Banks, FIs Told to Pro­vide Tran­si­tion Credit De­tails INFO SUM­MONS

Tax dept sus­pects some filed fake re­turns to claim higher credit for July

The Economic Times - - Companies: Pursuit Of Profit - Sachin.Dave@ times­

Mum­bai: The tax de­part­ment has sought ex­pla­na­tion from banks and fi­nan­cial in­sti­tu­tions, in­clud­ing multi­na­tion­als, on tran­si­tional credit claimed by them in July un­der the goods and ser­vices tax (GST) regime, two peo­ple with di­rect knowl­edge of the mat­ter said.

Deputy com­mis­sion­ers and as­sis­tant com­mis­sion­ers (cen­tral tax) have is­sued ‘in­for­ma­tion sum­mons’ in the last seven days seek­ing data in five spe­cific ar­eas “by e-mail/hard copy.” These in­clude past sales tax records; sum­mary of clos­ing bal­ance of tax (as of June); de­scrip­tion of the na­ture of cred­its; de­tails of ven­dor in­voices prior to July 1; and de­tails of pay­ments made to ven­dors and ser­vice providers af­ter July 1.

Tran­si­tional credit refers to tax cred­its on sales tax, ex­cise and val­ued-added tax ac­cu­mu­lated be­fore July 1 on pre-GST stock.

Such credit can be set off against GST li­a­bil­i­ties. GST was rolled out on July 1. Tax­men sus­pect that some com­pa­nies are mis­us­ing the pro­vi­sion and have filed fake re­turns to claim high tran­si­tional cred­its. Of the to­tal .₹ 95,000 crore GST col­lected in July, about .₹ 65,000 crore was claimed in re­funds or tran­si­tional credit. The move comes about two weeks

Un­der the scan­ner

af­ter tax of­fi­cers ques­tioned man­u­fac­tur­ing com­pa­nies on tran­si­tional credit claimed by them. ET was the first to re­port on Septem­ber 21 that about 5,000 such com­pa­nies had been ques­tioned by the tax­man over tran­si­tional credit claims. For now, tax of­fi­cers are only scru­ti­n­is­ing tran­si­tion credit for sales tax and ex­cise.

The data ob­tained from the banks and fi­nan­cial in­sti­tu­tions will be ex­am­ined for any dis­crep­an­cies. The firms said they haven’t been given much time to pro­vide the in­for­ma­tion.

“We had re­ceived the no­tice few days back and haven’t been able to sub­mit it due to the enor­mity of in­for­ma­tion sought,” said the fi-

Most busi­nesses have been busy in the sub­mis­sion of July GSTR 1 till 10th Oc­to­ber, af­ter which they com­menced work­ing on Septem­ber GSTR 3B, which is due on 20th Oc­to­ber. They are re­quired to work on the Tran 1 sub­mis­sion that is due on Oct 31st. This leaves them with no band­width to at­tend to such mat­ters (re­spond­ing to in­for­ma­tion sum­mons)

nance head of a ma­jor multi­na­tional bank. “A tax of­fi­cer called me to­day (Fri­day) and asked me to sub­mit the re­quired doc­u­ments by Satur­day.”

The fi­nance head cited the tax of­fi­cer as say­ing the tran­si­tional credit claimed by the bank was high.

“I tried to ex­plain that tran­si­tional credit has to be viewed in the con­text of our monthly tax outgo. But we will be sub­mit­ting the re­quired in­for­ma­tion nev­er­the­less by Satur­day,” he said. Ex­perts said many com­pa­nies are yet to sub­mit tran­si­tional credit de­tails, which has to be done through the Tran-1 form.

“Since the date for fil­ing the Tran-1 form has been ex­tended to Oc­to­ber 31, it would be pru­dent to com­mence any en­quiries there­after,” said MS Mani, part­ner, Deloitte In­dia. “It is ad­vis­able to con­sider the data sub­mit­ted in the Tran-1 form and then en­quire into those cases where any anom­alies are de­tected in­stead of sub­ject­ing the en­tire data sub­mit­ted by erst­while ser­vice tax pay­ers to any form of scru­tiny.”

The pres­sure on tax of­fi­cials in­creased af­ter a let­ter by a se­nior mem­ber of the Cen­tral Board of Ex­cise and Cus­toms (CBEC) was sent on Wed­nes­day to all tax com­mis­sion­ers. ET has seen the let­ter.

“In view of the ur­gency of the mat­ter, kindly have the ver­i­fi­ca­tion of tran­si­tional credit com­pleted on pri­or­ity (in re­spect of list of tax­pay­ers for­warded on 11/9/2017) and a re­port on the same to be sent on this of­fice not later than 15/10/ 2017,” the let­ter read.

The let­ter also asked tax of­fi­cers to sub­mit a de­tailed anal­y­sis of tran­si­tional credit claims. This is ex­pected to be sub­mit­ted by Novem­ber 3. CBEC had in Septem­ber sent a list to all com­mis­sion­ers and joint com­mis­sion­ers that in­cluded state-wise de­tails of com­pa­nies, the GST num­ber and tran­si­tion credit amount. Tax of­fi­cers had started call­ing all the com­pa­nies whose tran­si­tional credit num­bers seemed high to them.

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