New Delhi CBIC Chairman Vivek Johri said that the Central Board of Indirect Taxes and Customs (CBIC) will try to complete all tax investigations within a year to give certainty to taxpayers, while all measures of tax collection are modern and non-intrusive. approach will follow. Interview. Johri said the case for further Goods and Services Tax (GST) rationalization and rectification of duty discrepancies is right, and the only question is about implementation time. Edited excerpt:
The CBIC has brought in several rule changes related to arrest, summons and prosecution in recent weeks to ensure that tax officials exercise their authority more judiciously. So what is the new approach to compliance enforcement?
The intention is to provide greater transparency in our (tax compliance) enforcement environment and greater equity when our officers take up enforcement matters. Furthermore, the intention is to do this in a contemporary, modern way where we do not resort to coercive methods on the presumption of tax payer’s antitrust but do check it in a professional manner. We had some guidelines under the Central Excise and Service Tax regime. But since the introduction of the Goods and Services Tax (GST), even though we relied on those guidelines, there were no codes or standard operating procedures or guidelines for enforcement activity under the GST law.
So we tried to codify a lot of things, and the three main areas that needed to be addressed as part of the enforcement activity are issuing summons, exercising the power of arrest, and cases where criminal prosecution is initiated. Have to go
The government has also started making the law non-criminal across the board. What we have done is part of that guilt-free effort. What we have done is raising the limits for initiating prosecution and arrest. Hence you will see that the limits have been increased under both GST and Customs laws.
Will the new rules reduce questions and summons from tax officials?
One of the highlights of what we have done is to appoint an officer sufficiently senior, a Deputy Commissioner or an Assistant Commissioner, whose approval is required to issue summons. This will bring more discipline in the manner of issuing summons. We have also said that if it is possible to obtain information or documents through a simple letter, we should try that first. We should issue summons only if there is no response from the taxpayer. The first thing we do to our officers is to issue a polite letter mentioning the documents required to conduct an investigation.
There are a lot of concerns that the business raises from time to time regarding the way in which documents and records are sought, even where some records or documents are available with us or in the public domain, for example , the financial position of a company. They are in public domain if it is a listed company or ministry of corporate affairs. Also, copies of GST returns and registration applications are available in the system.
We have stipulated in the guidelines that such records should not be demanded as it increases the burden of the taxpayer. It is not right to ask for such records. We also said that one should try and avoid calling the most senior management directly from a business entity. Only if someone has some evidence that the information or document they are looking for is available at that level and is not with anyone at the bottom of the company or organization, should he (the company leadership) take the step. This tendency of calling very senior management executives directly is something we have asked them (officers) not to do.
Why were the arrest criteria revised?
One of the concerns of the industry relates to the exercise of the power of arrest by the authorities. We have said that the authorities have to evaluate the evidence they have about the person’s role in committing the crime. Unless you have at least reasonable evidence to begin with, or you think the other person will tamper with evidence or threaten witnesses, you should not resort to arrest. These are two or three broad criteria that I think all the laws of the land will set, and we have reiterated those principles. The purpose is that the power to arrest should not be used indiscriminately, and great care should be taken – after all, when you arrest a person, you are depriving that person of his personal liberty. So this (arrest) is a very extreme step and it should be taken with due responsibility and due diligence, and adequate protection.
In matters of technical nature, where there may be difference of opinion between the taxpayer and the tax department on the interpretation of the law, we have advised not to resort to arrest. One of the things we have done is to increase the threshold of prosecution. before it was Duty evasion of 1 crore, which has been increased to . Has been done 50 million.
Now we want the entire investigation activity to happen within the stipulated time frame.
We have said that we are monitoring the timeline for the competition of the investigation and the prosecution is to be initiated within the stipulated time frame. All milestones will be monitored, and we expect our officials to adhere to the timelines. On the customs side, in addition to the applicability of these guidelines, we have increased the threshold for both arrest and prosecution.
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