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The high court of Telangana recently ordered that no individual or taxpayer will be getting input tax credit until unless he had filed the GST returns.Also, the court has said that in case he had missed the return filing he is liable to pay the penalty on the tax amount. This would impact the majority of dealers who have been using the ITC on inputs for the reduction in cash payments.As per the judgement of Justices V Ramasubramanian and P Keshava Rao, it said, “…until a return is filed as self-assessed, no entitlement to credit and no actual entry in the electronic credit ledger takes place. As a consequence, no payment can be made from out of such a credit entry.”

The company on which the case was being decided argued that the interest has to be calculated on the net tax liability and not on the total tax amount however the court supported the otherwise and held the tax department correct.As per a tax lawyer, “The ruling has very wide implication as almost all taxpayers, who delayed filing returns and have paid interest only on cash payment of tax and not on the GST amount set off by them through ITC. The issue will open a floodgate of litigation and demands of interest by GST officials are imminent. Even CAs while auditing Annual GST Returns, which have to be filed by June 30, may be required to point out short payment of interest due to delayed set-off.”

GST Department Planning New Tricks on Tax Evaders

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Tax sleuths have planned a fresh crackdown on traders practicing tax evasion of Goods and Services Tax (GST) by pursuing new registration for their businesses without dismissing a prior one.Right and duties coexist simultaneously & where it is right, there is a duty to be fulfilled by the citizens. The Goods and Services Tax (GST) law gives the right to an individual to have separate registration on the same Permanent Account Number (PAN) in the same state. But people are not using this facility in fair fashion instead they are using the same to evade taxes which were due under earlier registration.

The Central Board of Indirect Taxes and Customs (CBIC) has given strict orders to the tax officers to carefully check and analyze the information like details of proprietor, director/members of managing committee of associations/board of trustees etc, furnished by an applicant in the fresh registration form in the context of any cancelled registration having same details. Recently, a huge number of registrations has been aborted by tax officers due to non-compliance.