MSME bodies urge Tamil Nadu commercial taxes dept to stop issuing penalty notices without proof of fraud

COIMBATORE: MSME representatives in Coimbatore have urged the Tamil Nadu commercial taxes department to refrain from issuing penalty notices under Section 74 of the State Goods and Services Tax (SGST) law unless fraud or wilful tax evasion is established, saying the provision is meant for deliberate wrongdoing and not routine compliance errors.

At an SGST interaction meeting held with MSME participants on Wednesday, the Coimbatore Industrial Associations (FOCIA) submitted a petition to joint commissioner of commercial taxes Sugam Thakarey. Coordinators J James, S Surulivel and A Sivasanmugakumar said over the past year many MSME taxpayers have received penalty notices under the SGST framework for issues such as mismatches, delayed return filing and HSN code discrepancies.

They alleged that notices were being issued even for older VAT assessment periods such as 2006-07, and that penalty notices are often uploaded only on the GST portal, leading to missed responses by taxpayers or their consultants. This, they said, results in penalties up to 200% and subsequent Form 13 actions that can freeze bank accounts without direct communication.

FOCIA said many micro units lack computer access and adequate digital literacy and depend on low-cost tax practitioners. It sought mandatory dispatch of notices in printed form through registered post.

The federation sought a “general amnesty” approach for the first five years of GST implementation up to June 30, 2022, citing frequent amendments and the introduction of auto-populated data from December 2020.

Coimbatore Chinnavedampatti Industrial Association (CIA) president N Devakumar urged the Tamil Nadu govt to hold SGST consultative meetings at regular intervals, citing after a gap of two years, an SGST consultative meeting was held in Coimbatore. He sought a separate category for micro units with turnover below Rs 1 crore to resolve accounts and grievances quickly. Stating that there are 40,000 job workers in Coimbatore, he asked the state finance minister to press the GST Council to cut job-work GST from 18% to 5%..

EOM