GST Notice

[Sangeetha D]

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.

AI Summary

GST taxability challenge: substantiate exempt supplies with records to rebut purchase reflecting taxable inputs and avoid liability.
Department queries taxability where GSTR 2A shows taxable purchases but the taxpayer declared only exempt supplies and did not claim ITC. Taxpayer must substantiate exemption with books, inward supply records and accounts; the notice's language indicates prima facie scrutiny. Possible departmental actions include proceedings under Section 73 or Section 74, with the department bearing burden to prove wilful evasion while the taxpayer must produce evidence of genuine non taxability. Consequences may include lost ITC, assessments with interest and penalty, and time bar issues; the taxpayer should clarify supplies and contest incorrect credits.