ICAI – SUGGESTIONS ON PRACTICAL ISSUES IN GST
GST
Dated:- 29-8-2025
SUGGESTIONS ON PRACTICAL ISSUES IN GST
A. Adjudication & Enforcement
1. Defined time for replying to intimation in Form DRC-01A
Issue
As per rule 142 of the CGST Rules, the proper officer may before service of notice under sections 73(1), 74(1) or 74A(1) communicate the details of tax, interest and penalty as ascertained by the said officer in Part A of Form GSTR-DRC-01A. However, there is no time limit defined for replying to the intimation communicated in Form GSTR-DRC-01A before service of notice. Practically, officers give minimal time (1-2 days) to reply to the intimation which causes hardship to the taxpayers.
Suggestion
Reasonable time of at least 7 working days be given to reply to the communication sent to the taxpayer.
Justification
Granting taxpayers adequate time to respond to notices is essential for natural justice, transparency, and effective GST compliance, enabling them to review a
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ing disputes and proceedings. They reduce the need for physical travel, saving time and resources for both taxpayers and tax authorities, especially in cases involving inter-State jurisdictions or remote locations. It also ensures continuity of adjudication even during unforeseen disruptions such as public emergencies, natural calamities or pandemics. Additionally, they promote procedural convenience, allow for easier scheduling and can be recorded for transparency and future reference.
3. Effective service of notices and communications
Issue
Section 169 of the CGST Act provides six options for serving any decision, order, summons, notice or other communication. Taxpayers often miss important notice, as they are only uploaded on the portal with no parallel communication through physical mail or real-time alerts. This particularly affects small-scale traders, senior citizens, rural business operators, and other digitally marginalized segments who may not log into the portal regularly
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ensures timely communication, upholds natural justice, and forms the foundation of fair adjudication. Failure to serve notices effectively breaches statutory requirements, violates the taxpayer's right to be heard, and risks orders being struck down by courts. Judicial precedents under GST and earlier tax laws have repeatedly quashed orders where service was deficient or adequate hearing was denied.
4. Physical document demands in GST personal hearings
Issue
Despite the entire GST ecosystem being designed as a digital and paperless system, many officers, particularly of state tax, continue to insist on the physical submission of documents during personal hearings (PH). Even though all filings-returns, challans, invoices, appeals, and replies-are uploaded and available on the portal, taxpayers are often asked to bring printed copies of these documents during hearings before adjudicating authorities.
Suggestion
CBIC may appropriately instruct central tax officers and guide the stat
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linked to yet another unique identifier. This fragmented system architecture hampers the ability of taxpayers and even departmental officers to track the full life cycle of a proceeding.
Moreover, the portal currently lacks a draft-saving feature for key forms and submissions, such as ASMT-11 (reply to scrutiny notice) and APL-01 (appeal form). If the session time goes out, the browser crashes or the internet connection fails, the user is forced to restart the filing process, leading to time loss and frustration.
Further, there is absence of version control and document submission history. In cases where multiple correspondences are exchanged, it becomes difficult to establish which version of the reply or supporting documents was acted upon, leading to confusion or disputes during adjudication or appeal. There is no clear thread as visible on the portal.
Suggestions
(i) To address these inefficiencies, it is suggested that GSTN may implement a structured “Case Life cycle Manageme
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e proceedings. All future notices or replies related to the same subject matter may be automatically mapped to this parent case ID.
(ii) In addition, the GST portal may include “Save Draft” functionality for all major forms and submissions, including ASMT-11, DRC replies and APL-01. This feature may autosave content at regular intervals and store the user's progress in a secure backend cache, enabling recovery in the event of a session timeout or technical disruption.
Justification
These enhancements will improve user experience, reduce errors and missed deadlines, and streamline compliance. A unified, user-friendly interface will aid taxpayers and officers alike, cut redundant correspondence, resolve technical issues, and provide clear case histories essential for fair appellate adjudication.
6. Concerns in levying personal penalties under Section 122(3) of the CGST Act, 2017
Issue
Section 122(3) of the CGST Act, 2017 provides for imposition of personal penalties on directors, p
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ng of orders against unregistered person. As a result, individuals who are personally penalized have no access to their orders via the portal and are unable to file an appeal under section 107 of the CGST Act, 2017, as the portal requires an order to be linked to a valid GSTIN. In effect, directors or officers find themselves subject to financial penalties without being afforded the statutory right of appeal, violating the principles of natural justice.
Suggestions
(i) A Unregistered Person (URP) login system be created for unregistered individuals similar to a Registered Person Login ID, for the limited purpose of issuing notices, uploading orders, and enabling replies or appeals.
(ii) The tax officers may issue and upload separate DRC-07 against such unregistered individuals on their URP dashboard to ensure that the order is distinctly addressable, traceable, and accessible to the person concerned.
