In a bid to facilitate ease of doing business, the Central Board of Indirect Taxes & Custom (CBIC) has set a timeline of one year to complete investigation into matters related to tax evasion by exporters/importers. It has reiterated that summons should not be issued to senior management, such as CEOs, CFOs, general managers, of large companies or PSUs, at the first instance.

This direction is part of the new guidelines pertaining to investigation of commercial intelligence/fraud (CI) cases. These are distinct from the category generally referred to as outright smuggling cases. “Since import and export of goods is also connected with doing business, the approach in investigating CI cases must be in line with ease of doing business,” stated a CBIC communication to field formation dated November 1.

According to the guidelines, the Commissioner is responsible for developing and approving any intelligence, investigation and its completion within her/his jurisdiction. “Every investigation must be initiated only after the Commissioner’s approval,” the communication said. Further, before initiating an investigation, the intelligence inputs and relevant aspects need to be appropriately analysed. This includes cross checking with available data, technical literature, prevalent industry practice, judicial pronouncements, extant legal framework, precedence, etc among others.

Collection info before launching probe

The guidelines call for collecting details before an investigation is initiated, thereby minimising interface with exporters/importers. “Even after the initial decision to conduct an investigation has been made by the Commissioner, the general principles of ease of doing business, including those driven by common prudence, must be kept in mind,” the communication mentioned. It advised that the time frame specified for appearance or producing information should be reasonable and in line with the communication of the letter/summons seeking the piecemeal information.

“In seeking information/document in CI matters, the letter/summons should disclose the specific nature of the inquiry being initiated/undertaken. Vague or general expression must be avoided,” noted the communication. A statement recorded under summons will need to be uploaded on the same e-file on which approval was granted. Similarly, outcome of search/inspection conducted, including panchnama or mahazar (when recorded), will also be uploaded. The e-file should be submitted to the Additional or Joint Commissioner within four working days from the date of statement, completion of search/inspection.

The communication advised against keeping investigation pending. Moreover, the closure report, consequent to appropriate payment of government dues by the person concerned, should also not be delayed. “Timely action in these stages are all part of preventive vigilance to ensure that there is no room for malpractices,” it said. The statement further underscored the need to record the absence of evidence, if nothing objectionable was found, following the conclusion of an investigation. .

The Commissioner has also been advised to meet the importer or exporter in case a reasonable grievance persists.

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