Leading companies get GST notifications on credit claims; responds sought within hours

Item and services tax( GST) officers sent notifications to hundreds of companies throughout Gurugram, Mumbai and Bengaluru on Friday, requiring they reply with exhaustive lists of documents within hours.

The notifications sent out to firms including Google India, Honeywell International, DLF City Centre, Panasonic, Hitachi Zochen, Yamaha Music India, Suzuki Motorcycles, leading banks and insurance provider, among others, pertain to transitional credit declared for pre- GST stocks. The notice, examined by Business Standard, said:” … Your organisation has been marked for preliminary verification … in order to determine the accuracy of Transitional Cenvat Credit … you are requested to send the documents on concern by today (Friday) night favorably.”

The drive– labelled unrealistic by tax consultants– comes amidst slowing earnings collections and significantly high transitional credit claims worth Rs 1.3 trillion. The unscripted verification of documents and related details follows regulation from the Central Board of Import Tax and Customs to tax officers to validate claims of credit over Rs 10 million.

The dealers who got the notifications are being asked to send this details amidst many statutory return filings in the months of December and January.

The tax officers have, nevertheless, claimed the deadline to send out the replies by Friday night was not strict, and attributed the drive to suppressed GST collections. They stated about 2,000 companies were taking 90 per cent of input credit and, for this reason, the focus was on them. Claims could be greater due to duplication, since the companies were registered at one location previously for the function of paying central excise but were now filing returns in each state, they added.

The documentation requirement includes ‘Main Import tax Return’ Types 1, 2 and 3 for January-June 2017, service income tax return for October 16-June 17, estimation sheet for credit gettinged in TRAN-1 application and GST Electronic Credit Ledger. In addition, it has actually asked for a statement of inputs, operate in progress, and finished items.”While the scrutiny of shift credits may be needed in some cases, companies ought to be given adequate time to respond with details. Some of the details being looked for by the tax authorities will require to be worked out with appropriate details and, thus, it would be better if just appropriate information are looked for from just those taxpayers who have availed extreme credits during transition,”said M S Mani, partner, Deloitte India. Revenue collections touched the most affordable in November at Rs 808 billion, significantly lower than the federal government’s expectation of Rs 920 billion each month. Finance Secretary Hasmukh Adhia took a conference of centre and states officers last month to evaluate the earnings position and to do an analysis for the first 5 months given that the application of the new tax regime viz-a-viz last year. “What is extraordinary is that such notifications are being issued to all and sundry, irrespective of any evidence of incorrect filing. It appears that the majority of the dealerships have been chosen on an arbitrary basis and provided with notifications to submit an extensive set of files,”stated Harpreet Singh, partner-indirect taxes, KPMG. The GST Council had actually permitted business to declare 100 per cent input tax credit by publishing excise payment billings for the period prior to July 1. In case of unavailability of invoices

, the Council had permitted 40 percent input tax credit through TRAN-2. The limit on input tax credit was raised to 60 per cent from 40 per cent of GST liability on items with tax rate above 18 per cent in the June 4 conference. Besides, the entire 100 percent input tax credit might be declared on high-value products above Rs 25,000 with a chassis number. Tax professionals said such notifications are issued to curb malpractices of those dealerships that have actually moved unlawful transitional credits.” However, the authorities have actually not been considerate to understand the time that would be needed to look at information like working sheet for credit gettinged, source documents or invoices for the exact same, statement in regard of inputs, work in development and finished goods for the duration,”a tax specialist, numerous of whose customers have got such notices, said. Singh said such an action by the tax authorities to enhance revenue would definitely not help in developing an environment of trust. “It does not augur well for the government’s image of producing a tax-friendly environment, “he added.