Many big names of India Inc, from Hindustan Unilever to ICICI Bank to LIC, have received tax demand on the eve of new year as authorities sought to meet the deadline to raise claims. Even many smaller GST taxpayers have also received tax demand. The notices range from mismatch of input tax credit, mismatch in turnover for various returns to demand for non-payment of tax on payments made to expats (in case of MNCs) for which demand has been raised.
For instance, Life Insurance Corporation of India (LIC) has been slapped with two demand notices recently. One notice of Rs 806 crore for alleged short payment of GST for 2017-18 for Maharashtra, the insurer said in a regulatory filing. The insurer shall file an appeal before Commissioner (Appeals), Mumbai against the said order within the prescribed timelines, it said.
In another instance, Life Insurance Corporation of India (LIC) said tax authorities have slapped a demand notice of about Rs 116 crore on it for short payment of Goods and Services Tax (GST) for 2017-18. The company has received communication/demand order for interest and penalty for Telangana state, LIC said in a regulatory filing. The corporation shall file an appeal before Joint Commissioner (ST), Hyderabad Rural Division against the said order within the prescribed timelines, it said.
Tax consultants said that several MNCs have received similar demand notices. There is no count on the number of notices as the Centre and state authorities have issued separate orders.
A tax expert said that since December 31, 2023 was the last date for issue of assessment orders for 2017-18, it has resulted in raining of orders on the eve of the new year. He also blames many GST taxpayers, who he says casually reply to notices without submitting proper evidence before GST authorities.
Under the tax laws, cases are “time-barred” and demand has to be raised within five years of filing of final returns. For 2017-18, the notices had to be issued by September 30 and demand orders had to be issued by December 31.
Pratik Jain, partner at Price Waterhouse & Co, told Times of India that even if a small percentage of these notices culminate into tax demands, the appeal process would entail substantial cash flow issues, given the requirement of pre-deposit of 10% at first level itself.”
He suggests that GST Council should consider reducing the quantum of pre-deposit required in the appeal process, while tax authorities should plan in advance so that such last-minute pressure situations are avoided.
Companies also face the prospect of being slapped with another set of notices towards April-end, the extended deadline for 2018-19.
Tax experts said that the current situation is far from the ease of business that was promised. “The spate of GST notices to businesses issued recently will require businesses to extract data for earlier years, reconcile the GST returns with the financials and in many cases the income tax returns as well, all of which will involve significant efforts by the tax and finance teams,” said Deloitte India partner MS Mani.
Another tax expert said that since a large portion of these notices are on routine matters, an amnesty scheme to settle such matters without any penal implications would be well received by businesses. Besides, it will help in ease of business.
