CBIC Denies Pressure to Pay GST in Cash Instead of ITC in Last Quarter

· No Tax Terrorism here, says North Block

Taxpayers are Free to Utilise Input Tax Credit available in their Credit Ledger as Permissible by Law to Discharge their GST Due for March month

[MoF Press Release/21.03.2021]

Unconfirmed reports have appeared in certain sections of the media that some GST officers are using unauthorised communication means such as phone calls, WhatsApp and messages asking taxpayers to discharge 'maximum tax liability' in 'cash' in order to ensure that targets for revenue collection from GST for the financial year are met.

It is to clarify that neither the Government nor the Central Board of Indirect Taxes and Customs (CBIC) have issued any such instructions to their field formations. As such, taxpayers are free to utilise the Input Tax Credit available in their credit ledger, as permissible in law, to discharge their GST dues for the month of March, 2021 – the last month of this financial year.

The finance ministry has said it has not issued any orders to its officials to use "unauthorised communication means" to achieve GST revenue collection targets for the fiscal year.

"Unconfirmed reports have appeared in certain sections of the media that some GST officers are using unauthorised communication means such as phone calls, WhatsApp and messages asking taxpayers to discharge 'maximum tax liability' in 'cash' to ensure that targets for revenue collection from GST for the financial year are met," the ministry said.

It clarified that neither the government nor the Central Board of Indirect Taxes and Customs (CBIC) has issued any such instructions to their field formations.

It was reported on March 20 that GST authorities were pressurising taxpayers to pay their maximum tax liability in 'cash'. In GST lingo, 'cash' does not imply hard cash but it is the payment of taxes after exhausting the input tax credit (ITC) available to the taxpayer. The ministry has said people are free to use ITC available in the credit ledger.

"As such, taxpayers are free to utilise the Input Tax Credit available in their credit ledger, as permissible in law, to discharge their GST dues for March 2021 - the last month of this financial year," said the ministry.

Earlier, some tax experts and chartered accountants had alleged that GST officers are using phone calls, WhatsApp and messages (which are banned by the tax department) to demand that taxpayers deposit 'maximum tax liability' in 'cash' without quoting the mandatory Document Identification Number.

As per experts, the reason that officials are coercing taxpayers to pay in cash is the accumulated ITC is already with the government. So when one adjusts tax liabilities with the ITC, the government does not get any additional revenue. However, if a taxpayer pays in cash instead of adjusting his liabilities with ITC, the GST department gets additional revenue in the books of government, even if for an interim period.

As per the GST law, there are only two ways of payment of GST -- one by adjusting the tax dues with the accumulated Input Tax Credit (ITC) and the other in 'cash'. All payments under GST are through digital means.

Payment by adjusting with accumulated ITC is also payment of GST if the ITC is availed as per law. However, tax experts point out the GST department software are designed to pick taxpayers (for scrutiny) who pay large amounts of GST through ITC, and not cash.