NEW DELHI: Taxpayers across India, including major corporations like Hindustan Unilever (HUL), ICICI Bank, HDFC Bank, and Eicher Motors, have been hit with tax demand notices by the Goods and Services Tax (GST) department. The surge in tax demands comes as authorities race to meet the five-year deadline for raising claims, working late into the night.
The notices cover a range of issues, from input tax credit mismatches to discrepancies in turnover for various returns. There have also been demands for non-payment of tax on payments made to expatriates, with multinationals facing the brunt of these demands. Companies like HUL have received demands of over Rs 400 crore, while other multinational corporations have also been targeted.
The number of notices issued is unclear, as both central and state authorities have issued separate orders. Some companies have received multiple notices within a short time frame. These tax demands vary in severity, ranging from a small portion of an entity’s turnover to the entire turnover, which could result in prolonged litigation. For instance, LIC has been slapped with a demand of over Rs 800 crore, including penalties, while the demand for Eicher Motors stands at Rs 130 crore and ICICI Bank faces a demand of around Rs 27 crore.
Tax advocates argue that taxpayers must take responsibility for the casual manner in which they reply to notices without submitting proper evidence to the GST authorities. Under the law, cases are time-barred and demands must be raised within five years of filing final returns. With the deadline for financial year 2017-18 now passed, companies may face another wave of notices later this year.
The sudden influx of notices has raised concerns about the ease of doing business and the burden placed on businesses to extract data from previous years in order to reconcile GST returns with financial records. Tax experts predict that this wave of tax demands will likely lead to increased litigation as companies look to preserve their interests, even if they have to deposit a portion of the demand.
To promote a more business-friendly environment, experts suggest introducing an amnesty scheme to settle routine matters without penalties. They also call for proactive clarification from the government on substantive legal issues to prevent unwarranted litigation.
While the GST department’s tax demand overdrive may serve its purpose in meeting statutory timelines, it raises questions about the efficiency and preparedness of authorities. Companies and taxpayers alike yearn for a smoother and more predictable system that allows for better compliance and reduces the pressure of last-minute notices.
As the dust settles on this recent tax storm, many hope that lessons are learned, and future tax administration is conducted with greater foresight and transparency. The Indian business community eagerly awaits government reforms that simplify the tax regime, minimize discrepancies, and foster a more conducive environment for growth and compliance.
