Goods and services tax (GST) officers sent notices to hundreds of companies across Gurugram, Mumbai and Bengaluru on Friday, demanding they reply with exhaustive lists of documents within hours.

The notices sent to firms including Google India, Honeywell International, DLF City Centre, Panasonic, Hitachi Zochen, Yamaha Music India, Suzuki Motorcycles, leading banks and insurance companies, among others, pertain to transitional credit claimed for pre-GST stocks.

The notice, reviewed by Business Standard, said: "…Your organisation has been marked for preliminary verification…in order to ascertain the correctness of Transitional Cenvat Credit…you are requested to submit the documents on priority by today (Friday) evening positively."

The drive — labelled unrealistic by tax consultants — comes amid slowing revenue collections and significantly high transitional credit claims worth Rs 1.3 trillion. The impromptu verification of documents and related information follows directive from the Central Board of Excise and Customs to tax officers to verify claims of credit over Rs 10 million.

The dealers who received the notices are being asked to submit this information amidst numerous statutory return filings in the months of December and January.

The tax officers have, however, claimed the deadline to send the replies by Friday evening was not strict, and attributed the drive to subdued GST collections. 

They said about 2,000 companies were taking 90 per cent of input credit and, hence, the focus was on them. Claims could be higher due to duplication, because the companies were registered at one place earlier for the purpose of paying central excise but were now filing returns in each state, they added.

The documentation requirement includes ’Central Excise Return’ Forms 1, 2 and 3 for January-June 2017, service tax return for October 16-June 17, calculation sheet for credit availed in TRAN-1 application and GST Electronic Credit Ledger. In addition, it has asked for a statement of inputs, work in progress, and finished goods.

"While the scrutiny of transition credits may be required in some cases, businesses should be given adequate time to respond with details. Some of the details being sought by the tax authorities will need to be worked out with relevant details and, hence, it would be better if only relevant details are sought from only those taxpayers who have availed excessive credits during transition," said M S Mani, partner, Deloitte India.

Revenue collections touched the lowest in November at Rs 808 billion, substantially lower than the government’s expectation of Rs 920 billion each month. Finance Secretary Hasmukh Adhia took a meeting of centre and states officers last month to review the revenue position and to do an analysis for the first five months since the implementation of the new tax regime viz-a-viz last year.

"What is unprecedented is that such notices are being issued to all and sundry, irrespective of any evidence of incorrect filing. It appears that most of the dealers have been selected on an arbitrary basis and issued with notices to submit an exhaustive set of documents," said Harpreet Singh, partner-indirect taxes, KPMG.

The GST Council had allowed companies to claim 100 per cent input tax credit by uploading excise payment invoices for the period before July 1. In case of unavailability of invoices, the Council had allowed 40 per cent input tax credit through TRAN-2. In fact, the limit on input tax credit was raised to 60 per cent from 40 per cent of GST liability on items with tax rate above 18 per cent in the June 4 meeting. Besides, the entire 100 per cent input tax credit could be claimed on high-value items above Rs 25,000 with a chassis number.

Tax experts said such notices are issued to curb malpractices of those dealers that have transferred unlawful transitional credits. "However, the authorities have not been considerate to understand the time that would be required to collate details like working sheet for credit availed, source documents or invoices for the same, statement in respect of inputs, work in progress and finished goods for the period," a tax consultant, several of whose clients have got such notices, said.

Singh said such a step by the tax authorities to augment revenue would definitely not help in building an environment of trust. "It does not augur well for the government’s image of creating a tax-friendly environment," he added.