ICAI representation on mass GST notices issued for FY 2017-18 in September 2023 [Important]

Sub: Mass show cause notices on GST issued under section 73 for the Financial Year 2017-18 in the month of September 2023

The Institute of Chartered Accountants of India (ICAI) is a statutory body established on 1st July 1949 by an Act of Parliament, viz., The Chartered Accountants Act, 1949, for regulating and developing the profession of Chartered Accountancy in the country. The Institute functions under the administrative control of the Ministry of Corporate Affairs, Government of India has 5 Regional Councils, 171 Branches covering the length and breadth of the country and 47 Chapters and 34 representative offices spread in 81 global cities across 47 countries.

At the time of implementation of the goods and service tax (GST) regime, it was known to all that being a new law there would be the possibility of making mistakes in the practical implementation of the new law. Further, in the initial period, the GST portal was not fully ready, due to which the stakeholders faced several technical glitches, making it difficult for them to log in, pay taxes, file returns on time, declare self-assessed information in proper manner and rectify or revise errors and mistakes when detected since the technical issues also led to incorrect GST returns filing. Considering the various representations and grievances expressed by stakeholders due to such issues, the Government had given assurance on various platforms and in various forums that the bona fide mistakes/ errors committed during the initial implementation of the law would be considered liberally.

However, the Department has already initiated inquiry under various modes prescribed under GST. Based on some auto-populated data received from the information technology infrastructure set-up/ software tools, notices have been issued in large numbers for the financial year 2017-18. These notices are for recovery of the alleged shortfall in payment of GST, for reversal of input tax credit (ITC) on grounds of mismatch under Tables 8A and 8B of GSTR 9, ineligible ITC in terms of section 17(5) and rules 42/43 as well as on issues such as mismatch of output GST liability under GSTR 3B and GSTR9/ GSTR 1 under the Central/ Assam Goods and Services Tax Act, 2017. In most of the cases, the notices have been issued within last few days of September 2023 i.e., the last few days of the extended time limit for issuance of notice.

It appears that the notices are issued in haste and at the last moment in a generic manner without considering the individual facts of each case. These notices have been issued to all taxpayers regardless of their nature of business, information declared in self-assessment returns. Unfortunately, the preliminary requirements of law have not been followed and notices have seemed to be issued mechanically in the last moment.

We have been informed by the stakeholders at large that such notices are vague and lack the ingredients of a proper show cause notice under section 73 / 74 of the CGST/Assam GST Act. These notices are issued without proper relied-upon documents or findings being communicated to the taxpayers and appear to be based on mere auto-populated numbers which may not be reliable in a majority of notices. We have observed the following with regard to such notices:

(1) Notices are issued based on GSTR-9 filed for the FY 2017-18. However, the required correction/rectification has already been made in GSTR-9/ 9C, and DRC-03 has also been filed, but the same is .......

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