Economy

CBIC moots stern action on officials for ‘coerced GST recoveries’

Tax experts said there had been several cases of GST being deposited under force by calling in senior office bearers such as directors or promoters of a firm in the course of searches, inspections and probes — what they termed as coerced ‘voluntary’ payments in the presence of GST officials. 

Tax experts said there had been several cases of GST being deposited under force by calling in senior office bearers such as directors or promoters of a firm in the course of searches, inspections and probes — what they termed as coerced ‘voluntary’ payments in the presence of GST officials.  | Photo Credit: NAGARA GOPAL

Responding to taxpayers’ allegations about the use of force and coercion to ‘recover’ GST dues during searches and probes by revenue officials, the Central Board of Indirect Taxes and Customs (CBIC) has issued instructions for Chief GST Commissioners to examine such complaints expeditiously and take strict disciplinary action against errant tax officials.

The communique issued by the CBIC’s GST Investigation wing on Wednesday also clarified that ‘there may not be any circumstances necessitating recovery of tax dues while conducting searches or inspections’ but there is no bar from taxpayers voluntarily paying up at any stage.

Tax experts said there had been several cases of GST being deposited under force by calling in senior office bearers such as directors or promoters of a firm in the course of searches, inspections and probes — what they termed as coerced ‘voluntary’ payments in the presence of GST officials.

The CBIC missive acknowledges that “some taxpayers have also gone to the High Courts in this regard” and though it provided an avenue for taxpayers to complain, courts may still need to be invoked where recovery is forced.

“This may give taxpayers a chance to represent their issue but one hopes they are not forced to pay voluntary tax payments during investigations now that the department is mooting stern disciplinary action,” said Abhishek A. Rastogi, partner at Khaitan and Co. 

“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,” stressed EY India tax partner Bipin Sapra. 

Mr. Rastogi also noted that the issue will not die in those cases of coercive recovery when the tax authorities will force firms to pay the amount as voluntary tax. “The taxpayers will have to continue seeking court assistance under the writ jurisdiction”, he explained.

In many cases, bank accounts had been frozen or refunds had not come through after making ‘voluntary’ payments in the course of probes, searches and inspections, which have caused undue harassment for the taxpayer, said a GST expert, requesting not to be named.


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Printable version | May 26, 2022 11:30:15 pm | https://www.thehindu.com/business/Economy/cbic-moots-stern-action-on-officials-for-coerced-gst-recoveries/article65464467.ece