From insurance behemoth?LIC?to food delivery giant?Zomato, it's been a tough start to the new year for many companies. Why? It's because of the string of?GST?notices?that are suddenly being slapped on many companies in India, demanding?hundreds of crores. Let us dig deeper into what is happening.
On New Year's Day itself,?Life Insurance Corporation of India (LIC)?received a?GST demand notice of about Rs 806 crore for alleged short payment of Goods and Services Tax for 2017-18. LIC had received the communication/demand order on Monday for the collection of GST along with interest and penalties for Maharashtra state. A day later, LIC was slapped with another tax demand, this time for Telangana state, as per the ET report.
Earlier this week,?Hindustan Unilever (HUL) said it received a GST demand with penalties of Rs 447.5 crore from authorities in five states over issues such as the disallowance of GST credit and salaries, including allowances paid to expats. Last week, Zomato?received?a Rs 402 crore?show cause notice from the?GST?authorities over?unpaid tax?on?delivery charges?collected from customers.
Eicher Motors, Asian Paints, Nestle India, and ICICI Prudential are some of the other big companies that have received tax demand notices for the GST payment. The flurry of?GST?notices has stunned the corporations. These notices are for the recovery of tax liabilities, whether due to non-payment, underpayment, or erroneous claim of input tax credit, for the financial years 2018¨C19 and 2019¨C20.
All this comes at a time when the?gaming industry?is already facing a tax demand of around Rs 1.5 lakh crore; the?insurance industry?is contesting a demand of over Rs 5,500 crore; and the?real estate sector?has received a demand of over Rs 2,000 crore.
The GST officials say the?reason behind a sudden surge in tax notices is because they could be time-barred. "The law came into effect in 2017." "However, the government offered relaxation during the pandemic. But now, with the pandemic behind us and many cases getting time-barred, a slew of show cause notices (SCNs) were issued before September 30. This was done with the purpose that there is no litigation on the ground of time-barring,¡± said a senior government official.
Exemptions and relaxations during?COVID times led to the piling up of tax demands. And if the notices were not sent now, the cases could be time-barred later. Experts say the notices will lead to litigation as many concepts are vague and both regulator and assessee have no clarity.
A flood of GST notices can also be attributed to?technology. Tax authorities use technology to issue thousands of time-sensitive notices at the click of a button. An automated return scrutiny module is integrated into a backend application that leverages data analytics to identify discrepancies and risks in GST returns. Consequently, discrepancies in statutory returns are flagged up, and a system-generated scrutiny notice is issued to the taxpayer.
Another reason why so many companies got notices in the last months of 2023 was a?looming deadline. For fiscal 2018¨C19, the deadline was December 31, 2023, which was extended to March 31, 2024.
An official told PTI last month that a GST appellate tribunal would be put in place in the next four to five months and efforts were being made to identify infrastructure, following which the selection process for members would begin.
Also Read:?Rakesh Jhunjhunwala's Stock Prediction For?Zomato?Comes True
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