Central GST authorities have started summoning businesses with a set of 12 key documents pertaining to FY17-18, the GST roll-out year, for closer scrutiny suggesting an aggressive approach against suspected tax evasion.
This has left the industry scared with many of them terming the move arbitrary. Many tax experts pointed out that several records called by the department are already with them and hence, such a demand is unreasonable.
Industry sources said that records called by the central GST authorities include various GST returns (GSTRs), GST registration certificate, copies of annual report, Income Tax returns, reports of cost, tax and internal audits, cash ledger and work orders, among others.
Bipin Sapra, partner at EY, said that GST audits are being ordered even where GSTR 9C has been submitted and the GST authorities have reconciliations of the financial data and tax paid.
"The audit should be based on queries if any on the basis of returns already filed. The information sought is elaborate and is available with the authorities. Given that most big units have multi state registrations, it will be an epic task to get the audit done in all the states for each year. There needs to be a centralised audit of these records to avoid undue hardship and promote ease of doing business in India," Sapra told IANS.
With pressure mounting on the field officers for higher GST collection, there has been more focus on curbing GST evasion and leakage. This week, the Revenue Department held a meeting with senior GST officials from both Centre and states and drew up a nine-point strategy to plug loopholes in the system.
Archit Gupta, Founder and CEO, ClearTax, said that government has been taking an aggressive stand against taxpayers.
"However, both government and the taxpayers should place increasing reliance on the systems data and use technology to improve compliance. Harassing taxpayers comes with limited benefits, but using technology for both compliance and audit is beneficial. The government will soon implement rules to make sure provisional ITC credit does not exceed 10 per cent.. this will leave taxpayers with no choice but to use technology for reconciling their data for ITC purposes," Gupta said.
With many states opposing the idea of rate increase to augment GST revenue, the government has directed its focus on anti-evasion measures. From April this year, e-invoicing would be implemented for certain categories of businesses.
Vivek Jalan, Partner, Tax Connect Advisory Services LLP said that the root cause of the notices is the directions given by the Commissionerate and CBIC to the field formations for going all-out on GST scrutiny.
Further, such directions have given field officers the opportunity to take arbitrary actions.
Jalan said that lower GST collection was not the only result of evasion but more of the lower GDP growth and the record-low consumption level.
"The higher GST collection will not happen in this way (sending notices to taxpayers). There has to be higher GDP growth and consumption growth to mop up more revenue," the tax expert said.
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