Under the Goods and Services Tax (GST), the authorities communicate to the taxpayers via GST notices. There are various reasons for the issuance of the different types of notices, which every taxpayer should know. This article discusses these reasons and types of GST notices along with the manner in which one may respond upon receiving one.
1. About GST Notices
Notices under the Goods and Services Tax (GST) law are a medium used by tax authorities to communicate to taxpayers. GST notices are usually sent as a word of caution for any defaults noticed by authorities specifically in GST compliance, or to collect more information from taxpayers.
GST authorities mainly send out notices when taxpayers operate suspiciously and when there is any supply of goods or services which does not occur under the tax lens. Upon verification of the taxpayer’s GST returns, authorities act according to the hints collected by them, received from other governmental department, or a third party.
The common reason for receiving a GST notice is defaults committed on taxpayer’s part, including no GST registration made even when the law requires, delayed or no GST returns filed, excess claim of Input Tax Credit (ITC), unpaid GST, short GST payment, etc.
GST notices are called by different names such as scrutiny notice, Show Cause Notice (SCN), or demand notice. The purpose of the notice, the intensity of the default committed, or the action required from taxpayer will determine what a GST notice will be called.
The taxpayer should respond promptly to the notice issued in his/her name within the specified period of time. In case, the taxpayer fails to do so, s/he will be legally acted upon. The GST authorities can eventually prosecute such a taxpayer or consider it as a purposeful default and charge the taxpayer with penalty.
2. Common Reasons for Issue of GST Notices
The most common reasons for issuance of a GST notice are:
- Issuance of scrutiny notice due to a mismatch of details furnished between GSTR 1 and GSTR 3B
- Difference in amounts of ITC claimed in GSTR 3B as compared to GSTR 2A
- Delayed filing of GSTR 1 and then consecutively delayed filing of GSTR 3B for over 6 months
- Inconsistent declarations made in GSTR 1 and the e-way bill portal
- Prices not reduced, after GST rates are reduced, by the date notified by the Central Board of Indirect Taxes and Customs (CBIC). The taxpayer does not reduce prices and thus commits the default of not passing on the benefit of reduced taxes to customers. Such a practice is known as profiteering and GST authorities have taken several measures for anti-profiteering which address such defaults.
- Issuance of SCN when GST is not paid by the taxpayer or is paid as short payment, either with or without any fraudulent intention
- Issuance of SCN when GST is wrongly refunded, either with or without any fraudulent intention
- Wrongly availed or utilized ITC
- When a business which is liable to register under GST has not been registered, and tax and other liabilities have not been discharged under the GST Act
- Exports reported inconsistently in Form GSTR 1 with the required information lodged accurately on ICEGATE
- When any additional information is required by authorities related to the records maintained by the taxpayer
- When tax authorities have to conduct an audit
- When the information return which was required to be filed before GST authorities has not been submitted within the specified period of time.
3. Types of GST Notices
There are various types of notices which can be issued to taxpayers, for which the response and its validity may vary accordingly. The table below specifies the action to be taken by the taxpayer, the time limit for responding, and the consequences of not responding upon receiving the following 20 kinds of notices:
|Name of Notice Form||Description of Notice||Response Required||Time Limit for Response||Consequences of No Response|
|GSTR-3A||Default notice for taxpayers who have not filed GST returns in GSTR-1, GSTR-3B, GSTR-4, or GSTR-8||File the required GST returns along with late fees and interest on the GST liability (if any)||15 days from the date of receiving the notice||Assessment of tax to the best judgement by using the available information.|
|Assessment of tax to the best judgement by using the available information.|
|Applicable penalty of Rs. 10,000, or 10% of the due GST, whichever is more.|
|CMP-05||Show Cause Notice (SCN) questioning the taxpayers eligibility to be a composition dealer||Reasons must be provided in CMP-06, justifying the taxpayers eligibility for the composition scheme||15 days from the date of receiving the notice||Penalty as per Section 122 and an order in CMP-07 denying benefits of the composition scheme to the taxpayer|
|REG-03||Sent while verification of GST registration application to ask the taxpayer to clarify details entered in the application and the documents provided. The same notice form is applicable for amending the GST registration.||Respond through reply letter in REG-04 clarifying the information provided||7 working days from the date of receiving the notice||Such application is rejected and the applicant is informed for the same in REG-05 electronically|
|REG-17||SCN asking justification as to why the GST registration of taxpayer should not be canceled for the reasons mentioned in the notice.||Respond through reply letter in REG-18 giving justifying reasons as to why GST registration should not be canceled||7 working days from the date of receiving the notice||GST registration is canceled in REG-19|
|REG-23||SCN asking justification as to why the cancellation of taxpayers GST registration should be revoked for the reasons mentioned in the notice.||Respond through reply letter in REG-24||7 working days from the date of receiving the notice||Cancellation of GST registration will be revoked|
|REG-27||For migration of taxpayers from VAT to GST regime, a notice may be issued within the prescribed time in REG-26 for not making an application after obtaining provisional registration, or for not providing complete or accurate details in it.||Respond by applying in REG-26 and appear before the GST authority providing reasonable opportunity to be heard||None||Cancellation of provisional registration issued in REG-28|
|PCT-03||SCN for the GST practitioners misconduct.||Respond within the time prescribed in the SCN||Within the time prescribed in the SCN||Order for the cancellation of the individuals license as a GST practitioner|
|RFD-08||SCN asking why GST should not be refunded to the taxpayer||Respond through reply letter in RFD-09||15 days from the date of receiving the notice||Rejection of GST refund application ordered in RFD-06|
