laws is not feasible for you or does not lead you to go along with various concepts, it is better to look for a tax professional’s help.
Review the GST Notice in a Professional Way
If the GST authorities find any discrepancies, they will send the taxpayers a show-cause notice (DRC-01). The notification may list every discrepancy for which the taxpayer is accountable, and a response is expected within the allotted period. The duration will be between 15 and 30 days.
Here are the important actions you can take if you as a taxpayer find yourself in the same predicament and receive a show-cause notice.
- Check the DIN first, the Document Identification Number.
- Understand the nature of the discrepancy by creating a note of the sections and provisions you have contravened as per the issued notice.
- Confirm if the allegation is within or over the limitation period. You can do this by checking the period during which the contravention has been committed according to the notice.
- Check the accuracy of the figures mentioned in the notice with your GST records.
Determine Whether the Contraventions Are Valid or Not
After thoroughly reviewing the show cause notice, your next step should be to ensure the contraventions are legal and valid. If the allegations are legal and valid, act according to the measures stated in the notice.
Important: High GST Collection & Reducing Litigation, Still A Struggle
If the contraventions and allegations raised by authorities are not valid, you should draft a notice accordingly. Moreover, you can start gathering relevant documents as evidence such as GSTR 2A, and GSTR 1, and transact invoices among others to make your case.
Spend a Lot of Time Before Reply to GST SCN
Preparing a solid reply against the show cause notice issued by the authorities plays a crucial role in handling the case. What important things can be included in the reply are listed below.
- Give a separate explanation for each discrepancy or contravention listed in the notice.
- Ensure your argument is equipped with facts, figures, and provisions of the GST law.
- You can make your argument strong by including some examples or illustrations.
- Provide the prepared response along with all supporting documentation as evidence, including invoices, the GSTR 1 form that was uploaded, and the GSTR 2A that was generated by the system.
If you ever feel unsure about how to compose an acceptable reply to the authorities, never hesitate to ask a tax professional for assistance. You’ll probably need to log into the GSTN portal in order to submit your response in the case of GST.
Be Prepared to Present Your Opinion Individually
Your response may be quite important in some minor circumstances, and it will probably be more than enough to approve a final order. But, the assessing officer may even ask you to personally appear and present your case. Attend the hearing with assurance and present your argument verbally in such a circumstance.
Don’t forget to present the assessing officer with all of the case’s supporting documentation that you have on hand. Once more, you might employ a tax expert to represent you during the hearing.
Conclusion
A show-cause notice may be issued by GST authorities, and the action is natural. You won’t encounter any obstacles if you use the aforementioned strategies to manage the contraventions. Making your case depends greatly on how well you prepare your response to upload on the GSTN portal. As a result, always be sure to write a clear, comprehensive reply that addresses every discrepancy raised in the notice with solid evidence.
In conclusion, the forms and returns you have submitted, including GSTR 2A and the other purchase and sale receipts, will be preferable to have.