Justification
Establishing of a mechanism to adjudicate and appeal penalties ag
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rception of conveyance for inspection of goods in movement, and detention, release and confiscation of such goods and conveyance, must be followed.
Justification
The reiteration of such Circulars from CBIC to the officers will ensure uniformity in enforcement, uphold due process, enhance predictability, and support a business-friendly GST regime.
B. Input Tax Credit
8. Operational enhancement of ITC distribution mechanism
Issue
Under rule 39 of the CGST Rules, 2017, the distribution of input tax credit (ITC) through an input service distributor (ISD) is done based on the turnover of recipients during the “relevant period.”
The rule defines the “relevant period” as:
(a) The financial year preceding the year during which credit is to be distributed; or
(b) If turnover is not available for all or some of the units in the preceding financial year, the last quarter for which turnover details of all recipients are available, prior to the month during which credit is distributed.
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t have any turnover in their States or Union territories in the last quarter previous to the month during which the credit is to be distributed, the month during which credit is to be distributed.”
Thus, in absence of turnover for preceding financial year and last quarter, the current month's turnover be allowed as the basis for distribution.
Justification
Allowing use of the current month's turnover for ISD credit distribution ensures practical compliance, aligns with rule 39's objective of fair credit allocation, and helps prevent disputes and non-compliance.
9. Enhancement of Form GSTR-2B functionality
Issue 1: Removal of Rate Column in Form GSTR-2B
The removal of the tax rate column from Form GSTR-2B has impacted the reconciliation process for taxpayers. The rate-wise breakup is essential to verify the correctness of tax charged on inward supplies and to cross-check with purchase records.
Issue 2: Non-Availability of Quarterly view of Form GSTR-2B
For taxpayers filing r
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and confirming ITC claims. It would reduce manual work. Similarly, restoring an automated quarterly summary would speed reconciliation, and aid financial planning, especially for businesses undergoing periodic audits.
10. Restoration of reversed ITC after withdrawal of GST cancellation application
Issue
Taxpayers are required to reverse the available ITC when applying for GST registration cancellation. However, if they later withdraw the cancellation application and continue their business, the reversed ITC is not auto-restored in the electronic credit ledger, despite the GSTIN being reactivated. This results in financial loss to taxpayers and leads to unjust enrichment of the Government, as rightful ITC remains uncredited.
Suggestions
(i) CBIC may issue a circular prescribing the procedure to be followed in such cases, including timelines and documentation, to ensure seamless re-credit of ITC to the taxpayer's electronic credit ledger upon restoration of the GSTIN.
(ii) A
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location be made available on the portal during the registration process.
Justification
Implementing these improvements would streamline the registration process, minimize delays and ensure correct jurisdiction assignments from the outset.
12. Amendment in GST registration through multiple applications
Issue
The current restriction on submitting a second application for GST registration amendment before the approval of the first amendment creates unnecessary delays in the amendment process.
Suggestion
The system be updated to allow multiple amendment applications to be submitted simultaneously or in quick succession.
Justification
Implementing this change would ensure that businesses can make timely corrections to their registration details, thereby reducing operational disruptions and minimizing compliance risks. The system could incorporate safeguards to ensure that the amendments are properly reviewed before final approval, while still allowing for greater flexibility and
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erence Number (ARN). This feature would help users identify and correct any typographical errors, data entry mistakes, or incorrect document uploads before submission, thereby reducing the incidence of rejections and notices.
(b) Post-Submission Stage – Error Rectification Window: A 24-hour rectification window may be provided from the time of ARN generation, during which applicants can make limited edits or corrections to the submitted Form GST REG-01. This buffer period would serve as a safeguard against unintentional errors and allow applicants to address minor mistakes without waiting for a rejection or notice from the tax authorities.
Justification
A preview feature would allow applicants to verify details and documents before final submission, while a limited 24-hour correction window post-ARN generation would enable timely rectification of minor mistakes without awaiting formal notices. These measures would reduce administrative burden, improve registration accuracy, and enha
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number.
(iii) Cancellation approvals may require vetting by senior officers-not below the rank of Assistant Commissioner.
Justification
A reasoned and transparent cancellation process is critical to uphold taxpayer rights and maintain legal compliance. Specific orders will provide clarity, reduce unnecessary appeals, and prevent avoidable disruptions to business continuity. Alert mechanisms and visibility into procedural safeguards will facilitate timely response.
15. GST compliance during business reorganization: Non-migration of proceedings
Issue
A significant procedural difficulty arises in cases of merger or demerger when the old GST registration is cancelled, but the proceedings associated such as notices, demands, or appeals-continue to remain tagged under the old GSTIN. Even though the law provides for the transfer of liabilities in such reorganizations, the GST portal does not provide a mechanism for transferring ongoing matters to the new GSTIN. This disconnect poses se
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ity may be activated upon submission of legally recognized documentation, such as Form GST ITC-02 (used for transferring unutilized input tax credit) or a certified order of merger or demerger (approved by a competent court, tribunal, or regulatory authority).
