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August 8, 2020

Delhi government sends notices to 5,584 companies for not filing GST returns

Delhi government sends notices to 5,584 companies for not filing GST returns

The Delhi government has sent notices to 5,584 companies for not filing GST returns and 36 similar notices to those who failed to have filed VAT returns, deputy chief minister Manish Sisodia said in a statement on 8th August, 2020.In its release, the government said that it was working to increase revenue for development works and also anti-COVID measures.

The Delhi government has reviewed tax collection of the last quarter. During the review process, it was found that 10800 companies registered under GST have either paid no tax or paid lesser tax to the Delhi government in the last quarter and action has been initiated against these companies.

So far in 2020, the Delhi government has collected around Rs3,777 crore in taxes, as against Rs5,792 crore in the corresponding period (January – July) the previous year.The notices were sent under GSTR Form 3A and VAT Section 59(2).

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What is GSTR 3A and Section 59(2)?

GSTR-3A is not a return. It is a notice issued to taxpayers who have not filed their GST returns. GSTR 3A will be issued by the tax authorities to a person not filing:

  • GSTR-3B (regular dealer)
  • GSTR-4 (Composition dealer)
  • GSTR-5 (Non-resident)
  • GSTR-6 (ISD)
  • GSTR-7 (Person liable to deduct TDS)
  • GSTR-8 (Person liable to collect TCS)
  • GSTR-9 (Annual return)
  • GSTR-10 (Final return)

Section 59 of the Delhi Value Added Tax Act 2004 pertains to Inspection of records. According to Section 59(2), the Commissioner may, for the proper administration of this Act and subject to such conditions as may be prescribed, require any dealeror any other person, including a banking company, post office, a person who transports goods or holds goods in custody for delivery to, or on behalf of any dealer, who maintains or has in his possession any books of accounts, registers or documents relating to the business of a dealer, and, in the case of a person which is an organisation, any officer thereof to

  • produce before him such records, books of account, registers and other documents;
  • answer such questions; and
  • prepare and furnish such additional information;

relating to his activities or to the activities of any other person as the Commissioner may deem necessary.

According to Manish Sisodia, Deputy Chief Minister and Finance Minister:-

  • Several sectors such as auto, electronics, e-commerce, insurance, pharma, financial services, consulting, security and healthcare were not affected by the pandemic.
  • While around 935 companies under these sectors have paid no tax for the first quarter (April – June) of the 2020-21 financial year, as many as 2,017 have paid less than 50% of what they had in the first quarter of the previous financial year (2019-20)
  • There are 35 such companies who have not filed tax returns for the fourth quarter of 2019-20 as well as the first quarter of 2020-21.
  • Delhi government will strictly scrutinise the reasons behind not filing tax returns by these companies from unaffected sectors and that the government has so far scrutinised 15,000 companies.

The extended time period granted for the filing of GST return for the first quarter of 2020-21 got over in July 2020. The Delhi government is also identifying the taxpayers evading tax.

The department has been able to recover ₹10 crore from two such defaulting companies in the last week. The department is also analysing the tax payment profile of such taxpayers along with their overall tax profile in the previous quarters.

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