The Central Board of Indirect Taxes and Customs (CBIC) has issued guidelines to the central goods and services tax (CGST) field formations regarding investigations.
These guidelines primarily focus on three main aspects of the investigation process: (i) initiation of investigation; (ii) collection of evidence, including the issue of summons; and (iii) conclusion of the investigation.
The guidelines say that the Commissioner or Principal Commissioner of CGST must approve initiating an investigation. However, in cases where the investigation involves a matter of law interpretation, if the taxpayer is a large industrial company or a multinational corporation (MNC), or if the case has national importance or is before the GST Council, investigations may only be initiated after the Chief Commissioner or Principal Chief Commissioner approves it.
Sanjeev Sachdeva, Partner, Luthra and Luthra Law Offices India said, “It is expected that the officer green-signalling the investigation would ensure that a similar investigation is not already underway in any other jurisdiction against the same taxpayer.”
Any information or intelligence which pertains to another CGST field formation, that may have been generated /collected /received /recorded by such field formation (or even developed in the course of an investigation, including with respect to end-availer(s) of ITC), shall be forwarded by the Principal Commissioner to the concerned CGST field formation or DGGI, as the case may be, CBIC stated in the guidelines.
“Addressing letter/summons with context or content akin to a fishing inquiry is not acceptable,” CBIC noted. When summons are issued, they should not be vague, and should clearly bring out the nature of the investigation, and the summons should not be used as an excuse for a fishing inquiry. Summons must be issued with the approval of a Deputy Commissioner or Assistant Commissioner, CBIC highlighted.
The guidelines further lay down provisions for consolidating the investigations in respect of the same taxpayer to avoid multiple simultaneous investigations in different jurisdictions.
"For the government, it signifies a more structured and efficient approach to tax investigations, reducing the ambiguity and delays that often plague such processes. Additionally, the streamlined procedures will reduce the burden on judiciary by resolving issues at lower level of authorities. Private businesses will benefit from greater clarity and predictability in tax investigations, allowing them to focus more on their core activities rather than being embroiled in prolonged disputes. Moreover, by ensuring a fair and transparent process, these guidelines will enhance confidence among investors and stakeholders, further bolstering the business environment," said Krishan Arora, Partner, Grant Thornton Bharat.
The guidelines provide that in respect of listed companies, public sector undertakings (PSUs), government departments or agencies, where the information sought is such as is record-based or reflected in statutory accounts or filings, then instead of summons, an official letter should be sent to the taxpayer calling for the information.
Darshan Bora, Partner at Economic Laws Practice cites the rationale of CBIC behind bringing these changes by stating, “Many businesses have complained of harrowing experience during investigation by GST authorities and have been forced to approach courts to obtain relief.”
The guidelines also introduce measures for expediting the disposal of investigations, appropriate grievance redressal mechanisms and better intelligence dissemination.
Bora further added that if the guidelines are implemented in letter and spirit, businesses may expect some reprieve from high-handed GST investigations, summoning of individuals without adequate justifications, duplication of investigations by multiple GST authorities and facing investigations even for interpretational issues.
However, Sachdeva is of the opinion that these guidelines consolidate instructions that have been issued from time to time in the past as well and the real test would be the manner in which these instructions are followed in practice.
_20240703141026_original_image_15.webp)
