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Tax notices, summons served to pre-GST, dispute resolution cases
March, 08th 2021

With the current financial year drawing to a close, a series of tax notices and summons have been sent out to taxpayers from the indirect tax authorities in Mumbai and some other tax zones across the country. The queries through letters and summons relate to cases predating June 2017 rollout of Goods and Services Tax (GST) and also includes cases where taxpayers had opted for resolution under the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS), 2019 — a dispute resolution scheme for pending service tax and excise cases that was announced in the Budget for FY20.

Citing “an inquiry in connection with SVLDRS filed under voluntary disclosure under the Central Goods and Services Tax Act, 2017”, the summons sent to multiple taxpayers in Mumbai zone, have asked for service tax returns, balance sheets, profit and loss accounts, cenvat credit for financial years 2015-16, 2016-17 and 2017-18 (till June 2017).

The summons have been sent under Section 70 of CGST Act, which provides powers to tax officers to summon persons to give evidence and produce documents.

Separately, in some other cases, queries have been sent with a 7-day response deadline for cases relating to service tax payments before GST rollout, industry sources said.


Amid projections of lower revenue stream this year

Queries sent to the Central Board of Indirect Taxes and Customs by The Indian Express went unanswered.

An industry expert, who did not wish to be quoted, said the flurry of notices could be reflective of lower revenue stream in the aftermath of the Covid-19 pandemic, adding that tax authorities can initiate inquiry for a period backdating five years if there’s a case of mala fide intent. “Even though the SVLDRS scheme ended long ago, and applications were accepted then, tax authorities can ask for information within five years if there’s a mala fide intent,” the expert said.

The queries sent by tax authorities come even as the CBIC has separately directed its field offices to exercise utmost prudence and maximum caution in attachment of property of a taxpayer in cases involving GST evasion, stating that such a remedy can be considered only in cases involving evasion, fake invoicing and delay of more than three months in depositing tax collected and that the value of the property attached provisionally is not excessive.

The government has revised down its estimated revenues from direct and indirect taxes for 2020-21 financial year. GST mop-up is estimated to be lower by Rs 1.49 lakh crore and customs duty collections estimated to be lower by Rs 26,000 crore compared to the budget estimates for this fiscal.

The legacy dispute resolution scheme, SVLDRS, was announced by Finance Minister Nirmala Sitharaman in the Budget for FY20 to “allow quick closure” of the litigations pertaining to the pre-GST regime. Under this scheme, relief was to the tune of 70 per cent of the duty involved if it was Rs 50 lakh or less and that of 50 per cent if it was more than Rs 50 lakh. This was for cases pending in adjudication or appeal or in investigation and audit. In cases of outstanding arrears of revenue, the relief was 60 per cent of the duty amount if it was Rs 50 lakh or less and 40 per cent, if it was more than Rs 50 lakh.

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