Kudos to CBIC for instructions on GST investigations

For issue of summons, prior approval of an officer not below rank of assistant/deputy commissioner must be obtained and relevancy and propriety of information/documents being sought must be recorded

In a welcome move, the Central Board of Indirect Taxes and Customs (CBIC) has issued guidelines to its Goods and Services Tax (GST) field formations for maintaining ease of doing business while engaging in investigation with regular taxpayers. Essentially, its instruction no. 01/2023-24-GST (Inv.) dated March 30, 2024, places the power of initiating investigations at a very senior level and directs seeking any information or documents not available digitally/online from the GST portal from regular taxpayer through letters (instead of summons), disclosing specific nature of enquiry/investigation in the communications to the taxpayer, and conclusion of investigations within one year.

At each GST commissionerate, the principal commissioner has been made responsible for developing and approving any intelligence, conducting search, and completing investigations and relevant subsequent actions, including at the lower field formations. 
 

Any information or intelligence which pertains to another GST commissionerate that may be or have been generated/collected/received/recorded by a field formation shall be forwarded by the principal commissioner to the concerned commissionerate or Director General of GST Intelligence (DGGI), as necessary or required.
 

Where investigation to be initiated involves interpretation regarding levy of tax/duty on any sector/commodity/service for the first time or levy of tax/duty on any big industrial house or major multinational corporation or any sensitive matter(s) with national implications or matters that are already before GST Council, prior written approval of the zonal principal chief commissioner must be obtained. The said instruction no. 01/2023-24 also deals with situations such as another investigating office or tax administration investigating the same subject matter with respect to the same taxpayer, the DGGI or the State GST department simultaneously undertaking record-based investigation of the same taxpayer on different subject matters,  the issue being investigated has relevance to some or all of that taxpayers’ GSTINs registered (under the same PAN) in multiple jurisdictions, the issue being investigated involves an interpretation of the CGST  laws, notifications or instructions etc. and the  taxpayer(s)  is/are following or have followed a prevalent trade practice  based on particular interpretation etc. The CBIC has prescribed strict disciplines for seeking information from the taxpayers. 
 

The letters must detail the reasons for the investigation and the relevant legal provisions and call for only relevant specified details. The letter/summons should avoid vagueness and should disclose the specific nature of the inquiry being undertaken and should not be used to seek information filled in formats or proforma specified by investigators. The summons must not convey requests for information/documents outside the scope defined in the summons. 
 

For issue of summons, prior approval of an officer not below the rank of assistant/deputy commissioner must be obtained and the relevancy and propriety of information/documents being sought must be recorded. The CBIC has also asked the taxpayers to approach the additional/joint commissioner in charge of the investigation with any grievance related to investigations and seek appointment with the principal commissioner, if necessary.
 

The CBIC deserves appreciation for issuing these instructions. Now, the CBIC should ensure effective implementation of its instructions.
 

 Its similar instructions on issuing summons as a last resort only if the party does not respond to letters asking for any information or documents have been repeatedly ignored by the field formations, especially the Department of Revenue Intelligence (e.g. in matters relating to pre-import condition in advance authorisations). The CBIC should not tolerate such insolence.

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Email:tncrajagopalan@gmail.com