Sunil Sethi & Co.
Advocates and Tax Consultants
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GST ITC on Auto-pilot
95% of Indian businesses claim less ITC. Sub-optimal input tax credit management impacts profitability by up to 8%, and that's a lot! We help businesses unlock their working capital through 100% ITC claims*, which most tax teams face a challenge with.
Indirect Taxes & Customs
Compliance in GST returns leads to reduced departmental interventions, and queries while aiding business growth
We use AI-enabled tools to optimize GST-ITC claims
How ITC on Auto-pilot works?
We connect directly to the taxpayer's accounting system for Auto-recons
We then use AI-enabled software to match data with 100% accuracy avoiding any transcription errors
Our clients save on taxes and unlock working capital as we help them determine only eligible ITC relying on the AI-enabled software which is updated whenever there is a change in the law to avoid inconsistencies
* The intricacies of India’s Goods and Services Tax (GST) regime continue to evolve. As of October 1, 2024, the government has reinstated the Input Tax Credit (ITC) matching scheme with a suite of new functionalities, which includes the automatic integration of B2B invoices uploaded in GSTR-1 into the recipients' Invoice Management Systems (IMS). This shift underscores the importance of accurate data reconciliation, with taxpayers now relying on GSTR-2B for monthly validation while GSTR-2A remains relevant for year-end adjustments. The reconciliation process, once confined to GSTR-2A, has been supplanted by the static return system in GSTR-2B, streamlining the monthly comparison of purchases with reported data. However, GSTR-2A, being a dynamic return, continues to play a role in annual filings—taxpayers must ensure that no duplications occur by consolidating these inputs judiciously. Compliance vigilance is paramount, with severe consequences for taxpayers failing to adhere to updated regulations. A new mandate for B2C supplies exceeding ₹1 lakh, effective from September 1, 2024, necessitates their reporting in GSTR-1 under B2CL. Additionally, negative liabilities in GSTR-3B will now auto-adjust, and GSTR-1 submissions face blockages if bank details remain unverified. The government’s activation of GSTR-9 and 9C forms for the fiscal year 2023-24 further indicates the tightening compliance framework. Perhaps the most significant change on the horizon is the hard-locking of auto-populated values in GSTR-3B, set to begin in January 2025. This move reinforces the importance of accuracy in monthly returns, as any discrepancies could have lasting financial implications for both suppliers and recipients. Amendments through GSTR-1A remain possible, but taxpayers should note that rejecting invoices could expose suppliers to additional tax liabilities. As India’s tax infrastructure becomes increasingly sophisticated, businesses must ensure robust compliance mechanisms to navigate these regulatory shifts effectively. We strongly advise against Non-compliance with Laws & Regulations (Noclar) during the course of our engagement with clients.
How can taxpayers ensure that their vendors comply with uploading invoices?
Creating an indemnification clause: Before making a supply, as part of the supply agreement, a clause can be inserted where the supplier will be required to indemnify the recipient in the event the supplier fails to carry out the necessary compliance requirements, resulting in a loss of credit to the recipient. Withholding payment of the vendors is not advised as it may lead to denial of ITC.
Using compliance software: A software or application can be put in place, containing relevant details for every vendor, which helps with compliance by keeping track of the invoices, showing return-filing status, sending out due-date reminders, etc.
Incentive system: An incentive system for the vendor could be developed where he is encouraged to file his returns on time and pass on the necessary credit. However, this could result in an increased cost to the recipient.
Boycotting defaulting suppliers: The suppliers who commit such compliance defaults repeatedly could be boycotted either by reducing orders placed with them or refusing to deal with them altogether. However, this option could hamper business relationships. ■
GST implementation services in case of newly set up organizations, review of the GST implementation in case of old organizations.
Complete outsourcing of GST regulatory compliance on presence across India basis such as obtaining registrations, periodic and annual compliance, preparing reconciliations, and analyzing eligibility of input tax credits.
