The number 18 has a lot of significance in Hindu mythology — there are 18 Puranas and 18 chapters in the Bhagavad Gita.
Probably taking a cue from the importance of this number, the Central Board for Indirect Taxes and Customs (CBIC) recently issued 18 guidelines to the department personnel on conducting investigations and enforcement.
It is mandatory to get an approval from The Principal Commissioner for conducting investigations and enforcement. For four specific instances, the guidelines specify that a written approval from the Principal Chief Commissioner (and not the Principal Commissioner) is necessary.
One of these is if an interpretation is required of provisions of GST laws when the tax is levied for the first time.
Other instances are when summons are planned to be issued to big industrial houses and MNCs, investigations are planned on sensitive matters or matters with national implications, and matters which are already before the GST Council.
Apart from a written permission, the guidelines elaborate that the department personnel should also collect details regarding the prevalent business practices and the nature of transactions carried out.
It would be interesting to see how this guideline is implemented since none of the major terms used in the guidelines (such as big industrial house, major multinational corporations, sensitive matters and matters with national implications) have been defined.
Since GST has always been advertised as a “one nation, one tax”, every levy could have national implications. For instance, would investigations into gaming companies be considered to have national implications warranting a written approval from the Principal Commissioner? The directive to study the prevalent business practices and their implications is welcome and could reduce the intent of revenue maximisation that is prevalent today.
Some of the guidelines could confuse the investigators. One instruction states that if a taxpayer has utilised ITC towards payment of GST on its outward supplies, it is not acceptable for the department to send a summons with a question as to whether the input tax credit was availed.
The guidelines do not provide any alternative to this question which could lead to a situation where the question is not asked at all — taxpayers would certainly not mind this. Over the last few years, some taxpayers have faced multiple investigations on the same matter from different investigating agencies. CBIC has attempted to resolve this in their guidelines by stating that “there may be a situation where it comes to the Commissionerate’s notice that either the DGGI or the State GST department is also simultaneously undertaking record-based investigation of the same taxpayer on different subject matters.
“The Principal Commissioner must engage in dialogue with the other investigating office/s to consider the feasibility of only one of the offices pursuing all these subject matters with respect to the taxpayer, and the other offices consolidating their material with that office. If this outcome is not feasible, the reasons therefor should be confirmed on file by the Principal Commissioner”. Multiple investigations have not been removed from the statute book — the process may have become more complicated.
Assessment guidelines?
For almost seven years, there has been a disconnect between GST laws and their implementation by some trigger-happy assessing officers. While the latest set of CBIC guidelines has cleared some of the misconceptions about summons and enforcement, the key challenge would be to implement them as instructed in the guidelines.
CBIC would do well to also bring out similar broad parameters to conclude assessments as well.
The writer is a chartered accountant