Govt sends 'GST evasion' letters to 150 companies for forged sales data

Indirect tax officials have issued letters to over 150 companies in Pune, Hyderabad and Bangalore, for suspected underreporting of their sales figures and payment of less goods and services tax (GST).


Basically, data mining by the Central Board of Indirect Taxes Customs (CBIC) showed that these companies are paying 95 per cent tax from input tax credit and five per cent from cash. As such, the letters asked these companies to produce documents as such a low value addition looks fishy, officials said.


"This indicates that the value addition is very low, which technically does not appear to be in order, considering your field of supply," one of the letters said. The letter says that it appears that the true value of outward supply (sale) is being suppressed to the extent of getting the tax liability discharged through ITC, so as to avoid payment of tax through cash.


The data analysed belonged to the first eight months of the GST rollout.


Except for the first three months of the GST rollout, the Centre and states combined never got Rs 900 billion in 2017-18. The letters asked the companies to bring self-certified or CA-certified statement of sales from July, 2017 to March, 2018, statement of ITC availed during the period, brief write-up on the business and value addition on outward supply. The letters were sent through e-mail and reply could also be sent online. This is different from the earlier regime, when letters on hard paper used to go.


The department may serve notices on companies, if their replies are not found to be satisfactory, officials said.


M S Mani, partner with Deloitte India, said, “Since we are in the early days of GST, caution needs to be exercised by both the tax authorities in interpreting data and taxpayers in submitting data to avoid incorrect inferences.” Sources said, depending on the notices, some of the companies may approach court.

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