Flurry of GST notices: States may be nudged to conduct more risk-based assessments


With India Inc facing a slew of show-cause notices for payment of goods and services tax (GST), states may be sensitised on the issue and nudged to conduct more risk-based assessments.

According to Union Finance Ministry sources, many companies have been getting GST notices due to bunching of notices ahead of the due dates and this has largely been only a seasonal or temporary issue. However, it has also been noticed that some states may have sent a higher number of GST notices.

“Some states may have actually given higher notices than others. Some of the states in the value added tax regime, used to do 100% assessment of returns, that is they would assess each and every return they received,” said a senior official.

Under the GST regime, the Central GST authorities only assess 1% of the returns while the remaining are assessed by states. The finance ministry is understood to have analysed the states that have sent out higher notices as compared to the taxpayer base.

“We want to impress upon them that they should be doing more of risk based assessment and making their risk based systems more accurate and better so that the tax evaders get notices and not others,” said a source, adding that this will help reduce the number of notices being sent out. 

Recently, Central Board of Indirect Taxes Chairman Sanjay Kumar Agarwal had also highlighted the issue and had noted that issuance of show cause notices should be done after due consideration of facts and circumstances of the case and after examining the relevant documents submitted by the taxpayer. “Issuance of show cause notices recklessly will lead to unnecessary litigation in future,” the CBIC Chairman had cautioned field officials in a recent weekly newsletter.

The timeline for sending out show cause notices for GST for fiscal 2018-19 and 2019-20 were recently extended. The new deadline for issuing SCNs for FY19 was January 31, 2024 while for issuing notices for FY20 is May 31, 2024.

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