CBIC Sets New Directives For GST Officers, Fixes One Year Deadline For Concluding Probes

The CBIC said that "official letters instead of summons" should be sent by CGST officers to the designated officer of the entity when starting a probe in a listed firm or PSU or requesting details

The Central Board of Indirect Taxes and Customs (CBIC) has introduced new directives for GST officers. Based on it, officers will have to obtain permission from their zonal principal chief commissioners to launch an investigation against large industrial houses or major multinational corporations and impose a duty on goods or services.

Following the guidelines, the principal commissioner will "consider the feasibility" of only one of the offices pursuing all of the cases pertaining to the taxpayer when the taxpayer is the subject of simultaneous investigations by the state GST and DGGI officers on different subjects. Additionally, the guidelines stipulate a deadline of one year for concluding investigations from their initiation.

The CBIC further stated that "official letters instead of summons" should be sent by CGST officers to the designated officer of the entity when starting an investigation into a listed company or PSU or requesting information from them. These letters should explain the purpose of the investigation and request the submission of documents within a "reasonable time period."

"In such a letter issued for seeking information/documents from the regular taxpayer, the reference can be to inquiry "with respect to" or "in connection with" that entity. Further, the letter/summons should disclose the specific nature of the inquiry being initiated/undertaken. The vague (or general) expressions such as that the officer is inquiring about connection with "GST enquiry" or "evasion of GST" or "GST evasion" etc. must not be mentioned," CBIC also said.

It further said tax officers should not ask for that information from the taxpayer, which is already available online on the GST portal. "Addressing letter/summons with context or content akin to a fishing inquiry is not acceptable," CBIC outlined.

The guidelines also stated that every investigation must begin with the principal commissioner's approval, except for the four categories listed above, where starting an investigation and taking action in a case require the zonal principal chief commissioner's prior written consent.

These four cases include interpretations that aim to impose taxes or duties for the first time on any sector, commodity, or service; large industrial houses and multinational corporations; delicate issues or issues with national ramifications; or issues that are currently before the GST Council. The relevant CGST field formation should also gather information about the types of transactions that the stakeholders are conducting and the prevailing trade practices in each of these four categories of cases.

"The implications/impact of such matter should be studied to have adequate justification for initiating an investigation and taking action," the guidelines underscored.

Discussions With Investigating Offices

It further stated that the Principal Commissioner must hold discussions with the other investigating offices to determine whether it is feasible for only one office to pursue all of these subject matters concerning the taxpayer, with the other offices consolidating their material with that office, in the event that the Commissionerate becomes aware that the state GST department or the DGGI is also concurrently conducting record-based investigations of the same taxpayer on different subject matters.

"If this outcome is not feasible, the reasons therefore should be confirmed on file by the Principal Commissioner," the guidelines further added. An investigation that is not more than one year must conclude as soon as possible. It is unnecessary to keep an investigation pending until limitations in law approach, it said.

After the investigation is finished, the show cause notice shouldn't be postponed. According to guidelines, the closure report that follows the person's timely payment of government obligations must also be submitted on time and include a brief, self-explanatory account of the problem and the relevant time frame. "Conclusion of investigation may also take the form of recording that investigation is not being pursued further as nothing objectionable was found in terms of the matter investigated," it also added.

Rajat Mohan, the Executive Director at Moore Singhi, remarked that these guidelines represent a substantial move toward cultivating a tax atmosphere supportive of business expansion, all the while guaranteeing adherence to regulations and equity within the tax framework.

Abhishek Jain, who serves as the National Head & Partner for Indirect Tax at KPMG, emphasised that the effectiveness of the implementation will determine its success. He stated that if executed as intended, it has the potential to enhance tax predictability and stability within the business environment of our nation.