Heavy GST penalties on co executives face legal scrutiny

NEW DELHI: The Directorate General of Goods and Services Tax Intelligence (DGGI) has issued thousands of notices to various companies, as well as their directors and promoters, regarding the wrongful availment of input tax credit (ITC), according to sources. This tax dispute primarily concerns the failure of the vendors to remit taxes to the government, in addition to other issues related to credit availment and utilisation.

According to experts, a key question arising from this situation is whether tax liability can be imposed on the service recipients, especially when they are not at fault. The ongoing investigations highlight the complexities surrounding tax compliance and the responsibilities of all parties involved in the supply chain.

According to the show cause notice reviewed by the TNIE, the interesting element of these notices which have been issued, especially for the financial year 2017-18, by the first week of August, is whether the liabilities imposed by way of personal penalties is correct. In some cases, penalties as high as 100% of the disputed tax amount have been imposed on the directors and the promoters of the company.