GST Litigation: 5 Proven Strategies for Handling GST Litigation
As a business owner registered under GST, you may receive a notice from the authorities. With the right strategies, you can easily handle the litigation.
The introduction of the Goods and Services Tax (GST) has streamlined the fragmented indirect taxation system in India. However, as with any other taxation-related laws, GST has also witnessed its fair share of disputes and litigations. Including tax refunds, input tax credit claims, return filing, and more. Also, the frequent changes that are being brought about through the various GST council meetings are making compliance tougher on taxpayers. Which inevitably leads to disputes and litigation with the authorities.
If you’re a business owner coming under the purview of the Goods and Services Tax, you need to be aware of how to handle GST litigations. This will ensure that you’re well-prepared if you ever encounter such a situation. That said, here are 5 strategies that you can follow to appropriately and effectively manage litigations.
1. Get Yourself Up To Speed With the Law
Since the introduction of the Goods and Services Tax in the year 2017, it has gone through several changes, both major and minor. Even the GSTN portal has been updated multiple times. And with every GST council meeting, there seem to be more changes being introduced to the taxation system. Although these changes are being implemented to streamline GST, they’re leading to major problems. Taxpayers are finding it very difficult to keep up with the different changes, which is ultimately leading to issues with compliance.
However, because ignorance of the law isn’t a valid defence, it is important for business owners, especially those with higher transaction volumes, to stay on above the law. There are several free online resources that you can use to get up to speed with the taxation system. Eminent publishers have even come up with detailed GST guides to help taxpayers become conversant with the law.
If that isn’t enough or if you’re finding it difficult to understand the various concepts, you could always seek the help of a tax professional.
2. Thoroughly Examine The Notice
If a discrepancy is detected by the GST authorities, taxpayers are usually served with a show-cause notice (DRC-01). The notice contains details of the discrepancies or offences and gives the taxpayers time to reply to the notice, which is typically around 15 to 30 days.
If you, as a taxpayer, receive a show cause notice from the authorities, here’s what you would have to do.
- ●Firstly, check the Document Identification Number, also known as DIN.
- ●Then, make a note of the contravening sections or provisions of the GST law for which the notice has been issued. This will help you understand the nature of the discrepancy.
- ●Check the period during which the contravention is said to have been committed. This will help you ascertain whether the allegation is within or over the limitation period.
- ●Thoroughly examine and note down the figures mentioned in the notice. Then, cross-check the same with your GST records to see if they’re accurate.
3. Form An Initial Opinion
Once the show cause notice has been dissected thoroughly, the next step is to determine if the contravention raised by the authorities is legal and valid. If it is, then it is advisable to comply with the suggested corrective measures present in the notice.
However, if the contravention or discrepancy raised by the authorities has no legal standing or is not valid in your case, draft a reply to the notice accordingly. Simultaneously, start compiling documentary evidence like GSTR 2A, GSTR 1, and purchase and sale invoices, among others to make your case.
4. Work Extensively On Your Reply
The reply to the show cause notice sent by the authorities is very important since it can either make or break your case. When drafting a reply, there are a few things that you should keep in mind.
- ●Present a separate argument for every discrepancy or contravention listed in the notice, one after another.
- ●Back your argument with facts, figures, and provisions of the GST law.
- ●It is advisable to use examples or illustrations wherever you can to strengthen your argument.
- ●Submit all the documentary evidence like the aforementioned invoices, the uploaded GSTR 1 form, and the system-generated GSTR 2A concerning your case along with the drafted reply.
At any stage, if you feel that you’re not confident in drafting a suitable reply to the authorities, don’t hesitate to seek the help of a tax professional. In the case of GST, you will most probably be required to submit your reply online by logging into the GSTN portal.
- 5.Represent Your Case
In some cases, especially minor ones, the reply submitted by you would most probably be more than enough to pass a conclusive order. However, depending on the assessing officer, you may even be asked to appear personally and represent your case. In such a situation, confidently attend the hearing and present your case orally.
Remember to carry all the documents relevant to the case with you and present them to the assessing officer to make your case. Here again, you can hire a tax professional to represent you during the hearing.
Conclusion
It is natural to be perturbed by a show cause notice from the GST authorities. However, by following the 5 strategies mentioned above, you can easily handle litigation without much fanfare. Keep in mind that the reply you submit on the GSTN portal plays a huge role in making your case. Therefore, always make sure that you draft a legible, extensive reply tackling all the issues mentioned in the notice with facts.
And finally, back your reply with appropriate documentation such as the forms and returns filed by you including GSTR 2A and the various purchase and sale invoices.