Notices From Small Town Based GST Officials Alarming Financial Services Companies

GST Notices for Financial Services Companies

Small town based tax officials have sent written GST notices to many companies catering the financials services seeking details about the tax paid, revenue generated and organisational framework. This has germinated fear within these companies that if their compliance burden would rise.

Indirect tax officials have started scrutinising the companies based across India. A Mumbai based financial services company has received a written notice that reads, “Provide brief note of organisational structure, details of turnover whether taxable, exempt, nil rated or non-GST turnover.. details of place of supply,” 

Almost in every case, companies are already adhering to GST compliance and giving details to the same state’s capital based tax officials.

Under the GST regime, every company must have a Goods & Services Tax (GST) registration in every state. However, queries (if any) in this regard are raised by tax officials of the city.

In the context, mofussil tax officers turn their back on under a specific section of the GST Act which interprets that any company from any part of the nation can be interrogated by any indirect tax officer regarding any transaction. 

Taking an example of Andhra Pradesh. Andhra Pradesh based companies are registered in Hyderabad but they are receiving written queries from state’s small-town based indirect tax officials. 

However, top-level employees and partners of such financial services company do not go to bat for this interpretation by GST officials as they are of the view that  GST has already increased compliance burden on service providing companies and if the indirect tax officials from any part of the world would begin questioning them, it would lead to pressure upsurge on the companies.

In this regard, MS Mani, partner, Deloitte India, said, “The compliance requirements in GST for service providers are significantly higher than the erstwhile service tax regime and the need to respond to inquiries from various parts of the country leads to additional pressures on businesses. A single authority should be empowered to enquire/investigate all GST issues of a service provider instead of multiple authorities, which will lead to efficiencies on both sides,”

Abhishek A Rastogi, partner, Khaitan & Co. suggested, “The jurisdiction has been a subject matter of debate and in an ideal situation the jurisdictional officer should seek information related to compliance, procedure and other legalities”.

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