‘Tool of harassment’: Ludhiana industrialists irked over ‘thousands’ of GST Dept notices

Flagging ‘thousands’ of notices being slapped by the state GST Department, local industrialists raised grave concern and called them “unnecessary”. The industrialists said GST notices must not become a “tool of harassment”.

They also alleged that many small firms had been waiting for GST returns since over six months ago.

The industrialists maintained that the large-scale issuance of GST scrutiny notices on MSMEs across the state had created uncertainty and led to an additional burden.

All Industries & Trade Forum (AITF) representatives said the developments will lead to unnecessary repeated interactions with tax authorities at a time when the Ministry of Micro, Small & Medium Enterprises (MSME) sector was already facing severe economic pressure. According to information compiled by the forum, around 40,000 to 50,000 scrutiny notices had been issued to MSMEs across the state in the recent months.

The forum demanded that the state government and the GST authorities immediately review the notices and withdraw cases where there was no substantive discrepancy or where the notices were generated or forwarded without proper examination of the records.

Forum president Badish Jindal and convener Narinder Bhamra said the notice in question, called ASMT-10, is legally meant to communicate a discrepancy identified during scrutiny of a GST return. Under the GST rules, the taxpayer is entitled to submit an explanation and if it is deemed acceptable, the officer is required to communicate it.

“The purpose of GST scrutiny should be to identify genuine tax discrepancies and not to create fear and panic among small businesses. If tens of thousands of notices are being issued without proper examination of the underlying transactions, it becomes a huge compliance burden on the MSMEs,” said Jindal.

The forum alleged that in many cases brought to its attention, the notices appeared to be based on routine or system-generated discrepancies and had been forwarded to MSMEs without adequate consideration of the actual business circumstances.

The World MSME Forum also echoed the issues. Its representatives said many notices were factually incorrect, repetitive, based on already reconciled information or unsupported by a substantive discrepancy. It said a taxpayer should not be forced into prolonged proceedings merely to establish what should already be clear from the records.

Bhamra said that such a system can increase the dependence of small businesses on intermediaries and professional assistance, increasing their compliance costs.

The World MSME Forum also questioned the priority being given to scrutiny notices when many MSMEs were waiting for GST refunds. According to the World MSME Forum, some MSMEs had been waiting for refunds for periods extending up to six months, creating serious working-capital problems for businesses.

“When the government expects every MSME to comply with GST requirements within the prescribed time, the government machinery must also discharge its responsibility of processing refunds within the statutory framework. An MSME can’t be expected to finance the government. It is happening with refunds blocked for months,” Badish Jindal said.

“We are not against legitimate scrutiny. Tax evasion must be investigated and legitimate tax revenue must be protected. The objection is to indiscriminate and inadequately examined notices that place an unnecessary burden on compliant MSMEs,” added Jindal.