“Do not summon top officials of companies for routine matters and don’t arrest taxpayers unless there is evidence of mens rea or intent to evade taxes,” the Revenue Department instructed GST officers in separate communiques issued on Wednesday.
The bid to rein within the misuse of arrest provisions below Central GST regulation, follows a Supreme Court verdict final August that “merely because an arrest can be made because it is lawful, does not mandate that arrest must be made”.
Also learn | Supreme Court ruling unlikely to change GST regime: Tarun Bajaj
The Central Board of Indirect Taxes and Customs (CBIC) has laid down detailed tips for arrests below the GST regulation, together with the circumstances to be met earlier than an arrest is made, the process for making arrests and post-arrest formalities.
Urging officers to not make arrests in a routine and mechanical method, the CBIC has requested them to think about a number of components in every case, together with whether or not the particular person involved is the mastermind or key operator behind fraudulent enter credit or different violations of the regulation.
“Approval to arrest must only be granted where the intent to evade tax or commit acts leading to availment of wrongful input tax credit or fraudulent refund of tax or failure to pay amount collected as tax… is evident and mens rea or guilty mind is palpable,” the CBIC has instructed. Arrests shouldn’t be resorted to in circumstances of a technical nature, arising out of various interpretations of the regulation, it added.
Noting that non-public liberty is a crucial side of the Constitutional mandate, the highest courtroom had mentioned: “A distinction must be made between the existence of the power to arrest and the justification for exercise of it. If the investigating officer has no reason to believe that the accused will abscond or disobey summons, and has, in fact, throughout cooperated with the investigation, we fail to appreciate why there should be a compulsion on the officer to arrest the accused.”
Taking cognisance of cases the place GST area formations have summoned high officers of corporations ‘in a routine manner’ for in search of paperwork and even statutory data which can be accessible on-line, recent norms have additionally been issued for issuing summons.
“Senior management officials such as CMD/MD/CEO/CFO of any company or PSU should not generally be issued summons in the first instance. They should be summoned when there are clear indications in the investigation of their involvement in the decision-making process which led to loss of revenue,” the rules state.
While issuing of summons is likely one of the devices to get info on the evasion of tax, such energy have to be exercised judiciously and officers should additionally discover choosing a letter of requisition for info in circumstances the place they might suffice as an alternative of issuing summons, as per the directive .
“While the GST officers should take due note of these guidelines, taxpayers should also peruse them to understand their rights,” mentioned Abhishek Jain, accomplice (oblique tax) at KPMG in India.
Source: www.thehindu.com