(iii) A dedicated section may be created within the new GSTIN's dashboard titled “Legacy Proceedings” or “Transferred Proceedings”, where all migrated items may be categorized chronologically and by type (e.g., ASMT-10, DRC-01, Audit Memo, Appeal ID).
Justification
A seamless transition of pending proceedings to the new GSTIN is essential for legal continuity and natural justice.
16. Concerns in GST registration via SPICe+/AGILE-Pro-S integration on MCA portal
Issue
During the process of company incorporation through the SPICe+ form on the MCA portal, there is an option to apply for GST registration through AGILE-Pro- S form. However, even after the successful submission and incorporation of the company, the TRN for the
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ong with status-tracking features, will enhance transparency, accountability, and operational efficiency.
17. Online cancellation of TDS registration
Issue
Taxpayers holding TDS registration under GST are unable to apply for its cancellation through the GST portal, as no such option exists online.
As per Rule 12(3) of the CGST Rules, 2017, a person registered as a tax deductor under a section 51 of the CGST Act who is no longer liable to deduct TDS is required to submit a written request for cancellation to the proper officer. Upon satisfaction, the officer may cancel the registration and issue Form GST REG-08. However, in practice, taxpayers face significant challenges in cancelling TDS registrations as manual applications submitted to jurisdictional officers remain unprocessed.
Suggestions
(i) An online facility for cancellation of TDS registration, similar to the cancellation of regular GST registration, be enabled on the GST portal.
(ii) To support the above facilitation m
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ts and inverted duty structure (IDS)-experience significant delays beyond the prescribed timelines. Procedural bottlenecks such as multiple document verifications, offline validations, and manual interventions reduce transparency and consistency, resulting in blocked working capital, disrupted cash flows, and impaired international competitiveness for exporters and MSMEs. Additionally, the issuance of deficiency memos beyond the 15-day period adds to uncertainty and delays.
Suggestions
(i) A robust, system-driven refund processing framework be implemented with provisional refunds being automatically sanctioned within 7 days in low-risk cases through back-end automation. The balance be refunded within the statutory 60-day period, leveraging AI-based scrutiny for faster and more accurate validation.
(ii) An automated mechanism to compute and credit interest under section 56 for delays beyond 60 days be integrated into the portal, ensuring timely payments without requiring separate t
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in such cases, leaving taxpayers' funds blocked without service delivery. This creates financial hardship and procedural uncertainty.
Suggestion
A new refund category titled “Refund of excess deposit against rejected casual registration or non-resident taxable person” be introduced, enabling taxpayers to claim the advance tax paid where registration was denied.
Justification
Introducing a transparent, automated refund pathway will prevent undue financial burden, reduce procedural deadlocks, and enhance taxpayer trust. Such reform aligns with the intent of Section 54 and supports ease of doing business by ensuring timely return of unutilized deposits.
20. Refund to SEZ
Issue
The GST law is currently silent on the refund of ITC received by a special economic zone (SEZ) unit from an input service distributor (ISD). With the implementation of mandatory ISD mechanism effective from 01.04.2025, ISD is required to distribute available ITC to all units, including SEZ units. However, SE
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iling returns for the previous month such as Form GSTR-1 and Form GSTR-3B.
For example, during the month of April, the dashboard currently displays April by default, whereas taxpayers are generally filing returns for March. This results in an unnecessary step of manually switching to the previous month each time.
Suggestion
The GST portal's Return Dashboard default be set to the previous month instead of the current month.
Justification
By defaulting to the previous month, the portal will better align with user behaviour, minimizing the steps required to navigate to the correct return period.
22. Generation of advance EVC for return filing
Issue
Many taxpayers prefer to authenticate return filings using EVC (Electronic Verification Code) instead of DSC. However, the EVC can only be generated at the time of submission, often resulting in delays-especially when the authorized signatory is not immediately available to share the OTP. This becomes even more problematic during pe
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able and exempt supply. Hence, composition suppliers other than manufacturers and restaurant service supplier who have both taxable and exempt turnover are not able to report correct tax liability.
Suggestion
A separate line item be inserted in Form CMP-08 for segregating taxable and exempt supply for the suppliers other than manufacturers and restaurant service supplier.
Justification
This will allow composition suppliers other than manufacturers and restaurant service supplier who have both taxable and exempt turnover to report correct tax liability.
F.-Way Bill
24. E-Way Bill to Include 'Ultimate Recipient' in “Bill to – Ship to” transactions
Issue
In “Bill to – Ship to” transactions under GST, the e-way bill system does not provide a dedicated field to capture the GSTIN and name of the actual place of delivery (i.e., the 'Dispatch To' party), which often differs from the 'Ship To' or 'Consignee' details. This structural limitation leads to compliance ambiguity, especially i
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