|ASMT-02||Notice seeking additional information for carrying out provisional assessment under GST||Respond in ASMT-03 with required documents||15 days from the date of receiving the notice||Possible rejection of application for provisional assessment|
|ASMT-06||Notice seeking additional information for carrying out final assessment under GST for applicants of provisional assessment.||Respond in 15 days of receiving the notice||15 days from the date of receiving the notice||ASMT-07 may be passed without considering the applicants views|
|ASMT-10||Scrutiny notice intimating discrepancies in filed GST returns after scrutiny along with any payable tax, interest, or other amounts related to such discrepancy.||Respond in ASMT-11 providing reasons for the discrepancies in GST returns||Within the time prescribed in the notice, or within 30 days from the service date of such notice or such deadline notified||Assessment of taxpayer is proceeded on the basis of the information available, which may lead to prosecution and penalty|
|ASMT-14||SCN for assessment under Section 63 reasons for assessing based on best judgement||Respond in written and then appear before the GST authority who has issued the notice||15 days from the date of receiving the notice||Assessment order in ASMT-15 may not favor the individual being assessed|
|ADT-01||Notice for an audit to be conducted by a GST authority under Section 65||Attend in person as prescribed in the notice, or produce relevant records||Within the time prescribed by the notice||Taxpayer is presumed to not be in possession of books of accounts, which will initiate proceedings|
|RVN-01||Notice is issued under Section-108 by the revisional authority to the taxpayer before the revision order of appeals is passed, giving the taxpayer enough opportunity to be heard. Revision order is usually passed to fix errors in appeal orders passed under Section 108.||Respond in prescribed time, and/or appear before the GST authority who has passed the revision order on a given date and time||7 working days from the date of receiving the notice||Decided ex-parte based on merits and records available|
|Enquiry Notice by Directorate of Anti-profiteering||When supplier does not pass the benefit of ITC or reduced GST rates to the supplier, all interested parties get a notice asking for additional information||Cooperate in proceedings and provide all required evidence||As specified in the notice||Proceedings will be initiated ex-parte by the Directorate of Anti-profiteering based on the evidence available|
|DRC-01||SCN issued for demanding unpaid or shortly paid tax with or without fraudulent intention. Served along with details statement in DRC-02.||Respond in RDC-03 for paying the demanded tax amount as per the notice with any applicable interest and penalty (if no fraud is committed then penalty is charged only if payment is made after the prescribed time limit). Respond to the SCN through DRC-06.||30 days from the date of receiving the notice||Order may be passed with higher penalty or prosecution (within 3 years from the due date of filing annual returns of the financial year for which tax is payable).|
|DRC-10 & DRC-17||Notice for auctioning goods under Section 79(1)(b) a reference to the demand order will be given, being the order of recovery through specified officer under Section 79, Or, Recovery by executing the decree.||Should be able to pay the outstanding demand as per form DRC-09||As specified by the notice before the sale. Last day of auction/bid cannot be before 15 days from the issue date of notice||E-auction and sale|
|DRC-11||Notice to the successful bidder.||Payment of the full amount of the bid/auction||Within 15 days from the auction date||Re-auction will be conducted by the proper officer.|
|DRC-13||Notice for recovering outstanding tax from a third person.||Deposit specified amount as per the notice and respond in DRC-14.||Not Applicable||Considered as defaulter with respect to the specified amount as per the notice and may be subjected to prosecution and penalty.|
|DRC-16||Notice for attachment and sale of movable/immovable goods/shares under Section 79.||Taxpayer will be prohibited from transferring or creating a charge in any way on the said goods. Any transfer or charge created will be invalid.||Not Applicable||Any contravention of the notice may invite prosecution and/or penalty.|
4. Valid Modes of Sending GST Notices
As per the CGST Act Section 169, there is a prescribed set of modes for communication of GST notices. Any other means of communication of GST notices will not be considered valid under the GST law. The different modes for communicating GST notices are:
- Hand-delivery either directly or by courier to the taxpayer or his/her representative
- Registered post, speed post, or courier with acknowledgement addressed to the taxpayer’s last known place of business
- E-mailing to taxpayer’s registered e-mail address
- Making the notice available on the GST portal after login is made
- Publishing in regional newspaper and circulating in the taxpayer’s locality (as per taxpayer’s last known address of residence)
- Last resort: Affixing the notice in some prominent place at the taxpayer’s last known address of business or residence. In case, GST authorities do not find it reasonable, a copy of the notice may be affixed on the notice board of the office of the concerned officer/authority.
In case the taxpayer receives a notice from any other modes of communication apart from the ones regularly notified by the GST law as mentioned above, s/he is not required to act on the notice.
5. Response to GST Notices and Consequences of No Response
The response to a GST notice may be submitted on the GST portal online. While doing so, taxpayers may use their own respective digital signature certificate or e-signature, or that of their respective authorized personnel.
For every requirement of tax or interest payment, such liability should be paid in the requisite form and manner as per the GST law. Upon completion of such payment, the taxpayer should submit the required form to the GST authority which had issued the notice.
A representative or a practicing Chartered Accountant can be authorized by the taxpayer to manage issues related to GST notices. This can be done by issuing an Authorization Letter under GST. This will allow the taxpayer to appoint a representative for replying and taking action on the GST notices on his/her behalf.
However, if the taxpayer does not respond to the GST notices issued in his/her name within the time limit, s/he will be liable for further proceedings and penalties as per the demand of each case under the GST law.