TaxTMI 
TaxTMI 
TaxTMI 
India’s GST was born out of a vision for minimal interface, maximum transparency, and self-policing through technology. Yet, as we enter its ninth year, compliance under GST is increasingly perceived as burdensome, adversarial, and enforcement-heavy—especially for small and medium taxpayers.
This final piece in the series explores the compliance paradox that GST now grapples with: a sophisticated tax technology ecosystem coexisting with deep-seated mistrust, excessive proceduralism, and growing taxpayer anxiety.
I. The Tech Revolution – Foundation of Compliance
Feature | Benefit (Intended) |
GSTN Portal | Unified filing and registration architecture |
E-Way Bill System | Nationwide traceability of movement of goods |
E-Invoicing (Rule 48) | Real-time reporting and fraud control |
Auto-populated ITC data for recipient matching | |
AIS/BOE linkage with Customs | Harmonisation between GST and import tax data |
In theory, these tools reduce manual effort and increase trust through data integration.
II. On-Ground Realities – From Self-Assessment to Systemic Scrutiny
Original Promise | Current Scenario |
Self-assessment with minimal human interface | Frequent summons, notices under Section 70, audit under Section 65/ 66 |
Seamless ITC based on valid tax invoices | Disallowance due to vendor non-compliance (Section 16(2)(c)), Rule 36(4), Rule 86A |
One nation, one tax | Multiple interpretations, parallel State-Centre scrutiny |
Technology-driven trust | Rule-based credit blocking, mismatch notices, rising litigation |
The balance is shifting from facilitation to suspicion.
III. Mismatches, Credit Denials & Section 16(2)(c) – The Silent Crisis
Input Tax Credit (ITC), the very soul of GST, has become a litigation minefield:
- Vendor Default = Purchaser Liability
Even where the buyer has paid tax and holds valid invoice, ITC is denied if the supplier defaults in GSTR-1/3B filings. - Rule 36(4)
Restricted ITC to matched credits, later increased to 105%, then rescinded—but created years of confusion. - Rule 86A
Gave officers discretionary power to block credit without adjudication—widely used, rarely reasoned. - Section 75(12) Interpretation
Treated GSTR-1 vs. 3B differences as tax unpaid, triggering demand directly without SCN in some cases.
These provisions have created a Kafkaesque environment for taxpayers—even bona fide ones.
IV. Procedural Rigidity vs. Business Reality
Provision/Process | Challenge Faced |
Overly complex for MSMEs, late fees punitive | |
Refund of unutilised ITC | Subject to Circulars, mismatches, restrictions (e.g. on capital goods) |
Adjudication timelines | Delays, retrospective actions, absence of binding precedents |
Input Service Distributor (ISD) compliance | Complexity in cross-charging between branches under common PAN |
Revocation of cancellation | Arbitrary cancellation of GSTIN for technical lapses, even when tax paid |
GST law increasingly relies on procedural compliance over substantive justice.
V. Enforcement Culture – A New Tax Terror?
Since 2020, the tone of compliance has noticeably hardened:
- Arrests under Section 132 (even in cases of alleged fake billing without recovery proceedings)
- DRC-01A coercion, often without SCN safeguards
- Denial of registration under Rule 9 without clear grounds
- Frequent inspections and surveillance, especially in sectors like manpower, metals, and transport
In effect, GST enforcement is moving away from compliance nudging to deterrence-based policing.
VI. Judicial Interventions – Relief Amid Rigidity
Court | Decision |
Gujarat HC (2020) – Rule 86A | Arbitrary credit blocking violative of natural justice |
Delhi HC (2022) – Bharti Airtel | Allowed rectification of GSTR-3B to claim missed ITC |
SC (2021) – Radha Krishan Industries | Laid down conditions for provisional attachment under Section 83 |
Madras HC (2022) – Sundaram Finance | Quashed cancellation of registration for procedural lapses |
But litigation is neither scalable nor sustainable as the primary dispute resolution mode.
VII. Building Trust – What Compliance Needs in GST 2.0
Reform Area | Recommendations |
ITC Restrictions | De-link Section 16(2)(c) from supplier default for genuine buyers |
Audit & Assessment | Introduce clear audit SOPs, risk-based scrutiny selection |
Notices & Recovery | Ensure speaking orders, time-bound SCNs, pre-SCN consultation as mandatory |
Introduce checks & review boards for credit blocking | |
Tech Infrastructure | Improve portal uptime, seamless GSTR updates, and multilingual support |
Small Traders | Exempt GSTR-9/9C or provide simplified returns for turnover < ?5 Cr |
VIII. Final Thoughts – Compliance is Not the Enemy
GST is a behavioural tax. If businesses are treated like suspects by default, even the best-designed tax fails in purpose.
We must remember:
Compliance is a journey, not an imposition. Trust and clarity are as essential as technology and enforcement.
GST@8 has seen impressive strides in digitalisation—but the next leap must be in compliance empathy, dispute prevention, and legal certainty.
By Navjot Singh, Chartered Accountant | Indirect Tax & Trade Policy Professional
This concludes our 3-part series on GST@8. If you’ve found this journey informative or have perspectives to share—from the trenches or from policy corridors—I invite you to join the conversation.