The Central Government, being puzzled by the number of transitional credit claims after the rollout of Goods and Services Tax regime, may now issue notice against 162 Companies and may also ask them to submit their Value Added Tax (VAT) returns of earlier tax regime.
The indirect tax body Central Board of Excise and Customs (CBEC) had earlier issued a directive to tax commissioners to verify GST transitional credit claims of over Rs 1 crore made by 162 entities.
According to a report in The Economic Times, such companies which collectively have claimed about Rs 65,000 crore in transitional tax credits, would be issued notices in the coming weeks.
Notices would be issued to companies and explanations would be sought for the amounts claimed in transitional credits. The indirect-tax department has also asked some Hyderabad-based infrastructure businesses to produce last year’s VAT returns, the report said.
In the transitional credit form TRAN-1 filed by taxpayers along with their maiden returns for July, businesses have claimed a credit of over Rs 65,000 crore for excise, service tax or VAT paid before the GST was implemented from July 1.
The Goods and Services Tax (GST) regime allows tax credit on stock purchased during the previous tax regime. This claim is available only up to 6 months from the date of implementation of GST.
For the specified high value cases, officials have to check whether the credit claimed matches the closing balance in returns filed under pre-GST laws. A report has to be sent by September 20. The issue was first discussed at the meeting of the GST Council in Hyderabad earlier this month while reviewing the tax collections under GST.
