Upset over complaints of alleged coercive action by tax inspectors, the Central Board of Indirect Taxes and Customs (CBIC) has warned of disciplinary action against officials.
In a direction issued to officials on Wednesday, the CBIC clarified that recovery of tax arrears can be done only after issuing a notice and a judgment order.
The tax authority said that no recovery can be made unless the amount becomes payable in accordance with an order issued by the adjudicating authority or otherwise in accordance with law. That is, there cannot be a situation where the tax due is to be “recovered” by the tax officer during the course of search or investigation if any issue is detected during the process.
The CBIC has advised senior field officers such as Principal Chief Commissioners and Directorate General of GST Intelligence (DGGI) to investigate at the earliest any taxpayer complaint regarding use of force or coercion by any of its officers. “In case of any wrongdoing on the part of any tax authority, strict disciplinary action as per law may be taken against the defaulting officers,” the tax authority said in the directive. The mint has seen a copy of the communication.
An email sent to CBIC on Thursday seeking comments for the story did not elicit any response at the time of publication. The CBIC in the direction also pointed out that the law does not bar taxpayers from making voluntary payment of any liability and the tax officer is required to inform the taxpayers about the provisions of voluntary tax payment.
Tax professionals said the CBIC’s direction to the authorities will reassure taxpayers and will come as a relief. CBIC has clarified that no tax officer has the right to compel a taxpayer to pay tax during inspection or investigation. Rajat Mohan, partner, AMRG Associates, an accounting firm, said, “If followed in letter and spirit, this directive will go a long way in making investigations easier.”
The move comes in the context of complaints from taxpayers who have raised their voice against alleged coercion by tax inspectors during searches, some of which have reached courts. The government is stepping up its tax compliance drive by using technology to match information reported by various entities in the supply chain, pre-filling tax return forms and restricting tax credits where reporting obligations have not been met. goes. It has also recently conducted several searches in cases where irregularities in the utilization of tax credits have been suspected. This, along with economic recovery from Covid, has helped GST collections hit records 1.68 trillion in April.
Abhishek A Rastogi, partner at law firm Khaitan & Co, said the CBIC clarification will boost business confidence and give taxpayers a fair opportunity to represent the issue before the adjudicating and appellate authorities. tax officer.
Rastogi said some online gaming companies, a food and beverage chain, and some firms in the denatured ethyl alcohol industry had moved the court alleging coercive action.
“Since it is clearly provided that strict disciplinary action will be taken, it is expected that during the course of investigation, taxpayers are not compelled to make the payment as voluntary tax payment,” Rastogi said.
Earlier this month, CBIC Chairman Vivek Johri advised the field officers involved in issuing quasi-judicial orders and those involved in the review process to ensure that judicial discipline, rule of law and due process are followed.