GST Demand Notices: CBIC to Set Monetary Threshold

New Delhi, Sep 23 (PTI) The CBIC is working on a mechanism to set a monetary limit for issuing GST demand notices to ensure that notices are not issued on flimsy grounds, a senior official said on Tuesday.

Central Board of Indirect Taxes and Customs (CBIC) member Shashank Priya said that the board will soon issue an instruction to the field formations in this regard. When we finalise our instruction, we will ensure some sort of mentoring by senior officers so that notices are not issued on flimsy ground, he said.

"The messaging that we need to give is, we are not interested in demand just getting confirmed... We are working on setting up a monetary limit for demand notices," Shashank Priya said addressing an Assocham event here.

He also said that once a demand is raised, field offices must ensure "fair adjudication". "...where demand is not fair we shouldn't be scared of dropping it. That is a cultural change we have to start working".

Shashank Priya also said that the department is working on making GST return process simpler by making both outward supply and inward purchases automated.

"We have sent letters to all the associations, we have sent out letters to the field formations to interact with the taxpayers to see where in the existing GSTR-3B framework amendments are needed... then we will see how we can address it so that at the end of the day the only point of input in return for those with annual turnover of above Rs 5 crore is e-invoice and everything else will be automated," he said.

Currently, e-invoice is mandatory for B2B sales for businesses with turnover of Rs 5 crore and above.

Shashank Priya further said that the department is also looking at how to make e-invoice process simpler so that taxpayers with lower turnover can start adopting it.

Under the automates system, while the e-invoices will capture B2B transaction data, QR codes can validate B2C supplies, and e-way bills can ensure transparency in goods movement. Together, these mechanisms will effectively secure supply-side data.

On the corresponding side, receipt-side information can also be safeguarded through the combined use of the Input Matching System (IMS) portal and e-way bill records.

AMRG & Associates Senior Partner Rajat Mohan said any proposal to introduce a monetary threshold for issuance of demand notices under GST is a highly welcome initiative.

"At present, even small-value disputes often result in notices, leading to unnecessary compliance burdens and litigation for businesses. By prescribing clear monetary limits, the system can focus on material cases, reducing administrative effort on trivial matters," Mohan said.

Currently, the threshold for departmental appeals before Appellate Authority is Rs 20 lakh, Rs 1 crore for the GST Appellate Tribunal, and Rs 2 crore for High Courts and the Supreme Court.

"Introducing such limits at the notice stage will streamline compliance, conserve both taxpayer and administration resources, and foster greater trust between businesses and authorities by ensuring that enforcement efforts are proportionate to the financial significance of the dispute," Mohan said.