GST search ops: No coercive motion; dues fee at any stage

Citing “alleged use of force and coercion by officers for making recovery” throughout search, inspection and investigation and subsequent courtroom circumstances, the Goods and Services Tax (GST) investigation wing has issued directions stating that taxpayers will pay tax dues at any stage throughout search operation.

In an instruction, it additionally requested chief commissioners to take “strict disciplinary action” towards officers for utilizing power or coercion for getting the tax due quantity deposited throughout search or inspection or investigation.

“It is clarified that there may not be any circumstances necessitating ‘recovery’ of tax dues during the course of search or inspection or investigation proceedings. However, there is also no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liability on non-payment/short payment of taxes before or at any stage of such proceedings,” the GST investigation wing mentioned.

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The tax officer ought to inform the taxpayers concerning the provisions of voluntary tax funds by means of DRC-03, it added.

There have been numerous circumstances when GST has been deposited below power by calling in senior workplace bearers like administrators/ Promoters of the agency. This round makes an attempt to safeguard towards that, nevertheless, on condition 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 prompted undue harassment for the taxpayer.

EY India tax Partner Bipin Sapra mentioned, “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.”