Show Cause Notice Under GST Act

What is a Show Cause Notice?

Show Cause Notice (SCN) is a warning or notification  issued by a Courts, Competent Authorities or an Organization  for an identified default demanding a tax payer  to explain or to "show cause" in writing as to why the disciplinary/penal action should not be taken against the taxpayer for the identified  defaults.

Show cause notice is the first  obligatory communication served on the dealer proposing any demand under GST Act 2017, other than payment of interest under section 50 and non filing of returns under section 62 of the GST Act. The issue on SCNs need not necessarily conclude in demand for taxes.

Why is Show Cause Notice Issued?

1. Non filing of GSTR 3B and GSTR 1 for a period  beyond six months
2. Mismatch in GSTR 1 and GSTR 3B.
3. An individual who is liable to be registered under the Act has failed to register.
4. Short payment or non payment of GST Liability.
5. Mismatch in GSTR 1 and E way Bill.
6. Mismatch of ITC.
7. Excess claim of refund
8. Anti Profiteering
9. Failed to respond within the time limit.
10. E invoicing and e waybill mismatch.

Showcase notices shall be issued for the following

Show Cause Notice Under Section 76

Taxes earned but not paid to the government serve as the subject of Section 76. If any amount due to the government is not paid, the Proper Officer may issue  a GST show-cause notice to the registered taxpayer who is  obligated to pay the amount, mandating them to show cause why the specified amount was not paid.

Show Cause Notice Under Section 73

For any reason other than fraud or deliberate misstatement or suppression of facts, Section 73 pertains to the identification of tax which is not paid, underpaid, or erroneously returned, or input credit claims in excess.