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GST Department Issues New Year Notices: Corporates Brace for Legal Battles

As the clock struck midnight on New Year’s Eve, a slew of GST notices descended upon major players in India Inc, from Hindustan Unilever to ICICI Bank, HDFC Bank, and Eicher Motors. The notices, numbering in the thousands, targeted both large corporations and smaller GST taxpayers, citing discrepancies in input tax credit, turnover mismatches, and demands for unpaid taxes on expat payments. This last-minute rush was driven by the authorities’ race against the five-year deadline to raise claims under the GST regime.

Corporate Impact: Prominent entities like Hindustan Unilever are facing substantial demands, with HUL slapped with a notice exceeding Rs 400 crore. Several other multinational corporations (MNCs) have reported similar demand notices, contributing to the uncertainty surrounding the legality of payments to expats.

Legal Challenges and Response: The notices range from fractions of turnover to substantial amounts, triggering potential litigation for affected companies. LIC faces a demand of over Rs 800 crore, Eicher Motors Rs 130 crore, and ICICI Bank around Rs 27 crore. Companies are gearing up for legal battles, with some issuing statements asserting their compliance and intention to challenge the demands.

Deadline Pressures and Taxpayer Response: The surge in notices is attributed to the statutory timeline pressure, as December 31, 2023, marked the last date for issuing assessment orders for the financial year 2017-18. Taxpayers are urged to respond diligently, providing proper evidence to GST authorities, as another set of notices is anticipated in April, the extended deadline for the financial year 2018-19.

Call for Clarity and Amnesty: Tax experts highlight the need for clarity from the government and propose an amnesty scheme to settle routine matters without penal implications. The current situation challenges the ease of business promised, requiring businesses to invest significant efforts in data extraction, reconciliation, and legal preparations.

Conclusion: The flurry of GST notices on the eve of the new year not only signals potential legal battles for corporations but also emphasizes the necessity for proactive clarification and streamlined processes to avoid unwarranted litigations in the future.


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