To cut back the incidence of tax officers forcing companies to pay extra taxes throughout search operations, the GST investigation wing of the Central Board of Indirect Taxes and Customs (CBIC) has cautioned that strict disciplinary motion can be taken towards them if such allegations are discovered to be true.
In a round dated May 25, the GST investigation wing has clarified that restoration of tax may be made solely after following the due authorized technique of issuance of discover and subsequent affirmation of demand by issuance of the adjudication order.
In case a criticism from a taxpayer is obtained relating to use of drive or coercion ‘recovery’ for getting the quantity deposited throughout search or inspection or investigation, strict disciplinary motion is to be taken as per legislation if any wrongdoing is to be discovered on a part of any tax officer, it stated.
“Such strict action is expected to be a strong deterrent against defaulting officers who seek to force such recoveries from assessees during search, inspection or investigation proceedings without giving them adequate time to consult their tax experts/ consultants,” stated Tanushree Roy, director- Indirect Tax, Nangia Andersen LLP.
The problem will stay that in most of those circumstances when coercive restoration occurs, the tax authorities ask the taxpayer to pay the quantity as a voluntary tax cost, stated Abhishek A Rastogi, companion at Khaitan & Co.
There have been quite a few circumstances when GST has been deposited below drive by calling in senior workplace bearers like administrators/promoters of the agency. This round makes an attempt to safeguard towards that. However, provided that the mechanism of depositing tax below DRC-03 exists, the officers should proceed to not directly coerce the assessee to pay up. There have additionally been circumstances of freezing of financial institution accounts, which have brought on undue harassment for the taxpayer.
“While the circular will reduce the use of coercion by the department to get the tax deposited during the investigation process, given that the officers have powers to summon and freeze bank accounts, any direct instruction may be of little help,” Bipin Sapra, tax companion, EY India, stated.
Source: www.financialexpress.com”