Government Action on GST Demand Notices Brings Relief to Industry

In a significant development aimed at easing the burden on industries and GST taxpayers across the country, the government has announced a new protocol for issuing GST demand notices. Under this policy, the Directorate General of GST Intelligence (DGGI) must obtain approval from the policy wing of the Central Board of Indirect Taxes and Customs (CBIC) before sending any tax demand notices related to interpretation or classification matters.

This means that before initiating any action, DGGI, which oversees monitoring and enforcement of GST compliance, must seek clearance from higher authorities at CBIC, ensuring a more regulated and structured approach to tax demands under the GST regime.

DGGI, the central intelligence agency of CBIC, closely monitors tax obligations, unpaid taxes, instances of tax evasion, and inaccuracies in tax reporting within the GST framework.

Previously, there were criticisms that DGGI often issued notices to taxpayers and industries based on its own interpretations, which sometimes conflicted with the views held by taxpayers. This mismatch in perspectives resulted in disputes, delayed tax payments, and an accumulation of unresolved cases.

The objective behind this initiative is to minimize legal disputes, ensure that intelligence resources are strategically deployed where they are most necessary, and ultimately enhance both living and business conditions under the GST regime.

According to sources, this measure will enable DGGI to utilize its resources more effectively, resulting in more conclusive outcomes in cases and related demand notices.

In addition, during the 53rd GST Council meeting, several clarifications were approved, providing relief to various sectors such as foreign shipping lines, multinational corporations (MNCs), foreign airlines, startups, and others operating in India. These sectors had been dealing with numerous notices from DGGI.

According to sources, the recent notifications have effectively resolved the notices issued to these sectors, rendering them null and void. This has been settled on an "as is, where is" basis, bringing clarity and closure to the contentious issues.

For example, foreign shipping lines were dealing with notices amounting to approximately Rs 1 lakh crore, while foreign airlines were contending with notices worth Rs 15,000 crore. Additionally, multinational corporations (MNCs) were disputing around 300 notices totaling Rs 4,000 crore, according to sources.

"All these cases will now be resolved in favor of the respective industries, following the clarifications approved by the GST council," the sources emphasized.

According to sources, several cases related to the issuance of ESOPs (Employee Stock Ownership Plans), corporate guarantees, and similar matters will also be resolved.