GST Show Cause Notice Lawyer in Ahmedabad

Overview and Legal Basis of SCNs in Ahmedabad

A Show Cause Notice (SCN) under GST in Ahmedabad is a formal demand issued under Section 73 (non-fraud) or Section 74 (fraud/suppression). The process involves DRC-01A (intimation), DRC-01 (notice summary), and DRC-06 (reply). For Ahmedabad’s robust manufacturing and trading base, SCNs often focus on ITC, valuation, and movement of goods.

Common Grounds for SCNs in Ahmedabad Matters

Input Tax Credit (ITC): Ineligibility of ITC on capital goods, inputs used in exempt supplies, and issues related to vendor non-compliance.
Valuation Disputes: Particularly in cases of related-party transactions and stock transfers between different company registrations.
Job Work Compliance: Discrepancies in documentation (delivery challans, ITC-04) and failure to receive goods back within the stipulated time.
E-way Bill and Movement of Goods: Mismatches between e-way bills, invoices, and physical movement, or undervaluation in e-way bills.

Procedural Steps for an Effective Reply

Analysis of Notice: Scrutinize the SCN for allegations related to ITC, valuation, or job work. Verify the period and quantification.
Evidence Collation: Compile purchase orders, invoices, contracts, job work challans, e-way bills, transporter records (LR/GRN), and stock registers.
Reconciliation: Prepare detailed reconciliations of ITC claimed vs. GSTR-2B, and stock movement as per books vs. e-way bill data.
Drafting the Reply (DRC-06): Draft a detailed reply addressing each allegation with evidence. For job work, provide a trail of challans. For valuation, provide the basis as per GST rules.
Filing and Hearing: Submit the reply via the GST portal and prepare a factual synopsis for the personal hearing, focusing on the operational realities of the business.

Evidence and Documentation Checklist

Complete SCN with all annexures.
Purchase registers, stock registers, and production records.
Invoices, delivery challans, and e-way bills.
Job work agreements and ITC-04 filings.
GSTR-1, GSTR-3B, GSTR-2B, and annual returns.
Valuation workings for related-party transactions.

Hearing, Adjudication, and Post-Order Remedies

The personal hearing is an opportunity to explain the manufacturing or trading cycle. If the order (DRC-07) is adverse, an appeal can be filed under Section 107.

AMLEGALS – Ahmedabad Office

For assistance with GST Show Cause Notices in Ahmedabad, You may connect with our local office at info@amlegals.com or call on 91-8448548549.

Frequently Asked Questions (FAQs)

1. How do we defend ITC on capital goods if the SCN alleges ineligibility?

The defense requires providing the purchase invoice, proof of capitalization in books of accounts, evidence of receipt and use in the course or furtherance of business, and proof of payment to the vendor.

2. What documentation is essential for job work compliance disputes?

Properly prepared delivery challans for sending goods, e-way bills for movement, entries in stock registers, and timely filing of Form ITC-04 are essential. Proof that goods were received back within the stipulated period (1 year for inputs, 3 years for capital goods) is critical.

3. How should related-party valuation be justified in a reply?

The reply must demonstrate that the valuation is at “arm’s length” as per the GST valuation rules. This can be supported by comparable transactions with unrelated parties, cost-plus workings, or a transfer pricing study.

4. What if the e-way bill has a minor error but there is no tax evasion?

For minor errors (e.g., a typo in the vehicle number), you can argue that it is a procedural lapse without any intent to evade tax. Provide evidence of the actual movement and the corresponding tax-paid invoice. The penalty, if any, should be minimal as per relevant circulars.

5. Is a physical copy of the reply required in Ahmedabad offices?

While the primary filing is electronic via DRC-06, it is a common and recommended practice to submit a physical paper book of the reply and annexures to the adjudicating authority for ease of reference during hearings.

6. How to handle an SCN alleging ITC mismatch based solely on GSTR-2A/2B?

The reply should assert that GSTR-2A/2B is a facilitative measure and not the sole determinant of ITC eligibility. Provide your own evidence (invoices, payment proof, delivery proof) to satisfy the conditions of Section 16 and cite judgments that support this view.

7. Can we ask for cross-examination of the officer who prepared the audit report?

Yes, if the SCN is based on an audit report containing factual findings you dispute, you can request to cross-examine the officer to challenge the basis of their observations. This is a principle of natural justice.

8. What is the consequence of not returning goods from a job worker in time?

It is deemed a supply from the date the goods were originally sent out, and you would be liable to pay GST plus interest on that transaction. Your reply must address this, either by proving the goods were returned or by paying the applicable tax.