GST has been rolled out about 30 months back, and it is dubbed to a major tax reform postindependence, but the reality is it is a business process reform. As it is a new tax regime and in the initial days of implementation, the Government is lenient on the taxpayers. This is given as legroom for the trade and industry to adapt to the new laws but some sections of the taxpayers are misusing the same as there is not much activity happening on search, seizure and inspection. In the initial days, the Government has instructed the officers not to make field visits and inspections but this is being continued for quite some time. This has resulted in a lot of fraud taking place in the ecosystems. Every alternative day we see in newspapers on ITC frauds, or fake invoices etc., All this has resulted in lower tax collections and also lower compliance in return filing
If we see the above table, we could see a constant dip in the return filing percentage for the first four months of the current Fiscal year. *Source - http://gstcouncil.gov.in/sites/default/files/gst-statistics/Return-Filing-Summary-2019-20.pdf GST Collections started with a bang in April 2019 but after that, we could observe a gradual fall in the collections. There was a clear dip in Aug/Sep & Oct but improved during Nov 2019. All these trends are giving a room of suspicion on the tax evasion by some unscrupulous taxpayers in the system. To ramp up the tax collections tax evasion measures have been rolled out from time to time. As part of it, the e-invoice is being introduced, and matching is being made mandatory and restrictions on the availing input tax credit.
Apart from these measures, the department is using data analytics and started issuing notices to errant taxpayers who are not filing their returns at regular intervals. As a part of this process, notices have been issued to such taxpayers.