This Tax Alert summarizes a recent instruction [1] issued by the Central Board of Indirect Taxes and Customs (CBIC) stipulating guidelines for investigation under Goods and Services Tax (GST) to improve ease of doing business.
The key guidelines are:
Prior written approval of the zonal Principal Chief Commissioner shall be required for initiation of investigation in the following matters:
- Matters of interpretation seeking to levy tax for the first time
- Big industrial house and major multinational corporations
- Sensitive matters or matters with national implications
- Matters already before the GST Council.
Principal Commissioner must coordinate with other investigating offices when a taxpayer is simultaneously being investigated by the other investigating offices on a different subject matter. If feasible, only one investigating office should undertake investigation on all the subject matters.
Where the issue is based on a matter of interpretation and the taxpayer is following prevalent trade practice as per their sector, it is recommended to make a reference to the relevant policy wing of the CBIC.
When commencing an investigation of a listed company, public sector undertaking, corporation, government department or authority established by law, the CGST field formation should first issue an official letter, instead of summons to the designated officer of such entity.
The letter or summons issued should disclose the specific nature of the inquiry being initiated or undertaken. The letter should not be vague, and should not call for information available digitally or on the online GST portal.
Comments
The guidelines aim to bring transparency, efficiency and uniformity to the enforcement activities undertaken by GST authorities resulting in ease of doing business in India. Its implementation by the field formation would be key for its success.
Earlier, instruction [Instruction No. 01/2022-23 GST-Investigation] was issued by CBIC with respect to deposit of tax during search, inspection or investigation.
Separate instruction for issuance of summons [Instruction No. 03/2022-23] and for launching prosecution [Instruction No. 04/2022-23] were also issued by CBIC.
[1] Instruction No. 01/2023-24-GST (Inv.) dated 30 March 2024
