This Person Dealing in Supply of both Exempted and Taxable Goods. They are Registered in GST Since 2017-18, From then they are filling only exempted and not Availing any ITC. In 2024 they have Received a notice for FY 2020-2021 form Department Stating that.
'Your Purchase Reflected in GSTR-2A Seems Taxable at the Rate of 12% and 18%, How come you have only filed Exempted Sales of 10,30,562.
Now the Department is demanding Tax on 10,30,562 at 18%, Now the person does not have any ITC Balance in their Electronic Credit Ledger,Since they did not availed any ITC at All.
In this case what can we do, Please Advice.
Taxpayer Challenges GST Notice for 2020-2021 Over Exempted Sales Reporting; Must Justify Exemption Claim and Transactions Validity. A taxpayer registered under GST since 2017-18, dealing in both exempted and taxable goods, received a notice for the fiscal year 2020-2021. The notice questioned why only exempted sales were reported when purchases appeared taxable at 12% and 18%. The taxpayer did not claim any Input Tax Credit (ITC) and is now facing a tax demand on exempted sales. Responses suggest verifying the genuineness of transactions, clarifying any discrepancies, and defending against potential misdeclaration claims. The burden of proof lies on both the taxpayer and the department, with the taxpayer needing to justify the exemption claim. (AI Summary)
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