New Delhi, In a surprising move, the GST department has issued tax demands to major corporations, including Hindustan Unilever, ICICI Bank, HDFC Bank, and Eicher Motors, just as the new year begins. This rush to meet the five-year deadline for raising claims has led to concerns and potential litigation.
Notices have been sent for various reasons, such as mismatched input tax credit, turnover discrepancies, and non-payment of tax on payments to expats, especially for multinationals. For instance, Hindustan Unilever faces a demand of over Rs 400 crore. The company asserts its proactive compliance and plans to challenge the demand.
Tax consultants report that several multinational corporations have received similar notices, creating uncertainty in the business landscape. The number of notices issued remains uncounted due to separate orders from central and state authorities.
The tax demands range from a small portion of turnover to substantial amounts, triggering concerns of potential litigation. LIC faces a demand exceeding Rs 800 crore, while demands for Eicher Motors and ICICI Bank are Rs 130 crore and around Rs 27 crore, respectively.
Tax advocate RS Sharma attributes the sudden surge in notices to both authorities and taxpayers, emphasizing the need for proper evidence submission.
Under the law, cases must be resolved within five years of filing final returns. The deadline for the 2017-18 fiscal year has resulted in a flurry of orders, with companies anticipating another round of notices in April for the extended deadline of the 2018-19 fiscal year.
Industry experts express concerns about the pressure on businesses and authorities due to the statutory timeline. Pratik Jain, Partner at Price Waterhouse & Co, suggests planning in advance to avoid last-minute situations. He also calls for a reduction in the required pre-deposit for the appeal process.
Deloitte India partner MS Mani points out that the recent GST notices will necessitate businesses to extract and reconcile data for earlier years, leading to increased efforts by tax and finance teams.
As the situation unfolds, businesses are gearing up for potential litigation to safeguard their interests, even with the requirement of a 10% pre-deposit at the first level of the appeal process.
The recent surge in GST notices to businesses has created uncertainty and increased workload for companies, tax, and finance teams. The demand for proper evidence submission and potential litigation are key concerns as authorities and businesses grapple with the statutory timeline.
