• Notification Date: 23-08-2023
• Notification No: N/A

Small taxpayers need to be vigilant in checking up on GST demand notices: Experts

Recently, the Supreme Court of India upheld the order of the Patna High Court where it dismissed a writ petition filed by a taxpayer against a GST assessment order. 
 
In the case of Vishwanath Traders, the order has wide ramifications for Small Medium Enterprises (SMEs), Micro, Small & Medium Enterprises (MSMEs), ‘small businesspersons’ and professionals. This occurred because several of them approach the high court's directly for remedy against a demand notice which is due to a delay in filing an appeal from their side. 
 

Sunil Gabhawalla, founding partner of a CA firm, told TOI that a response (appeal) to a demand notice must be made within three months. In case of a delay, the jurisdictional appellate commissioner can be approached for seeking a one-month extension. 

In case more than four months have passed, the only recourse available is to file a writ with high courts, he added. 
 
Many small taxpayers do not keep track of the assessment orders, which could contain significant demands and are served online through the GST portal. As a result, many times, the four-month period passes before they are aware of the demand raised. 

Manish Gadia, partner at GMJ & Co, a firm of chartered accountants, said to TOI, “The process of serving notices online through the common portal first began in financial year 2020-21. Unfortunately, small taxpayers do not have the bandwidth to check the portal on a day-to-day basis. In the case of many such taxpayers, notices and demands have piled up. To make matters worse, since the past few months, bank accounts are being attached for non-payment. Typically, at this stage, the small taxpayer becomes aware of the notice.” 
 
Not always are the emails and text messages informing the taxpayer of a demand notice (that is uploaded on the portal) sent, as per tax experts. The contacts provided by an SME/MSME are typically those of an employee. Further, high attrition means such messages do not serve their purpose. 

The path of the issue raised becomes challenging with the apex court agreeing with the decision of a High Court in not entertaining a writ petition. 
 
“Though a correct legal interpretation, the Supreme Court’s order literally closes all doors available to such taxpayers,” TOI quoted Gabhawalla. 

“If the avenue of filing a writ petition is shut, the entire sum will have to be paid. Often, the tax demand is high-pitched and substantial penalties are imposed... plus there is an element of mandatory interest,” he added. 
 
According to the tax experts, it is important for SMEs to be more alert in checking up on demand notices. The government may also consider amending the act to permit delayed appeals in genuine cases of SMEs and small taxpayers, TOI reported.