Small taxpayers must be diligent in monitoring GST demand notices, according to experts.
A recent ruling by the Supreme Court of India upheld the Patna High Court’s decision to dismiss a taxpayer’s writ petition challenging a GST assessment order.The order in the Vishwanath Traders case has broad implications for professionals, small business owners, and micro, small, and medium-sized enterprises (MSMEs). This happened as a result of several of them going directly to the high courts to seek relief from a demand notice that was issued as a result of a delay in their side’s filing of an appeal.A response (appeal) to a demand notice must be submitted within three months, according to Sunil Gabhawalla, founding partner of a CA firm, who spoke to TOI. If there is a delay, the jurisdictional appellate commissioner may be contacted to request an extension for one month.The only option, he continued, is to file a writ with the high courts if more than four months have passed.The assessment orders, which may include sizeable demands and are served online via the GST portal, are often overlooked by small taxpayers. Because of this, it frequently takes them longer than four months to learn about the demand.
The process of serving notices online through the common portal first started in the financial year 2020–21, according to Manish Gadia, partner at the chartered accounting firm GMJ & Co. Unfortunately, small taxpayers lack the bandwidth to regularly check the portal. Notices and demands have accumulated in the cases of numerous such taxpayers. Even worse, since a few months ago, bank accounts have been frozen for non-payment. Usually, the small taxonomy at this point.
According to tax professionals, the emails and texts notifying the taxpayer of a demand notice (that is uploaded on the portal) are not always sent. An SME or MSME typically provides contacts that are those of employees. High attrition rates further indicate that such messages are ineffective.When the Supreme Court concurs with a High Court’s decision to reject a writ petition, the path of the issue raised becomes difficult.The Supreme Court’s order, according to a quote from Gabhawalla in the TOI, “literally closes all doors available to such taxpayers, despite a correct legal interpretation.”
“The entire sum will have to be paid if the option of filing a writ petition is closed. Frequently, a high-pitched tax demand is made, along with significant fines and a component of required interest, he continued.The tax experts advise SMEs to pay closer attention to demand notices and to be more vigilant. According to TOI, the government may also think about amending the act to allow for delayed appeals in genuine cases involving SMEs and small taxpayers.