GST authorities issuing SCN will have to complete enforcement action

Tax authorities issuing show-cause notices will have to complete all enforcement and consequential action against the assessee against whom GST evasion was detected, the GST Council has said.

Under the GST regime, states administer and control 90 per cent of the assessees with an annual turnover of up to Rs 1.5 crore.

Assessees with an annual turnover of over Rs 1.5 crore are administered by the Centre and state tax authorities in 50:50 ratio on computer-based random sampling.

In order to resolve the jurisdictional issues while dealing with enforcement cases, the GST Council has clarified that the tax authorities, whether Centre or state, which initiates the enforcement action will be responsible for completing all consequential actions like appeal, review, adjudication.

The GST Council Secretariat, in an office memorandum, said that varied practices are being followed by the field formations regarding the issuance of recurring Show Cause Notices (SCNs) as well as other consequential actions in cases where investigation has been initiated and finalized by central tax authorities in respect of the taxpayers under State tax Administration and vice versa.

"In some cases, the authority which initiates the investigation is also issuing recurring SCN whereas in some other cases, it is being left for the concerned jurisdictional tax authority, who is administrating the taxpayer, to issue recurring SCN," it said.

The Council said that a taxpayer located within a state is open to enforcement action by both authorities.

"An enforcement action against a taxpayer, assigned to state tax authorities, can be initiated by the central tax authorities (and vice versa). In such cases, all the consequential action relating to the case including, but not limited to, appeal, review, adjudication, rectification, revision will lie with the authority which had initiated the enforcement action," the Council Secretariat said.

Refund in such cases may, however, be granted only by jurisdictional tax authority, administering the taxpayer.

It also said that further/ recurring SCNs are issued by the actual jurisdictional authorities (which is responsible for assessment of returns of the taxpayer), as they will be in a position to access the records and returns of the taxpayers.

AMRG & Associates Senior Partner Rajat Mohan said in most cases, it has been seen that enforcement agencies pick up cases for investigations. However, after an initial deposit of taxes, subsequent actions are left pending for concerned jurisdictional officers.

"Lack of clarity regarding who will initiate action after the issuance of SCN (after an investigation) has deterred the tax officers from taking cases to a logical end," Mohan said.

This clarification by the GST Council Secretariat would garner additional tax collection from long-forgotten cases, he added.