The Goods and Services Tax (GST) has simplified India’s indirect tax structure, but non-compliance can lead to serious legal consequences. Here are the most common GST-related legal issues businesses face — and how to handle them.
1. Failure to Register for GST
Businesses with annual turnover above the threshold (Rs. 40 lakhs for goods, Rs. 20 lakhs for services in most states) must register for GST. Operating without registration is an offence that attracts penalties.
2. Late Filing of GST Returns
GST returns must be filed monthly or quarterly depending on your scheme. Late filing attracts a late fee and interest. Habitual late filing can trigger scrutiny and notices from the GST department.
3. Mismatch in Input Tax Credit (ITC)
If the ITC you claim does not match what your supplier has uploaded, the GST department may disallow the credit and issue a demand notice. Always reconcile your purchase records with GSTR-2B before claiming ITC.
4. GST Notices and Scrutiny
The GST department issues notices for various reasons — discrepancies in returns, suspected evasion, or routine scrutiny. You must respond within the specified time with proper documentation. Ignoring a notice leads to ex-parte orders and heavy penalties.
5. GST Raids and Investigation
In cases of suspected large-scale evasion, GST officers may conduct surprise inspections or raids. If your business faces a raid, do not panic — cooperate with officers while simultaneously contacting an advocate.
6. Cancellation of GST Registration
The department can cancel your GST registration for non-filing of returns for six or more months. You can apply for revocation within 30 days of the cancellation order.
How an Advocate Helps
A legal advisor with GST knowledge can draft replies to notices, represent you in hearings before the GST Appellate Authority, and help you avoid penalties through timely compliance.
GuruLegal provides corporate and tax legal advisory services. Contact us if you have received a GST notice or need compliance guidance.