While GSTR-3B requires self-assessed details of tax liability and availability of input tax credit (ITC), a taxpayer needs to provide invoice-wise details of sales in GSTR-1.
The tax department’s soft approach towards non-compliance under the GST may be coming to an end as the indirect tax regime enters into the new financial year. This is reflected in the spurt of notices received by assessees at the start of this month, urging them to explain mismatches of details in two different returns filed for the same period. Notices issued in the first week of the month have asked taxpayers to explain discrepancies in monthly summary return (GSTR-3B) and GSTR-1 (outward supply details) for the same period. While GSTR-3B requires self-assessed details of tax liability and availability of input tax credit (ITC), a taxpayer needs to provide invoice-wise details of sales in GSTR-1.
“This is to inform that during scrutiny of the return for the tax period referred to above, the following discrepancies have been noticed:Your GSTR-1 data is not matching with GSTR-3(B),” the notice sent via email said.
One such notice issued to an Ahmedabad-based firm and seen by FE said if no explanation is received by May 14, it will be presumed that the taxpayer had nothing to say in the matter and proceedings in accordance with law would be initiated without making any further reference to the assessees in this regard. “The worst part of these notices is that the department has given around 10 days (out of which 4 days are weekly off) to reply, otherwise the case is decided against the taxpayer. These notices are coming by email and we have requested our clients to keep track of email-ID registered with the GSTN portal,” Rajat Mohan, partner, AMRG & Associates, said.
Although the original structure of return filing, which envisaged invoice-matching to curb tax evasion, never took off due to glitches in the IT system and the cumbersome nature of triplicate returns, the two return forms that continued to be filed provide enough information on transactions of buyers and seller to locate any evasion.
“It is about time that we initiated the process of enforcement under the GST as taxpayers have been given a long rope to get used to the new system. Some of these initial inquiries are also the reason why the compliance among taxpayers has shown improvement for April,” a tax officials said.
“In some cases, the discrepancy may be due to genuine issues, in such a case, a taxpayer must prepare and appropriately draft a response to the authorities, explaining the position. At the same time, the tax department can charge 18% interest for wrong credit claimed,” Archit Gupta, founder & CEO of ClearTax, said.