GST advisory services on all matters including stock transfers, classification advisory, valuation, input tax credits, registration requirements, ISD, refunds, export benefits, cross charges, job work and reverse charge mechanism. The advisory inter-alia services such as supply chain cost optimization, review of contracts from GST perspective, recommendations on tax clauses, negotiations with vendors/ customers, drafting of indemnification clauses, advising on day to day GST issues, automation solutions in compliances, developing of SOPs for compliances
GST Consultancy Services: Return Compliance, documentation, Advisory, and Audit under Goods and Services Tax (GST) in India along with pre-GST taxes.
Assistance in relation to yearly GST Audits and credit reconciliations.
Litigation Support: End-to-end assistance in relation to GST inquiries and assessments, including representation before the Tax Authorities including Assessment proceedings, Investigations, Departmental Audits, Enforcement proceedings, Anti-Evasion proceedings, GST-Appeals, GST-Advance Rulings, Search & Seizure matters as well as representation before the Hon'ble CESTAT with complete support in drafting replies to show-cause notices and appeals, including representation before Adjudication and Appellate Fora.
Conducting anti-profiteering studies and assistance in relation to anti-profiteering certification, assistance in relation to ITC-02 certification for transfer of credit in case of sale, merger, de-merger, or amalgamation of entities.
Advice on the execution of turnkey projects / EPC Contracts involving planning at the pre-bidding stage, structuring of contracts, identification of tax optimization opportunities, devising the most tax-efficient models, and a comprehensive range of compliance services subsequent to the bidding stage.
Select Landmark GST Judgments
Kerala High Court in Chukkath Krishnan Praveen vs State of Kerala (08-Dec-2023) : The petitioner asked for a Writ of mandamus to correct a mistake in Form GSTR-3B by accounting input tax credit as IGST instead of SGST and CGST credit. High Court directed the department to consider the representation as a rectification application and issue necessary orders.
Madras High Court in Kavin HP Gas Gramin Vitrak vs The Commissioner of Commercial Tax (24-Nov-2023): The judgment is on relief from Section 16(4). Not notifying of Form GSTR-2 is clearly a ground to consider the petitioner`s claim of belated returns. Since the GSTR-2 was not notified, which is meant for claiming ITC, hence the petitioner could not claim the ITC within the prescribed time. It was held that in the absence of any enabling mechanism, the assessee cannot be prejudiced by not granting ITC. The respondents are directed to accept the belated returns and if the returns are otherwise in order and in accordance with law, the claim of ITC may be allowed.
Kerala High Court in Divya Agencies vs The State Tax Officer* (12-Sep-2023) : Merely on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit.
Bombay High Court in Nirakar Ramchandra Pradhan vs Union of India (11-Sep-2023): The show cause notice cannot be an empty formality. GST Registration cannot be canceled merely by writing that registration being obtained by means of fraud, wilful misstatement, or suppression of facts without providing the supporting evidence.
Andhra Pradesh High Court in Arhaan Ferrous and Non-Ferrous Solutions Pvt Ltd vs Deputy Assistant Commissioner (03-Aug-2023) : This case was of Sections 129 and 130. The responsibility of the purchaser will be limited to the extent of establishing that he bonafide-ly purchased goods from the seller for valuable consideration by verifying the GST registration available on the official web portal.
Customs and Foreign Trade
Today, as a result of thoughtful implementation, about half of India’s GDP is due to the external sector, from the import and export of goods and services.
Advisory on Import-Export Laws and Procedures including FTP, ICE-Gate, GST-LUTs, DESH Act.
Customs: Reconciliation of taxes and processing of Refunds including Duty Drawback, RoDTEP, SEZ matters, and advisory on matters of High Sea Sales under the FTP.
Advisory on Incentives and Schemes under the Foreign Trade Policy and Customs Act.
Technical assitance in preparing and reviewing of SOFTEX Form before submission with the RBI.
The DGFT has extended the duration of Foreign Trade Policy, 2015-2020 ('FTP') along with 'Hand Book of Procedures (HBP)', SION introduced under FT(DR)A, 1992 from March 31, 2022 till September 30, 2022.
Our approach is tailored to clients’ needs aimed at ensuring error-free compliance.
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