ASMT 10 - SCN

Scenario

A business entity, let's call them XYZ Pvt Ltd, received a notice in Form GST ASMT-10 from the tax authorities, alleging a discrepancy in their GST returns for the month of January 2022. The notice, with reference number XXXXXX dated XXXX, highlighted that XYZ Pvt Ltd had reported sales of Rs. 100 in their GSTR 3B for the said month, while supplier M/s ABC Ltd had shown TDS deducted under Section 51 in GSTR 7 amounting to Rs. 120. Consequently, the tax authorities questioned why there was a shortfall in tax payment and why interest and penalty should not be levied against XYZ Pvt Ltd.

Upon receiving the notice, XYZ Pvt Ltd thoroughly reviewed the allegations and prepared a detailed response to address the discrepancy:

1. Explanation of Time of Supply: XYZ Pvt Ltd referred to Section 13 of the Central Goods and Services Tax Act, 2017, which determines the time of supply for services. According to the law, GST liability arises at the time of supply, which is determined based on specific criteria outlined in the section.

2. Summary of Time of Supply: XYZ Pvt Ltd summarized the conditions under which a taxpayer becomes liable for GST payment, emphasizing that it occurs only when an invoice is issued, consideration is received, or the supplier records the receipt in their books of account.

3. Legal Precedent: XYZ Pvt Ltd cited a relevant CESTAT Kolkata order in the case of M/s Luit Developers Private Limited, wherein it was held that Form 26AS figures cannot be solely relied upon to determine service tax liability without satisfying the conditions specified in the law.

4. Request for Personal Hearing: XYZ Pvt Ltd requested a personal hearing as per Section 74(5) of the Act before any order or decision is passed against them, and they urged the tax authorities to drop the SCN issued against them based on the provided explanation.

In summary, XYZ Pvt Ltd's response highlighted the importance of understanding the legal provisions regarding the time of supply and emphasized that the discrepancy in GST returns cannot be solely based on GSTR 7 figures without satisfying the conditions specified in the law. They also exercised their right to request a personal hearing before any adverse decision is made by the tax authorities.

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