Departmental GST Audit, Investigation and Litigation

The introduction covered the reason for implementing the Goods & Services Tax (GST) in India. The key topics covered in this webinar are the verification process done by the Tax authorities, how the litigation gets translated, and how the verification moves into the litigation phase.

After an overview of the Department GST Audit, Saket Patawari - Executive Director, Indirect Tax – Nexdigm, spoke on the criteria for selecting the audit, along with the timelines of the audit process depending on various scenarios.

Saket then dives into the audit process flow by illustrating using a flow chart containing eight stages. Here, Saket points out that although there is prevalent strong-arming by the tax authorities, the taxpayer is not liable to pay the outstanding dues. At this stage, the tax authorities can only issue a Show Cause Notice (SCN), leading to litigation. Post which, the amount of tax to be paid could be reduced under the right circumstances.

The webinar touches upon the various requirements of data that the tax authorities require for risk assessment, reconciliations, and special areas of verification. Here, Saket mentions that tax authorities look for the GSTN being mentioned in the place of business. This is commonly missed out and leads to a penalty if found missing.

Next, Saket talks about four noteworthy points for submitting documents that one should always keep in mind. One of these points was that conversations take place via email and tax authorities sometimes use a free-to-use email ID. Here, the taxpayer must request the tax authorities for their official email IDs to be safe from data leakages or fraud.

The webinar then flows into the next segment, i.e. investigation. The tools of investigation include inspection, search, seizure, and summons. It further uncovered other tactics the tax authorities use to intimidate the taxpayer and get any information. Subsequently, Saket mentions some valuable courses of action one can take to make their case against the tax authorities stronger, provided they have enough evidence to back their claims.

Then, there is also a discussion on the several litigation options, the different applicable penalties, and the circumstances where the person under litigation could be exempt to some amount of the initially proposed tax.

Post an insightful question-answer round, the webinar concluded by instilling in the taxpayer’s minds that if the event does arise where one has to face verification, investigation, or litigation, they must not panic and should instead handle the situation calmly. Deadlines can be extended, statements can be rectified, allegations can be cross-examined, and the tax along with the accrued interest can be reduced. These hold true provided that the taxpayer has sufficient evidence and reasoning to support their case.