The process of responding to a GST notice doesn’t need to be stressful.There is a way of responding to a GST notice without panicking.
When you get a GST notice in your registered email, or appear on the GST portal, it can spoil a good day. The first thought that comes into many business owners’ minds is worry; then, confusion regarding the meaning of the notice and implications if it is not followed. Fortunately, the vast majority of GST notices are administrative in nature, and can be managed with ease, provided you know what to do and are able to act timely.
Read the Notice Carefully Before Beginning
Read the Notice carefully before beginning.It is essential to read the Notice carefully first.
All GST notices contain a reference number, the section of the GST Act to which the notice relates and reasons for it. This detail is more important than people realise.
A notice issued under Section 61 for scrutiny of returns is entirely different from a notice issued under Section 73/74 for the scrutiny of registered persons’ tax short paid or wrongly availed input tax credit.
There are some notices that only request a clarification, and others that might have financial consequences if not followed.
Identify the Key Details
In the first step, work out the type of notice, the form number (“ASMT-10”, “DRC-01”, “REG-17” as examples), and the date that the response is due.
If you miss the deadline — even a few days — it could mean additional punishments or an ex-parte order against the business.
Don’t Sweep It Under the Rug, Even If It’s Not That Big of a Deal
Many businesses make the mistake to think that it will pass or that it is not worth responding to in writing.
No GST notices will go away.
Failure of a response within the time frame requires the department to be able to make the assessment based on the department’s information, which is typically not a taxpayer’s best interests.
If you don’t pay, or don’t pay on time, the taxes which the notice originally called for will be more.
Before Answering, Get the Necessary Paperwork Together
When the notice has been comprehended the subsequent step is to gather the necessary documents.
Typically, it involves GST returns submitted for the relevant timeframe, purchase and sale registers, e-way bills, input tax credit ledgers and reconciliation statements between GSTR-2A or 2B and books of account.
Creating these documents in advance will speed up the process and also minimise the risk of missing out part of the answer or including contradictory points.
Verify the Discrepancy
It can also be beneficial to check with the department and ask if the discrepancy mentioned in the notice is an actual error, if it is a timing error or if it was a data entry error.
Written reply will require different approaches to each one of these.
Write a Concise, Informative Answer
A GST reply should NOT be about lengthy explanations rather facts and figures.
Clearly state the discrepancy in question, give accurate numbers and supporting documentation and cite the return periods in question.
Where tax is really owed because of a mistake, it is probably better to accept and pay the amount with any interest charged or included in the tax bill, instead of challenging a clear liability as this decreases the chance of penalty action in the future.
Any notice that seems to stem from a misinterpreted statement or a data matching mistake in the department should be accompanied by a thorough explanation including samples of what it is reconciling with, and copies of pertinent filings.
Responsive answers that aren’t concrete or specific are no help and may lead to further questioning.
Meet the Deadline, Every Time
GST notices are issued with time limits, typically within 30 days of 7 days following the date of notice, as per the section under which the notice is issued.
The deadlines are strictly enforced for the most part and it’s not always possible to extend a deadline and it would be wise to avoid relying on this.
Businesses should consider the due date as a deadline and count backwards from it when planning for the collection of documents and when drafting the reply.
Why Professional Guidance Helps
Over the years, the GST law has become complex and very technical and a routine notice may have unexpected meanings at a cursory glance.
A paid GST assessor can easily determine if the notice requires a straightforward clarification or a more in-depth representation, while drafting a reply that’s correct and likely to be understood by the department’s assessors as such.
At Badami & Kamath, we can help you with the handling of GST notice as soon as you receive it till it is closed.
This involves reading the notice, reconciling and preparing the formal response, and appearing before the GST authorities if necessary.
Our method is rooted in correct documentation and elucidation of the requirements for each type of notice.
A Notice Is Not a Verdict
A notice is not a verdict.Never take the action of giving a notice as a finding.
GST notices are not a proof that there is something seriously wrong.
Most of the time, it is merely a lack of clarity or some filing information.
Most of these notices can be addressed with organised records, a factual answer and a sense of the deadline to their issuance, and the issue is averted.
Need Professional Assistance?
Businesses that have received a GST notice should follow it up with a consultation with Badami & Kamath as they will have a team of professionals who can review it and help you with a response.