The Central Board of Indirect Taxes and Customs ("CBIC") has issued guidelines for investigation proceedings conducted by CGST field formations. Officers are instructed to conduct investigations in accordance with the prescribed guidelines:
- All investigation will be authorized by the Principal Commissioner and he will be responsible for developing and approving any intelligence, conducting searches, and completing investigations. Any information obtained, collected, received, or recorded during the proceedings [pertaining to another GST field formation] must be forwarded by the Principal Commissioner to the relevant CGST field formation or Directorate General of GST Intelligence ('DGGI').
Written approval of Principal Chief Commissioner for investigation in specific issues/ matters
- To commence the investigation, CGST field formations should
gather information about prevailing trade practices and the nature
of transactions conducted by the taxpayers and also seek written
approval of Principal Chief Commissioner in the following cases:
- Matters of interpretation seeking to levy of tax/ duty for the first time on a sector, commodity or service
- Big industrial house and major multinational corporations
- Sensitive issues or matters with implications at national level
- Matters represented before the GST council
- Before obtaining the approval for commencing the investigation, it should be ensured that same subject matter is not under investigation by any other investigation officer.
Ensuring a unified process and consistency in proceedings:
- In specific circumstances, DGGI or State authorities may have commenced investigations on various subjects. In such cases, the Principal Commissioner should engage in discussions concerning the feasibility of consolidating the proceedings under a single investigation officer. If consolidation proves impractical, the rationale for this decision should be documented.
- If the Principal Commissioner discovers that the matter under investigation concerning a taxpayer's GSTIN is pertinent to registrations in other states and falls within the scope of the DGGI's mandate, the Principal Commissioner, via the Zonal Principal Chief Commissioner, should formally request the Principal Director General of DGGI to undertake the investigation following their established guidelines.
- In cases involving more than one interpretation, the Zonal Principal Chief Commissioner needs to make a self-contained reference to GST Policy wing / TRU preferably as early as possible before issuance of show cause notice to promote uniformity and avoiding litigation.
Guidelines for issuance of Official letters/ Summons:
- At first go, CGST field formations should send an official letter instead of a summons for requesting the information or specific details for initiating any investigation proceedings of a listed company, public sector undertakings or corporation or Government Department/ Agency or Authority established by the law. There should be reasons recorded in writing for issuance of summons or not following the said practice.
- Official letters / summons should indicate the specific nature of inquiry being conducted and should not be vague. The scope of the summons should strictly adhere to the parameters established by the law.
- Information available on GST online platforms or common portal should not be called up in the official letters/ summons. Authorities should avoid seeking information filled in formats or proforma and also avoid fishing enquiry.
- The contents of the summon [i.e., information sought and the timelines for submitting such information] shall be approved by an officer not below the rank of a Deputy / Assistant Commissioner. The approval can be verbal too and the endeavour should be made to document the same at the first available opportunity.
- The appropriateness and relevance of the information requested via summons must be documented on the electronic filing system and repetitive issuance should be avoided.
- Statements recorded during the summon proceedings are to be uploaded on the e-office file. Outcome of such proceedings should also be uploaded. E-file needs to be submitted to the appropriate authority within 4 working days from the date of statement or completion of proceedings.
Conclusion of the investigation proceedings:
- CGST field formations are required to conclude the investigation proceedings within a year. Issuance of show cause notice should not be stretched till the end of the limitation period.
Grievance redressal:
- Additional/ joint Commissioner in-charge of the investigation will be the grievance officer. Such officer can be reached for the redressal of any grievance in the ongoing proceedings.
Aurtus comments:
- Although taxpayers have been assigned under Central and state jurisdictions, there have been instances where both authorities have parallelly initiated investigation proceedings / audits against same taxpayer. Taxpayers have on these occasions sought relief from the Courts to consolidate these proceedings under a common authority to avoid multiplicity of proceedings. The above guidelines though not comprehensive, will substantially reduce litigation to a certain extent in any upcoming investigations. This will also be ensured as the guidelines recognize that issues of interpretation need internal deliberation [with the TRU / GST Council] and prevailing trade practices need to be understood before rushing into a demand against the industry players.
- Taxpayers have faced multiple notices and summons seeking ambiguous information lacking in clarity. In many cases, the approach of the Revenue authorities has been to issue notices and summons without indicating the nature and subject matter of enquiry. These guidelines will streamline the practice followed by the Revenue authorities and cease or control the issuance of vague official letters/ notices. Further, issuing of summons has recently become a common practice and generally even the most mundane enquires target and call for the appearance of top-level company officers through these summons. These guidelines delineate the circumstances under which summons can be issued and hence will limit the uncontrolled practice of issuing summons for any and every enquiry. Further, uploading of the summon and statement on e-filing system will bring transparency into the system.
- Obtaining approval from the Principal Commissioners or Zonal Principal Commissioner for investigation proceedings is a well-considered initiative aimed at ensuring the efficient use of departmental resources. This measure will also facilitate taxpayers in providing the necessary information appropriately during the investigation process. Thus, though the Guidelines are not comprehensive, the initiative is good and intends to cover and address the most pressing woes by introducing control and supervision by higher GST authorities and by streamlining processes to prevent the harassment of taxpayers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
