Most GST disputes arise from misread notifications, not tax evasion: CA explains why

A large share of Goods and Services Tax (GST) disputes in India do not stem from non-payment of tax but from incorrect interpretation of GST notifications, according to chartered accountant Nitin Kaushik. 

In a detailed post on social media platform X (formally twitter), Kaushik said that many taxpayers and professionals focus narrowly on tax rates or exemptions without fully understanding the legal framework within which GST notifications operate. “Most GST disputes don’t happen because tax wasn’t paid. They happen because a notification was read incorrectly,” he wrote. 

Kaushik noted that the consequences of such misinterpretation go far beyond tax demands, interest, or penalties. “The cost isn’t just tax, interest, or penalty. It’s credibility — with auditors, officers, and sometimes clients,” he said. 

Notifications must be read with the GST Act 

Highlighting a recurring pattern in GST litigation and audits, Kaushik pointed out that notifications cannot be read in isolation. Every notification, he explained, flows from a specific section of the GST Act, which defines its scope and limitations. 

“If the Act doesn’t allow something, no notification can magically create that benefit,” he said, adding that this is where many tax positions tend to collapse during scrutiny or assessment. 

According to him, taxpayers often jump straight to the exemption or concessional rate they want to rely on, ignoring the enabling provisions of the law. This selective reading frequently leads to disputes when authorities examine whether the notification is legally valid for the transaction in question. 

Timing & effective dates often overlooked 

Kaushik also flagged timing as a critical but commonly overlooked factor in GST compliance. While many focus on the issue date of a notification, it is the effective date that determines its applicability in audits and assessments. 

“A few days’ mismatch can change the entire tax position of a transaction,” he warned, noting that such errors are a frequent trigger for disputes during departmental checks. 

Operative wording is key 

Another major source of error, Kaushik said, lies in ignoring the operative wording of notifications. Conditions, provisos, restrictions, and explanations are often skipped or misread, resulting in the loss of claimed benefits. 

“GST concessions are rarely unconditional,” he said, stressing that schedules, tables, and explanations form an integral part of the law and cannot be treated as mere annexures. 

He added that while HSN codes are important, the actual description of goods or services often plays a more decisive role in determining eligibility for exemptions or lower tax rates. 

'GST is a system' 

Kaushik emphasised that no GST notification should be applied without checking its alignment with the GST Act, rules, and relevant circulars. “GST is a system, not a standalone document,” he wrote. 

The real test, he said, lies in practical application: whether the notification applies exactly to the supply in question, whether all conditions are met, and whether the applicable period is covered without assumptions. 

Summing up, Kaushik underlined that effective GST practice is less about speed and more about careful, disciplined reading. “Strong GST practice isn’t about speed. It’s about disciplined reading. That’s what separates routine compliance from professional confidence,” he said.