GST investigation wing directs field units to take quick action in pending cases, issue show cause notices where needed


The Goods and Service Tax (GST) investigation wing has asked field units to issue show cause notices in time-barred cases that are pending investigation and warrant so, after it found that notices have been issued in only a few cases of tax evasion and availing input tax credit fraudulently.

The wing, under the Central Board of Indirect Taxes and Customs (CBIC), has directed principal chief commissioners or chief commissioners to draw up an action plan to ensure that no cases are pending investigation beyond one-year.

In an instruction notice dated September 22, the wing has directed principal director general, director general, principal chief commissioners and chief commissioners within their jurisdictions to, “take stock of pending investigation cases/ other cases that warrant issuance of show cause notices and take appropriate action to ensure timely completion of investigations and issuance of show cause notice well before the last date.” ET has seen a copy of the notice.

The Board noted that the last date for filing the annual returns for the FYs of 2017-18, 2018-19 and 2019-20 was already over, and therefore the time limit of three or five years for issuing demand notices would be approaching fast and any delay in issuing show cause notices would leave little time with the adjudicating authority to pass orders.

“This might result in a situation where either the adjudicating authority is not able to pass orders within prescribed time period or quality of adjudication suffers,” the Board said.

“It is felt that the present situation warrants for extra efforts on the part of field formations and strict monitoring at supervisory level,” it added in the notice to field units.

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Experts said that while the department was trying to protect potential revenue, it should only issue demand notices where evidence is certain, and not in cases of interpretation.

“It’s important that distinction is made between a fraud (based on tangible evidence) and interpretation issues. Unless there is an evident risk of revenue loss, the role of investigating /intelligence officers should be to gather all facts and pass on further for issuance of a SCN,” said Pratik Jain, partner at Price Waterhouse & Co, LLP.

Aditya Singhania, partner at Singhania GST Consultancy said that taxpayers must prepare themselves to ensure complete reconciliations of their returns filed vis-a-vis books of accounts, so that differences if found out can be smoothly substantiated.

“This comes as no surprise as the Department has already started conducting audits of the assessee, however, the instruction will certainly force conducting audits of multiple years on cumulative basis,” he added.



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