A stitch in time saves nine: Rs 3000 jump to Rs 48 lakh liability

An entrepreneur got a sales tax notice of Rs 3000. He got an unprofessional advice of ignoring the same. He followed the advice. Again, there was a reminder. The entrepreneur stuck to his old impulse of ignoring it again. Some time passed by, there was another notice. There was no third one immediately.

There followed a lull then. There was a huge sigh of relief for a long time. No back up action.

The business kept on growing in size. The entrepreneur thought he had learnt to dodge tax administration and was flourishing without being noticed. The entrepreneur was also thinking that he had learnt the art of dealing with existential business issues like dealing with the government. His elation was more on the ground that no so-called expert was required to deal with the issue. Not even a fee was required to hire an expert to deal with the notice.

His dream came crashing eight years after when he got a notice of Rs 48 lakh. He could not believe the amount. The entrepreneur rushed to the department concerned to find out what had really happened.

A bigger shock was awaiting him: his house he was living in was being processed to be attacked to recover the government dues.

His supplies and credit lines were threatened the next day as the matter was reported in newspapers. Goodwill which looks good in books was also hit due to the tax liability.

Not only was his business threatened now but his very existence. He now had a bigger worry to where will his family stay.

His initial antipathy to consult an expert to deal with the Rs 3000 sales notice has now become an urgency to consult one now. He does not know who is a good professional to deal with the issue. He did not even know whether he required a lawyer or a charted accountant, or both.

He had a tough choice as to how to engage a professional who is both effective and reasonable in fees.

The entrepreneur who could have saved his worries spending a portion of just Rs 3000, the first notice amount, Is now haunted by the possible percentage of fee of Rs 48 lakh for hiring a professional to deal with the crisis building up. There was no time also as he was about to lose his house. An urgency had been thrust upon him to deal with multiple issues while resources at disposal were nowhere to be seen.

After so much of misery, he hired both a CA and an advocate. The entrepreneur had to cough up Rs 12 lakh to save the house in place of just Rs 3000 demand of tax.

The take away: Consult a professional both to deal with a crisis and even avoid one. There is no harm consulting more than one professional over many non-professionals offering useless free advice with no responsibility of consequences.