• Notification Date: 03-04-2024
• Notification No: N/A

CBIC Instructs Central GST Officials to Maintain Ease of Business

The Central Board of Indirect Taxes (CBIC) has recently instructed the Central Goods and Services Tax (CGST) officers for maintaining ease of doing business while engaging in investigation with regular taxpayers has been welcomed by experts, who believe that it could contribute towards greater tax certainty. However, actual implementation of the directive on the ground would be key they believe. 

The directions are significant given the large number of cases where GST officials have initiated enforcement action as well as the issuance of several show cause notices in recent months. 

Abhishek Jain, National Head and Partner, Indirect Tax, KPMG said the instruction is a positive step towards addressing industry concerns and emphasising ease of doing business. “Implementation will be key to its success, and if followed, it could contribute towards tax certainty and stability in our country's business landscape,” he noted. 

The Central Board of Indirect Taxes and Customs (CBIC) recently came out with a uniform procedure for undertaking enforcement activities involving regular taxpayers by CGST field formations to ensure ease of doing business. The Principal Commissioner shall be responsible for developing and approving any intelligence, conducting a search, and completing the investigation in a case and the relevant subsequent action, including in the divisional formations, the CBIC said, adding that any information or intelligence collected will also be sent to the Principal Commissioner. 

It has further said that each investigation must be initiated only after the approval of the Principal Commissioner. Further, prior written approval of the zonal Principal Chief Commissioner will be required if the investigation is to be initiated and action to be taken in certain specific cases. These involve matters of interpretation seeking to levy tax or duty on any sector, commodity, or service for the first time, whether in Central Excise or GST; or a big industrial house and major multinational corporations; or sensitive matters or matters with national implications; or matters which are already before the GST Council. 

“In all of above four categories of cases, the concerned CGST field formation should also collect details regarding the prevalent trade practices and nature of transactions carried out from the stakeholders,” the CBIC highlighted, adding that the implications or impact of such matter should be studied to have adequate justification for initiating investigation and action. 

Rachit Jain, Partner at Lakshmikumaran & Sridharan Attorneys has agreed with this directive, stating that the CBIC has finally taken cognizance of the incidents of harassment faced by the CXOs and officials in regular tax investigations and suitably structured its guidelines to address such issues. “While it is appreciated that future investigations into big industrial houses and major multinational corporations will only be taken up after approval of Zonal Principal Chief Commissioner, the instruction lacks clarity on the taxpayers covered within the said category. A turnover-based criterion seems to be a plausible approach for identifying such taxpayers,” he noted. 

The instruction also aims at preventing protracted investigations by prescribing one year for concluding the investigation. “While the said timeline is the only directory in nature, it should encourage the authorities to finalise an investigation without unnecessary delay,” Jain said, adding that a similarly worded instruction was also issued by the Directorate General of GST Intelligence (DGGI) in February 2024.