GST suspensions up 25% over compliance lapses

GST registration suspensions due to procedural and compliance-related lapses have increased by nearly 25 per cent over the past year, according to city-based tax experts. They say many genuine businesses are facing suspension not because of tax evasion, but due to procedural issues.

A city-based chartered accountant, requesting anonymity, said, “A large number of GST registration suspensions that we are seeing today are triggered by procedural lapses such as non-filing of returns, non-updation of bank details or non-response to notices, rather than deliberate tax evasion. Many genuine businesses realise their registration has been suspended only when they are unable to issue invoices or their customers refuse to transact with them.”

Another chartered accountant said, “Whether it is denial of Input Tax Credit due to a supplier’s default or compliance action arising from mechanical processes, genuine businesses spend significant time and resources resolving issues despite having no intention to evade taxes.”

CA Anjali Choksi, president of the Chartered Accountants Association, Ahmedabad, said, “Many of the cases being witnessed are the result of mechanical compliance failures rather than deliberate attempts to evade tax. Businesses often overlook routine requirements, which can trigger notices and eventually lead to suspension of their GST registration.”

Tax experts said once a GST registration is suspended, businesses face difficulties in carrying out normal operations, including issuing tax invoices and conducting regular business transactions until the compliance issues are resolved.

Choksi said, “One of the biggest unresolved concerns continues to be the denial of Input Tax Credit (ITC) due to supplier defaults. In several cases, buyers purchase goods, receive valid tax invoices, pay GST through banking channels and comply with all requirements. However, they later receive notices because the supplier failed to file returns, the supplier’s registration was cancelled retrospectively, or the supplier was later found to be non-genuine.”

She added, “Another challenge is the inability to amend GSTR-1 in certain situations, while some favourable High Court rulings are not being uniformly followed at the field level, increasing the compliance burden on taxpayers.” 

A senior city-based chartered accountant, requesting anonymity, said, “Most business owners focus on paying taxes but ignore routine compliance. By the time they realise the mistake, the registration has already been suspended.”

A senior GST official said suspensions are initiated only after provisions under the GST law are triggered and are meant to ensure compliance. 

Source : https://www.ahmedabadmirror.com/gst-suspensions-up-25-over-compliance-lapses/81917737.html