New Delhi, Jan 22 (KNN) Businesses are gearing up for an anticipated surge in show cause notices from GST officials for the Fiscal Year 2018-19, focusing on potential shortfalls in tax payments, as the January 31 deadline approaches.

Section 73 of the GST Act addresses issues related to tax determination, covering scenarios such as non-payment, underpayment, erroneous refunds, and misuse of input tax credit. According to this section, officers are mandated to issue notices at least three months before the specified time limit for order issuance.

Earlier, the deadline for orders pertaining to the recovery of unpaid taxes, underpaid taxes, or wrongly availed input tax credits for FY 2018-19 was March 31, 2024.

However, a December 28 notification from the Finance Ministry extended this timeline to April 30, 2024. Consequently, the deadline for issuing show cause notices has also been extended by one month, now set for January 31, 2024.

Notably, these extended deadlines specifically apply to time-barring periods under Section 73, while the GST department retains an additional two years for issuing notices and orders under suppression/misrepresentation cases under Section 74.

In light of potential court rulings, it is anticipated that businesses may be given 15-30 days to respond, ensuring a reasonable opportunity for taxpayers to be heard.

Industry insiders highlight that a significant number of notices were issued just before the due date for the Fiscal Year 2017-18.

Reports indicate that in December, GST authorities issued demand notices totalling Rs 1.45 lakh crore to around 1,500 businesses for inconsistencies in annual returns and input tax credit claims for the financial year 2018. Experts expect a similar trend now, with concerns about possible arbitrariness.

Rajat Mohan, Executive Director, Moore Singhi, cautions against the rapid issuance of notices by tax officers to meet deadlines, as seen in the extended deadline for FY 2018-19 in January 2024.

Mohan emphasises that this approach risks compromising the quality and fairness of tax assessments, potentially leading to errors, unnecessary disputes, and undermining taxpayer rights.

He calls for more efficient processes, improved tax administration, and policy changes to ensure accurate and fair tax collection.

Experts advise taxpayers to carefully review such notices and seek professional guidance if necessary. They also stress the importance of authorities balancing procedural efficiency with accuracy and fairness in their assessments.

Recent observations indicate an eagerness among field officers to swiftly conclude tax cases, often overlooking the basic principles of natural justice. Some officers are resorting to extreme measures, pressuring taxpayers to settle payments on questionable grounds or face the escalation of cases to the intelligence unit for alleged non-cooperation.

Such an approach not only disregards procedural fairness norms but also places undue pressure on taxpayers, coercing them into unwarranted payments under the threat of increased scrutiny, according to Mohan.

(KNN Bureau)