The introduction of the Goods and Services Tax (GST) in India was celebrated as a landmark reform-ushering in the promise of "One Nation, One Tax." But for many taxpayers, professionals, and businesses, this ideal has turned into a recurring nightmare. Below are just a few of the nightmares plaguing the GST landscape:
1. GST Portal
The GST portal is not as smooth and user-friendly as it appears. You might know where to look for notices and orders-in the "Notices and Orders" tab. But where are they actually placed? Under "Additional Notices and Orders." Who would imagine that main notices would be listed under the additional category? And if these are missed-which happens often-see Point No. 2 to understand the consequences.
Many features of the GST portal are still evolving, but explaining this to officers becomes very difficult. For example, in most cases of GST registrations migrated from the Service Tax regime, the old HSN still appears instead of the updated SAC, leading to absurd mismatches between inward and outward supply classifications.
There is still no provision for virtual hearings on the GST portal, despite the government mandating them. In cases involving GST refund SCNs, additional submissions cannot be uploaded online and need to be filed manually.
There are countless features that need to be upgraded or newly implemented on the portal to make life easier for taxpayers.
2. Appeal Process
God should not do it with anybody. You lost a case / missed a notice and the demand is confirmed. What do you have to do to come out of the case? Either accept the demand or contest it. But if you are going to contest it, the GST law mandates a mandatory pre-deposit of 10% of the disputed tax amount or 10% of the penalty amount (if there is no tax) before the appeal can be admitted. This pre-deposit poses a significant financial burden on you.
Adding to the strain, the appellate process is often slow irrespective of the fact GST law mandates to decide the appeal in one year of its filing. The cases are dragged for long periods due to limited resources and high litigation volume and also causing prolonged uncertainty. Whereas the fact is not hidden from anybody that the chances of winning at the first appellate level are very low.
And if by God's grace you win the appeal, getting the pre-deposit back is like chasing a dream. There's no automatic refund mechanism. You must file a refund application, receive a Show Cause Notice, reply to it, and then wait for either sanction or rejection-taking another 2-3 months at minimum.
3. E-Way Bill Errors: Heavy Penalties for Honest Mistakes
To err is human, but if you're registered under GST, you're expected to be superhuman. And if you're issuing an E-way bill, you need divine precision.
A single minor or unintentional mistake can turn into a nightmare. If your truck is intercepted by GST authorities and even a tiny error is found-like a wrong pin code or vehicle number-you're liable for heavy penalties (200% of tax amount or 50% of the goods' value). Even when there's no intention to evade taxes, no one will hear your side-the burden of proof lies entirely on you. And the SOPs issued by the department in E-way bill cases only favour the department.
Your only choice? Pay the penalty, get the goods and vehicle released, and then file an appeal. And you already know how that cycle plays out. Structured penalties like these can wipe out your working capital. Despite all the slogans about ease of doing business, the ground reality is completely different.
4. ITC Denial: Buyer Penalised for Supplier's Default
What happens if you've paid your supplier and he defaults? Despite court rulings stating that the supplier should be targeted first-and that recovery from the recipient can only be made if the supplier is absconding-the department usually starts recovery from you.
Why? Because you're traceable and compliant. You end up paying the price for being honest. Even though you've paid the tax and satisfied all ITC conditions, your supplier may default-he may not pay taxes or may issue fake invoices. You're held responsible for something totally beyond your control, even if you've done nothing wrong.
5. GST Audits or Assessments
In this era of self-assessment, it's hard to understand why departmental audits and assessments still exist in such forms.
In these proceedings, a large number of documents are demanded-even though most of the required data is already available on the GST portal, which the department can easily access. Although virtual hearings have been introduced to reduce physical interface, the on-ground reality remains stressful, giving assessees serious nightmares.
6. Excess Tax Paid: Refunds Delayed
Even a single mistake is not acceptable under GST. You are finished if you lose your mind. If by mistake any taxes have been paid in excess, your shoes will get worn out but you still won't be able to get the refund. Refunds must be automatic but realities are weird and troubling. God will not show these days to anybody.
7. Summons & Investigations
One day you might be visited by an unexpected guest in your office-GST officers. How will you feel? Your first reaction will be: why are you here? What have I done? The reply is: your supplier is involved in goods-less invoicing, and you are also involved in it. What you get-nightmares.
Even after instructions by the Board regarding the manner and procedures of inspections and summons, how these should be done - what are the duties and obligation of officers and taxpayers - but everybody knows how these are actually implemented.
8. Procedures
No matter how much we speak, procedures are hardcore and must be followed seriously. For example, an exporter forgets to file the Letter of Undertaking and later receives a notice for non-compliance with the procedure-irrespective of the fact that all export conditions have been satisfied he will suffer from heavy penalties and tax demands - because a paper he has not filed. The fate is then left to the courts. One missed paper and your business gets hampered. There are many procedures in the law which, if not complied with timely, you already know the results.
Now, how to get sweet dreams?
1. Track the GST portal regularly
Keep checking both the 'Notices & Orders' and 'Additional Notices & Orders' tabs for any pending notices. Reply with full facts, legal provisions, and case laws. Always request a hearing and attend it. Mark your presence during hearings. Most states now allow virtual hearings-don't miss them.
2. Double-check E-Way Bills
Ensure all details like supplier, recipient, goods, HSN, pin codes, and vehicle details are correct. Strictly implement the maker-checker concept while preparing E-way bills.
3. ITC: The basic rule is-know your supplier first
- Do a physical verification of the business location.
- Check the filing table on the GST portal-Is it a regular filer or filing returns with delay? Act accordingly.
- Take an indemnity bond from him for any tax defaults.
- Check the registration-ensure that your HSN and their HSN match.
- Don't deal with defaulters; it will land you in big trouble.
- Check your 2A/2B on a regular basis and do a robust reconciliation periodically.
4. Understand the reason behind assessments or audits
Always try to find out why you have received a notice for GST assessment or GST audit. Being a self-assessment mechanism, if you are receiving a notice, it means something has been missed. Be alert in advance, and if you are in a business where exemptions are being claimed, kindly ensure robust documentation and calculations behind your claims so that notices can be replied to comprehensively and accurately.
5. Verify the challans thoroughly
Cross-verify the amounts, tax head, and description before creating a challan. An additional zero can cause working capital issues. Everybody knows the reality of getting refunds from the tax department.
6. Be prepared for summons or inquiries
Always ask the authorities in your replies to summons and inquiries: what are the reasons to believe? What made them issue the summons or inquiry letter? There is a circular from the department that summons is the last resort to collect information and should be issued only in the course of an inquiry. If you are asked in summons to tender your statement, then try to find out from the department-why you have been called, what you have done. That's why we say: your books and records must be GST-compliant so that you can come out of these troubles easily.
7. One missed procedure and you are in big trouble
- For example, you forgot to file the Letter of Undertaking; your entire export will be denied despite fulfilling all export compliances.
- You closed your business and your GSTIN got cancelled, but you forgot to file GSTR-10 (final return). Now what's next? Penalties and interest.
Get an assessment of your business from a GST perspective by a GST professional and prepare a list of procedures and compliances to be followed. To save yourself from hassle and trauma, follow the law diligently.
Authored by: Gaurav Arya, CA and Aarchi Jain, Budding CA
Disclaimer: This write-up is based on the experience, struggles, failures, and knowledge of the authors. The views expressed are personal and are not intended to target any individual or system. The sole objective is to make taxpayers aware and vigilant while complying with GST laws.
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