Stop immediately all unproductive works  of GST officials

Time and again, through various articles published in taxtmi.com,  it is brought to the notice of the concerned tax officials for awareness as well as for improved future performance that the GST Laws are binding on all including tax officials and GST officials are not above the law.  This message has not properly reached the concerned tax officials and by way of issuance of a show cause notice by raising fictious demands which are most likely to be set aside by GSTAT or High Court or Supreme Court at a later date, several damages are done which are listed below.

1. In the first place, the tax officials  own time, energy, efficiency, expertise and several connected resources are wasted as nothing is gained by them when the SCN or OIO or OIA is quashed/ set aside at a later date, except that they help tax professionals to have more cases.
2. In the second place, all these fictious demands are unfortunately confirmed in most of the cases at adjudication level and the first appellate authority mostly reject the appeal under flimsy grounds in most of the cases, which forces the taxpayer to spend lot of energy, time, money and other resources to get his interest protected, which in case used for development of business would result in additional improved collection of GST due to volume increase in business.
3. In the third place, when the case enters the jurisdictional  high court or GSTAT, the valuable and precious time of the top tax professionals and the highly learned judges are also spent on unproductive issues which  otherwise could be used in a much purposeful manner.
4. Lastly, when a knowledgeable tax professional sees the demand, he wonders how a superintendent or Tax Official could raise such demand without application of mind. Even a layman, who is focused on business is able to appreciate that the demand has been raised incorrectly.

It is a known fact in GST law  that the payment to the supplier is required to be made within 180 days, in order to ensure that ITC is eligible. However, in a large manufacturing unit having turnover in thousands of crores per annum, how  is it possible to prove that each and every payments are made within 180 days in respect of all the cases?. The records are open to tax officials and by applying required skills, techniques and intelligence, the tax officer is bound to establish that payment is not made within 180 days before raising any demand on this count.

However, a huge demand is raised in a single SCN on trade payment issue and the way in which the demand is raised is furnished below for creating awareness among all tax officials to understand that the demand is baseless.

The relevant extracts are furnished below for spreading the message amongst all concerned.

As per the second proviso to Section 16(2) of the CGST Act, 2017 read with Rule 37(1) of the CGST Rules, 2017, if the recipient fails to pay the supplier the value of supply along with tax within 180 days from the date of invoice, the ITC availed shall be reversed along with applicable interest under Section 50. In the absence of documentary proof, the taxpayer has failed to discharge the burden of substantiating that the amounts disclosed under Trade Payables were within the 180-day limit. Accordingly, it is concluded that the entire outstanding amount as on 31.03.2022 is deemed to be overdue beyond 180 days. Since no reversal of ITC has been effected in respect of these amounts, the same is liable to be recovered along with applicable interest.

My only question is does not it go without saying that all debits in respective purchases or connected accounts which are made on or after 03/10/2021 are less than 180 days as on 31/03/2022?. How a prudent tax official could conclude that only because the required details were not furnished (despite the confirmation given that all creditors are less than 180 days by the taxpayer), the entire trade payables are older than 180 days?.

The one and only possibility of the assumption of the tax official becoming  true is when there are no purchases and connected activities during October 2021 to March 2022, which the tax official is also aware that such assumptions do not work.

Are we going to improve by way issuance of quality show cause notices in future which are within the legal framework or continue to raise only fictious demands, which does not serve any fruitful purposes except the statistics on demand raised.

Is it not the right time that the tax officials must be sensitized on this fictious demands at least when the GSTAT is in place.