First Suggestion to GST Council- Threshold limits on GST.

In my earlier article published on 09/02/2026, I had put forth three suggestions so as to bring in some improvement in quality in GST administration for which the suggestion was first to increase the threshold exemption limit so as to enable tax officials focus on improved tax collections.  The second one was to instruct officials to ensure that the cases in which the orders are passed passed by them are not set aside or quashed later by the competent court. The third one was to have a minimum of two or three GST Council meetings every financial year in future so as to resolve pending issues appropriately in a timely manner.

On a careful thought, one article for three suggestions is only entry and it requires minimum three articles per suggestion. Accordingly, I proceed to emphasis the paramount need to consider the increase in threshold exemption limit urgently as the requirement for this suggestion is justified as per the following points.

Quality: Section 73 as well as 74 have no application from 01/04/2024. This position may be irrelevant from taxpayer perspective whereas a tax officer is bound to follow the provisions of the Act meticulously. So far, I have come across 10 cases where orders have been wrongly passed under 73 for financial year 2024-25 without even knowing that this is impermissible.  The jurisdictional high court is forced to spend time on this minor procedural issue, there by the time, efforts as well as energy of taxpayer, tax professional as well as the jurisdictional high court are spent in unproductive way due the error committed by the tax officer. Should we continue to be silent spectator on this issue anymore?

Few of the tax officers handling adjudication matters informed me that they work for six days a week for 12 hours per working day as many of them are given additional charge especially at State Level. Moreover, the State Level officers themselves feel that their workload should come down for improving the quality of adjudication orders.

The following table depicts the time line requirements during 2025 and 2026

Thus,  it is evident that all the quarters ending on September 25, December 25 and March 26 are crucial as even if one hour is missed from deadline, the SCN/Order becomes non est. The officers are monitored by their controlling officers to ensure that all applicable SCN/Orders are issued in time as they do not have the time to ensure minimum quality.

The end result is that single SCN is being issued for multiple financial years which are subsequently quashed by the jurisdictional high courts. Wrong sections are applied resulting in subsequent setting aside of the SCN/Order. In order to address this issue, increase in threshold exemption limit as suggested in the previous article is a good solution.

The second aspect is that when the major portion of GST collection is from businessmen having huge turnover, (as admitted by Government), even if bottom most 5% of the GST registrations in terms of turnover are proposed to be cancelled, it may result in reduction in total registrations by up to 25%. These 25% low profile businessmen are brought out of GST Net, the Government may seem to loose small GST collection, which in reality is not going to be. When the reduced number of cases per tax officer comes down due to the above exercise, the focus automatically shifts to quality which ultimately results in improved GST collection and a drastic reduction in litigation. The time spent by GST officials on litigation  also comes down which may be focused on other activities.

In order to strengthen the above argument, let me analyse a live case handled by me with a state tax officer. He is posted in one of the southern states in India. The taxpayer observed some omissions in turnover during the period June 2021 to March 2022 in December 2022 when filing the GSTR 9. He voluntarily paid omitted GST with applicable interest on 09/12/2022 through DRC 03.

The State Tax Officer was aware of three important facts which he duly executed to ensure duplicate demand. For the year ended on 31/03/2022, SCN has to be issued by 30/09/2025 as the difference between two GSTR can not be brought under 74 accordingly SCN was issued on 05/06/2025. As the case has to be adjudicated latest by 31/12/2025, it was done so on 12/12/2025. In order to prove (?) that he has followed principles of natural justice, he gave three personal hearings on 27/10/2025, 06/11/2025, and also on 04/12/2025. The officer has doubly ensured that the taxpayer should not see the above four notices and with this motive posted all the four under ADDITIONAL NOTICES in the portal. The result was obvious. The taxpayer did not have any occasion to see the above notices. However, as the State Tax Officer, while passing the order on 12/12/2025 had almost 18 clear days to pass the final order, did not bother to send a mail or send the SCN by Speed Post or RPAD, even though several High Court orders have clearly held that this communication of posting under additional notices column may ensure compliance under GST Law but this is not effective communication.

What is to be noticed is that when the tax official noticed the differences in GSTR 3 and 9, he did not even bother to verify whether the applicable GST is still pending as on the date of issuance of SCN.

The taxpayer came to know about the adjudication order dated 12/12/2025 as the tax official promptly contacted the taxpayer to insist the taxpayer to pay the tax immediately as otherwise recovery action shall follow.  (Part one of the story. Part two shall be covered in next article on this topic).

My argument on the above case study is that SCN was issued on 05/06.2025 raising demand of GST which was already paid on 09/12/2022 itself. Amazingly, the demand is exactly for the same tax period and that too on the same issue for which payment was made through DRC 03 on 09/12/2022 itself establishing very clearly that this is a duplicate demand which resulted in duplicate proceedings.

The officer did not even have the time to verify the status of payment before issue of the SCN. I do not perceive, as a Chartered Accountant,  this as an opportunity to earn (As the Top Lawer Mr.Nani Palkhivala once said in a budget meeting at Chennai during early 90s that every wrong order passed by tax official is opportunity for tax professional ) but see this as a undesirable act of the tax officer which I strongly believe that must stop immediately to save harassment of taxpayers at least in future.

I conclude that if the taxpayer fails to pay applicable GST, whatever action that is possible under law should  identically facilitate to deal the duplicate demand in an appropriate manner. In my considered view, Department should take appropriate disciplinary actions on erring tax officials to bring more quality in adjudication. The idea of this article is to propagate the idea that GST collection must improve at least by 10% immediately by reducing the lowest turnover cases under GST Law by enhancing the threshold exemption which if done shall be a win- win situation for all concerned.  Hence, I appeal to authorities to consider this proposal for  implementation latest by 01/04/2027, if not earlier.