Punjab finance minister Manpreet Singh Badal has asked the central government to remove a block on goods and services tax (GST) credits as it was leading to working capital issues. “The indiscriminate stopping of tax credits, without even a prior notice and hearing is also likely to fall foul with the principles of natural justice,” Badal wrote to revenue secretary Ajay Bhushan Pandey, referring to the GST Council authorising the blocking of 40,000 crore GST credits due to a mismatch in filings and returns.
In the letter seen by ET, Badal said that businesses, which were already reeling because of a sluggish economy and poor liquidity, were being made to shell out GST in cash even when they were entitled to tax credits. “I’m informed that the central tax authorities have also taken this action in respect of taxpayers whose administration is otherwise with the state authorities, disturbing the agreed protocol for this purpose,” he said, adding that there was “some amount of high-handedness in administering GST.”
Noting that tax credits had been blocked for all taxpayers where there were some differences between GSTR-2A and GSTR-3B, he said these differences were largely inevitable in a large number of bona fide situations like reverse charge mechanism supplies or credits through the input service distributor route.