• In the recent scenario, the role of government officials is no longer restricted to passing laws rather making everyone adhere to these laws is a new challenge faced by them. Some Taxpayers are intentionally or unintentionally getting themselves engaged in the activities of evading tax which ultimately results in the loss of revenue of the department and hampers the economic development of the country.
  • As a result, the lawmakers must keep a close watch on taxpayers who are concealing facts to evade taxes. To keep a check on the non-compliant taxpayers, the government officials have stepped into their new role of watchdogs.
  • It is the need of an hour to catch hold of such taxpayers to ascertain whether the tax payments are being made judiciously in accordance with law or not.
  • All the demand and recovery goings-on under GST starts with the issuance of show cause. Therefore, notices and demand orders are being issued by the commissioner in substantial figures to mitigate the number of fraudsters. Thus, it is essential to understand the root causes of show cause notice to become a compliant taxpayer.
  • A show-cause notice (Abbreviated as “SCN”) is a formal communication between the department and a person, requiring the latter to show cause as to why he should not pay the amount defined in the notice along with interest. Thus, before passing any order, an opportunity of being heard is given to the taxpayer.
  • If the proper officer is satisfied with the explanation or facts produced before him, he may modify the liability specified in the notice.

The show because notice is issued due to following reasons:

From heavy penalties and demand notices?

  • Before service of notice, when default in payment of tax arises due to reason other than fraud, then one must pay the amount of tax along with interest-based on his ascertainment or the tax as ascertained by the proper officer and inform the proper officer in writing. But in case of fraud, along with tax and interest, a penalty equivalent to 15% of such tax should be paid.
  • On receipt of such information, proper shall not serve notice in respect of the tax so paid or any penalty payable under provision of the Act.
  • But if the proper officer is of opinion that the amount so paid falls short of the amount payable, then he shall proceed to issue the notice.

Thus, it can be concluded that strict actions are taken against the taxpayer if he or she is found giving wilful misstatements or suppressing the facts or information in the return, statement or report, or any other document furnished under GST Act,2017. Also, failure to furnish any information on being asked by the proper officer in writing is an offense under GST.

As a result, it is very important to note that if greed is stronger than the development of an economy, there will be suffering.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.

Posted by: CA Tarun Kapoor

AKGVG & Associates

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