Implicit reliance on third-party data is the laziest inquiry ever. In GST, POs routinely lean on data such as 26AS or toll plaza reports to cast data-driven aspersions, particularly when making stunning allegations to deny credit under 16(2)(b). However, intelligence only suggests an allegation; it cannot eclipse trial and leaves Revenue's burden of proof entirely undischarged.
In the broader context of defence and strategy, taxpayers usually falter the moment such data-driven aspersions are cast. They blink and rush to tender detailed reconciliations, hoping to explain away the differences. This is a massive tactical error where a poor defence is presented as a good substitute for a weak investigation by the PO.
When you submit reconciliations to justify your self-assessment, you implicitly lend legitimacy to an otherwise illegitimate SCN. In pleadings, you must "accept, reject or replace" every fact-in-issue in the Order-at-Large (OAL). By attempting to explain away differences with data, you "replace" the facts, which immediately causes the onus of proof to shift away from Revenue and squarely onto you. Replace at your own peril.
A sound defence strategy requires the wholesale rejection of demands that implicitly rely on third-party data. Doing so exposes the jurisdictional defects of the inquiry and forces the PO to discharge their own heavy burden of proof. When purchases are bona fide, do not cower; clearly state your position and tabulate EWB data, GRIR, MRN, and settlement details to displace the premise of the alleged mischief completely.
Remember, a reply to any notice is a disclosure of your position, not a justification of your self-assessment. All it takes is to dispute the demand and firmly reject the allegations as contrary to the facts and the law.
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