The taxpayers are now in trouble as the income tax department has started detailed verification of transitional credit claims made by them under the new Goods and Services Tax ( GST ) regime and has sent notices to them asking to produce a large volume of documents within seven days.
One such notice has asked for “copies of Cenvatable invoices i.e inputs, input services, and capital goods for the period 01.04.2016 to 30.06.2017.” This alone would entail hundreds of pages of invoices over a period of 14 months, even as these notices require a plethora of other documents under 12 other categories of mandatory submissions.
Under the GST regime, rolled out on 1st July 2017, the businesses can claim credit for the central taxes (excise and service tax) paid on the stock bought in the pre-GST regime but sell after July 1, when the new tax law came into existence. However, nearly 9.5 lakh assessees have claimed a massive Rs 1.6 lakh crore as such credits till the December 27 deadline, which shocked the Government.
Suspecting fraud, the department-initiated investigation, which didn’t yield a conclusive result due to the paucity of manpower required for detailed investigation. As a result, the government decided to select the top 50,000 assessees in terms of the claims for further analysis.
As per the notice issued by the Government, a taxpayer selected for the exercise needs to submit “a note on all the goods manufactured/services provided by the company and their treatment in the previous indirect taxation regime vis-a-vis the GST regime”. Besides, the assessee has also been asked to provide service and central excise returns for the April 2016 to June 2017 period.
“….submit above-said documents within a week of receipt of this letter. It is to note that no extension of time shall be given to submit the required documents”, the notice said. It added that non-compliance of the letter would invite penal action as per law.
