Manufacturing (Auto Components)
GST
GST Notice Resolution Saved a Manufacturer ₹6 Lakh in Penalties
How WizBiz resolved a ₹15 lakh GST input tax credit notice for a Chennai auto parts manufacturer, saving ₹15 lakh in penalties.
GST ITC Notice Resolution | Manufacturing Case Study | WizBiz
GST, ITC, Notice, Manufacturing, Chennai, Reconciliation, Section 74
WizBiz Team
Challenge
Precision Auto Parts Pvt. Ltd., a Tier-2 supplier to major automotive OEMs, received a show-cause notice from GST authorities alleging input tax credit (ITC) mismatch of ₹15 lakh for FY 2023-24. The notice claimed that the ITC claimed by the company did not match the supplies reported by their vendors in GSTR-2A. The company faced a potential demand of ₹15 lakh plus 100% penalty under Section 74 of CGST Act. Their internal accounts team was unable to reconcile the mismatch as they lacked expertise in GST reconciliation.
Solution
Our GST team conducted a detailed reconciliation exercise: (1) Extracted purchase register data and matched it vendor-wise with GSTR-2A; (2) Identified vendors who had not filed their GSTR-1 or had filed with errors; (3) Communicated with 23 vendors to file or rectify their returns; (4) For vendors who were unresponsive, we guided the client on claiming ITC under rule 36(4) with proper documentation; (5) Prepared a detailed reply to the GST notice with annexures of reconciled data. We also set up a monthly reconciliation process to prevent future mismatches.
RESULTS
Out of the ₹15 lakh disputed ITC, we successfully validated ₹11 lakh through vendor corrections and documentation. The remaining ₹4 lakh was voluntarily reversed by the client along with nominal interest of ₹32,000. The total penalty exposure of ₹15 lakh was reduced to zero. The client now has a robust monthly ITC reconciliation process.
Key Metrics
Disputed ITC: ₹15 Lakh
ITC Validated: ₹11 Lakh
Penalty Saved: ₹15 Lakh
Interest Paid: ₹32,000 (vs potential ₹15L penalty)
Vendors Corrected: 23
Time to Resolve: 60 Days
Testimonial
The GST notice was a huge stressor for our finance team. WizBiz not only resolved the notice but also fixed our underlying reconciliation process. We haven't had a single mismatch since they implemented the monthly checks. Their technical expertise in GST is outstanding.
