Responding to a GST Notice: A General Approach
Notices under the goods and services tax law range from a routine request for information to the commencement of a proceeding with real consequences. Reading which one you have received is the first task, and it determines everything after it. This note sets out a general approach; it is not a substitute for advice on the notice itself.
Guide
Read what the notice actually is
Notices are not all the same. Some seek an explanation of a discrepancy between returns. Some intimate a proposed liability and invite a response before any determination is made. Some initiate a proceeding to determine tax, interest and penalty. Some concern registration rather than liability at all.
The notice itself states the provision it is issued under, the period it concerns, what is being asked, and the manner and time within which a reply is to be made. Those four things should be extracted and written down before anything else is done, because they determine what kind of response is required and how much room there is to prepare it.
Deal with time first
Every such notice specifies a period for response, and the period is stated in the notice itself. Establish it immediately and work backwards from it, because assembling records takes longer than people expect and the reply is only as good as the material behind it.
Where the time available is genuinely insufficient, an extension may be sought — but that is a request to be made properly and in good time, not a reason to let the period pass. A reply filed late, or not at all, may result in the matter being decided on the material the authority already has, which is by definition the material that prompted the notice.
Establish the facts before framing the reply
Most notices arise from a discrepancy — between returns, between returns and the records of suppliers or recipients, or between what was declared and what an authority has been told by somebody else. The reply has to be built on a reconciliation, not on an assertion.
That means going back to the underlying documents: invoices, credit and debit notes, contracts, transport and delivery records, payment records and the books. Where the discrepancy is real, it is better to identify it yourself and address it than to deny it and have it established. Where it is not real, the reconciliation is what demonstrates that.
Framing the reply
A reply should answer what was asked, in the order it was asked, and should annex the material it relies on. A reply that argues generally without producing documents invites a further notice; a reply that produces documents without explaining what they show invites the authority to draw its own conclusions.
Where a proposed liability is disputed, the reply should state the grounds clearly, because the grounds taken at this stage shape what can be argued later. Where part of a liability is accepted, saying so plainly and dealing with the rest is usually more effective than a blanket denial that the record does not support.
What follows, and who does what
A reply may resolve the matter, or lead to a personal hearing, or be followed by an order. If an order is made, there are avenues of appeal against it, and those avenues run on their own timelines. Where an adverse order is a real possibility, it is worth understanding the appellate route before the order arrives rather than after.
It is also worth being clear about who does what. This is a firm of advocates. Advice on the legal position, drafting the reply and representation before the authority are work an advocate does. Preparation of returns and reconciliations is carried out with, or coordinated with, a chartered accountant, and audit and any certificate that only a chartered accountant may sign is their work, not ours.
Checklist
Practical Checklist
- Identify the provision and the periodBoth are stated in the notice, and both determine what kind of response is required.
- Note the time allowed for replyTaken from the notice itself, and worked backwards from immediately.
- Retrieve the returns for the periodAs filed, so that what was actually declared is established rather than remembered.
- Assemble the underlying recordsInvoices, credit and debit notes, contracts, transport records, payment records and the books.
- Prepare a reconciliationShowing how the figures in the returns relate to the records, and where any difference arises.
- Identify what is accepted and what is disputedSeparating the two makes for a stronger reply than a blanket denial.
- Draft the reply to answer the noticePoint by point, in the order asked, with the supporting material annexed.
- Keep proof of filingWhatever acknowledgement the manner of filing produces, retained.
- Understand the route if an order followsThe appellate avenue and its own timeline, established before it is needed.
Cautions
Common Mistakes
- Letting the period passThe matter may then be decided on the material that prompted the notice.
- Replying without reconcilingAn assertion unsupported by records rarely closes a discrepancy.
- Denying everythingA blanket denial that the record does not support weakens the parts of the reply that are sound.
- Producing documents without explaining themUnexplained annexures leave the authority to draw its own conclusions.
- Treating the reply as informalThe grounds taken now shape what can be argued later, including on appeal.
- Ignoring a hearingA personal hearing is an opportunity, and not attending is not a way of preserving a position.
- Assuming one professional can do everythingSome of this work is an advocate's; some requires a chartered accountant. Knowing which is which avoids delay.
See also
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Provenance
Authorship and Review
About this note
Published by H.R. Legal Associate, advocates, Lucknow, for general information.
Date published
Date reviewed
Important
Disclaimer
This note is general information about an area of law. It is not legal advice, it is not an advertisement or a solicitation of work, and reading it creates no advocate–client relationship.
What a particular notice requires, the time it allows and the consequences of an adverse order depend on the provision under which it is issued, the period concerned and the current state of the law and the notifications in force. Nothing here should be acted on without the notice itself being read and advice taken on it.
Procedures, limitation periods, court fees, stamp duty, government charges and tax rates change, and what applies depends on the facts of the particular matter. Nothing here should be acted on without advice taken on your own documents, and no outcome is promised or predicted.
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If a question on this page touches something you are dealing with, it should be looked at on your own documents. Sending an enquiry does not create an advocate–client relationship, and confidential documents should not be sent through this website.