The recent decision of India’s Supreme Court to uphold the Patna High Court’s ruling, which rejected a writ petition filed by a taxpayer against a GST assessment order, carries significant implications. The impact of this ruling extends widely to entities such as Small and Medium Enterprises (SMEs), Micro, Small & Medium Enterprises (MSMEs), as well as individuals categorized as ‘small business persons’ and professionals.
In the case of Vishwanath Traders, the ramifications of this decision are particularly pronounced. SMEs, MSMEs, small business operators, and professionals are directly affected, as they often resort to directly approaching the high courts seeking recourse against demand notices due to delays in initiating appeals.
According to Sunil Gabhawalla, a founding partner of a CA firm, the response (appeal) to a demand notice should be promptly made within three months. If there is any delay, individuals can seek an extension of one month by reaching out to the jurisdictional appellate commissioner. Beyond a period of four months, the only available option is to file a writ petition with the high courts.
It’s worth noting that many small taxpayers fail to monitor the issuance of assessment orders, which may carry substantial financial demands and are conveyed through the GST portal. Consequently, these individuals often realize the demand well after the four-month window has lapsed.
Manish Gadia, a partner at GMJ & Co, a chartered accountancy firm, highlighted that the process of delivering notices via the common portal began in the financial year 2020-21. Unfortunately, small taxpayers lack the capacity to consistently check the portal, leading to an accumulation of unnoticed notices and demands. Adding to the predicament, in recent months, bank accounts have been subjected to attachment due to non-payment, further alerting small taxpayers to these notices.
The challenge intensifies as the apex court supports the stance of the High Court in refraining from entertaining writ petitions on this matter. While this interpretation holds legal merit, the Supreme Court’s decision essentially closes off a crucial avenue for these taxpayers, as emphasized by Gabhawalla. With the possibility of filing a writ petition off the table, affected parties will be required to settle the entire sum. Frequently, these tax demands are inflated, accompanied by substantial penalties, and mandatory interest.
Tax experts suggest that SMEs must be vigilant in regularly checking for demand notices. There’s also a call for the government to contemplate amending the legislation to allow for delayed appeals in genuine cases involving SMEs and small taxpayers, as reported by TOI.
(Note: This revised version offers a more straightforward and active voice while conveying the essential information and implications of the Supreme Court’s decision on SMEs and taxpayers.)