How to respond to notices from GST department for payment of penalty, interest and late fees?

Notices from the tax department induce anxiety in the mind of taxpayers. Here the article is with some of the reasons for receiving such notices, precautions to avoid such cases and the procedure that has to be followed when any notice from the GST department is received by any taxpayer regarding payment of any Penalty, Interest and Late Fees.

REASONS FOR ISSUING GST NOTICES:

•  GST return for any tax period is filed after the due date.
• ITC claimed based on a document has been availed after the expiry of the prescribed time limit for claiming ITC*.

*Time Limit for claiming the ITC on a particular invoice is either of the following;

•  The due date of filing return for September of the following financial year;
•   The date of filing relevant Annual Return.

whichever is earlier.

PROCEDURE TO REPLY AGAINST GST NOTICES

These notices are sent to the taxpayer as a reminder to pay the Interest in terms of section 50 of the CGST Act OR in case where ITC has been availed beyond the expiry of the time limits to do so.

In response to the notice, the taxpayer should:

• Discharge its interest liability on the late payment of tax amount; OR
• If the case is of ineligible ITC, then ITC must be reversed by paying equivalent tax amount along with the applicable interest.

STEPS TO RESPOND AGAINST GST NOTICES

1. Login on the GST Portal with your credentials.
2. Move the cursor on Services > User Services > My Application.
3. Select option of “Intimation of Voluntary Payment-DRC-03” and click on New Application.
4. Under the option of “Cause of Payment” select “Voluntary” as these notices arrived without any SCN numbers.
5. Fill the required information such as section number, Financial Year, details of payment of Tax, Interest, Penalty, etc.
6. A challan is created with the amounts entered and is set off by the balances of electronic cash ledger and electronic credit ledger.
7. Check the verification checkbox and enter the name of the authorised signatory and click on create challan.
8. Further of this the steps are as according to the mode of payment selected while creating challan. Here the draft statement of Form DRC-03 is made available for download.
9. Verify the details, check the checkbox and name of the authorised signatory and click to “File”.
10. A confirmation message with the option of filing with DSC or EVC will be displayed on the screen. Select whichever is applicable.

NOTE:  The amount of interest and penalty is set off by the balance of cash ledger only.

PRECAUTIONS TO BE TAKEN TO AVOID SUCH GST NOTICES FROM DEPARTMENT

To avoid the notices and long procedures of their replies the following precautions should be taken;

1.   All returns should be filled regularly before the due dates.
2.   Before filling any return make sure that all the details required by the return are declared properly.
3.   Claim ITC as soon as possible within the time limit prescribed in the act for claiming ITC.
4.   Make sure no ITC is availed which contravenes the law.

Conclusion

One should take care after taking the GST Registration that all the returns and compliances are done on time and with the help of GST Consultant or professional person. All such notices if received by any concerned party should be addressed to the department in the specific process as prescribed by the department with a proper drafted reply.