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GST assessment challenges for business & solutions

Updated on :  

08 min read.

Taxpayers often receive GST notices upon GST assessment by the department. It may be due to differences in data available with the department when compared to the taxpayer’s records.

Currently, GST assessments take place offline. There is a need for rules and procedures to be in place for smooth conduct of GST assessment and hearing given the introduction of faceless assessment by the department.

In this article, we will take you through the challenges faced by the taxpayer or tax consultant during the GST assessment and ways to overcome those challenges.

Circumstances when GST notice is issued

Following are some of the popular instances where GST notices were issued-

1. Differences in Input Tax Credit (ITC) availed in Form GSTR-3B compared to Form GSTR-2A/GSTR-2B or difference in turnover disclosed in Form GSTR-1 compared to Form GSTR-3B

2. Discrepancies noted in any application filed by the taxpayer (application for refund or transitional credit)

3. There may be a case of potential tax fraud committed by the taxpayer.

Challenges in GST assessment and ways to overcome

1. Time pressure created by tax officials

Whenever we receive any notice, there is always a statement at the end, “Kindly reply within 7 or 10 days,” or else the tax department would take the necessary action (for example, pass order on the best judgmental basis). There will always be pressure on the taxpayer or tax consultant to furnish the same within the said number of days.

As a resolution, we can submit a letter to the tax officials for allowing a reasonable extension. But remember, the data asked is quite enormous and would take time to comply with monthly compliances.

2. Providing information to tax officials

The information requested may be sent to tax officials physically or through an electronic medium (via email). Though there is an option on the GST portal to attach files given the size limit, not all documents or information may be submitted through this option.

The supporting attached may contain a lot of information that would be difficult for the taxpayer or tax consultant to arrange and explain to tax officials adequately. Also, certain tax officials are not tech-savvy, which causes more understandability issues in this COVID Era.

As a resolution, providing proper references in the cover letter or the mail body helps the tax official navigate the documents easily.

3. Automated notices from systems

Other than regular notices in GST, there are auto-generated notices from the system, which are sent to the taxpayer digitally signed by the tax officials. These notices are generated whenever there is any disparity in the information provided in various GST forms.

The issue over here is the timing of that notice. For instance, you received a notice for June 2021 in September 2021 stating some difference in ITC availed in GSTR-3B compared to GSTR-2A. But till September 2021 arrives, there is further update in GSTR-2A since it is auto-generated by the system. 

The department will not take any action on the previous notice sent. Also, the notice would not get cancelled or automatically updated based on the latest figures available. The taxpayer has to perform a further reconciliation for the satisfaction of tax officials.

As a resolution, do confirm the facts and figures from the portal and approach the tax officer immediately if there is any shortcoming. But with the emergence of GSTR-2B showing how much input tax credit is available to the taxpayer, the taxpayer has found some resolution to the issue.

4. Change of tax officials

It is a tough challenge where the tax official who knows the whole story of a particular assessment case vacates his office. In such a case, the previous tax official would try to close the case as soon as possible during his tenure.

But the problems arise when a new tax official is appointed. The new tax official might have to re-visit the facts of the case. They may demand additional documents for their satisfaction leading to a duplication of work for taxpayers and tax consultants.

The above list of challenges is not exhaustive and may change as per the facts and circumstances of the case.

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