GST-registered businesses that have reported a decline in annual revenue by 20% or more over the previous year have received a flurry of notices over the last few weeks from the tax department, sources in the know told FE. While notices related to a mismatch in declaration between GSTR-3B (summary return) and GSTR-1 (outward supplies detail) were common earlier, the department is now comparing firms’ earning under GST with that of erstwhile service and excise regime. The notices have asked businesses to produce relevant documents and explain the reasons for a decline in sales. The department believes that many such cases could point to possible evasion under the new indirect tax regime.
Sources said that the government is sitting on a pile of data that wasn’t available to them before GST. This is further aided by the integration of information from Customs and direct tax department. The GST IT system is now throwing up many red flags when tax returns under different tax regimes are compared. However, the spate of notices is also targeting businesses that have genuine reasons for declining revenue which includes a slowing economy. In one instance, a service provider for multinational companies received a notice but its revenue had slacked due to the expiry of certain contracts. In another notice seen by FE, the taxpayer was asked to produce input tax credit documents as it had paid a substantial portion of tax liability through an accumulated tax credit.
Read More at: https://www.financialexpress.com/economy/businesses-reporting-20-pct-fall-in-revenue-receive-gst-notices/1669653/