GST Notice (Under Section 73)

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Student
12 Points Joined April 2018

This Person Dealing in Supply of Taxable Goods. They are Registered in GST Since 2017-18 ,From then they are filling only exempted supply and not Availing any ITC. In 2024 they have Received a notice for FY 2020-2021 form Department Stating that. 
"Your Purchase Reflected in GSTR2A Seems Taxable at the Rate of 12% and 18%, How come you have only filed Exempted Sales of 10,30,562.
 Now the Department is demanding Tax on 10,30,562 at 18% , Now the person does not have any ITC Balance in their Electronic Credit Ledger,Since they did not availed any ITC at All.

In this case what can we do, Please Advice.

 

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On 13 February 2025 at 21:49 Report
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GST Consultant
15986 Points Joined March 2013

First analyse the reason why it was supplied under exempt..if supply under exempt was correct then cite the reasons....if it was wrong and your outward supply was indeed taxable then GST has to be paid...it doesn't matter whether you claimed ITC or not nor does it matter whether or not you recovered gst from buyer..

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On 14 February 2025 at 10:22
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Chartered Accountant
746 Points Joined January 2012

You need to pay tax on value taxable supplies. Amount receipt will be treated as inclusive of GST.

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On 16 February 2025 at 18:46
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Master in Accounts & high court Advocate
9037 Points Joined December 2011

Given the scenario, it appears the person has been dealing with taxable goods, but only reported exempted supplies since 2017-18, without availing any Input Tax Credit (ITC). The GST department has issued a notice for FY 2020-21, questioning the exempted sales of ₹10,30,562, as the purchases reflected in GSTR2A seem taxable at 12% and 18%. The department is demanding tax on ₹10,30,562 at 18%, but the person doesn't have any ITC balance in their Electronic Credit Ledger, since they didn't avail any ITC. In this case, the person should: - *Verify the exempted supplies*: Double-check if the supplies were indeed exempted, and if so, under which category (e.g., *absolute exemption*, *conditional exemption*, or *supplier-based exemption*).¹ - *Reconcile GSTR2A and GSTR1*: Ensure that the purchases reflected in GSTR2A match the exempted sales reported in GSTR1. - *Respond to the notice*: Provide a detailed response to the GST department, explaining the exempted supplies and supporting it with documentation. - *Consult a tax professional*: Seek guidance from a tax expert to ensure accurate compliance and to address any potential penalties. It's essential to address the notice promptly and provide a clear explanation to avoid any further complications.

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On 16 February 2025 at 22:15


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