Taxpayer panic to fulfill GST criteria, as I-T dept asks to submit documents in 7 days

At first many exporters and traders found it difficult to cope with the new tax regime Goods and Services Tax (GST) which was launched last year in July 2017, and now many of these taxpayers are on panic mode, as the Income Tax department asks to submit various documents under GST within seven days of receiving the notice. With shortage of time and heavy data mounting, it has become difficult for taxpayers to fulfill detailed verification of transitional credit claims made under GST. The reason is because of suspected large-scale foul play created by many firms, which has forced IT department to undertake such steps. Also it needs to be noted that, GST is nearing towards it's 1 year anniversary, which makes it very necessary for government to clear backlogs for having proper outcome of this regime in a year. 

According to a report of Financial Express, one such notice seen has asked for "copies of Cenvatable invoices i.e inputs, input services, and capital goods for the period 01.04.2016 to 30.06.2017." This would approximately entail hundreds of pages of invoices over 14 months and these require plenty of other documents under 12 additional categories of mandatory submissions.

“We have sought 15 days from the department to comply with the notice as it is physically not possible to gather all these documents without impacting the daily business,” a business owner told Financial Express. 

In GST, businesses are allowed to claim credit for excise and service tax paid for the stock that was bought before GST came but were sold when GST came (July 1). As such credits, a huge amount of Rs 1.6 lakh crore was claimed by nearly 9.5 lakh assessees till the December 27 deadline. For claiming credits there are forms like GSTR-1, GSTR-2, GSTR-3, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A and GSTR-6. 

The verification drive was carried out by the tax department as large-scale fraud was suspected by the government, which eventually failed due to the deficiency of the manpower. After that, the government selected the top 50,000 assessees for further analysis in terms of the claims.

“Tax officers undertaking verification of transitional credit after one year are now forcing the taxpayers to submit detailed documents including copies of invoices from Pre-GST regime in short period of seven days. The notices are loaded with a blunt and upfront denial of deadline extension, which seems to be coercive in nature and hits directly at the core of natural justice principles,” Rajat Mohan, partner, AMRG & Associates told Financial Express.

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A taxpayer will needs to submit a note on all the goods manufactured/services provided by the company and their treatment in the previous indirect taxation regime vis-a-vis the GST regime. They even have to provide central and service excise returns from April 2016 to June 2017.

“….submit above said documents within a week of receipt of this letter. It is to note that no extension of time shall be given to submit the required documents”, the notice said. It added that non-compliance of the letter would invite penal action as per law.