GST field officers can restrict the tax credit as of now upon the grounds of the sources found and it is apart from the suspicion said CBIC (Central Board of Indirect Taxes and Customs).
The sources specified that there could be five situations in which these credits can be restricted via senior tax officers. “These include availment of credit without any invoice or any valid document or availing of credit by purchasers on invoices on which GST has not been paid by sellers.”
CBIC specified that “The commissioner, or an officer authorized by him, not below the rank of assistant commissioner, must form an opinion for blocking of input tax credit (ITC) only after “proper application of mind” acknowledging the points of the matter.”
“It is reiterated that the power of disallowing debit of amount from electronic credit ledger must not be exercised in a mechanical manner and careful examination of all the facts of the case is important to determine cases(s) fit for exercising power under rules 86A,” so mentioned.
In December 2019, Rule 86A as defined in GST rules which furnished the authority to taxmen to limit the input tax credit available inside the electronic credit ledger of the assessee if the officer poses “reasons to believe” that the ITC was taken in a bogus way. Beneath the rule till last month, the ITC of 66000 businesses worth Rs 14000 cr has been restricted.
It draws consideration to the objective determination upon the grounds of the intelligent care and evaluation as defined through specific recognition of the suspicion.
The causes are upon the grounds of the material evidence available or accumulated towards the taken of the ITC in a bogus way or ineligible input tax credit taken under the guidelines beneath sub-rule (1) of Rule 86A.
The mentioned rules have suggested a fiscal limit towards the division of the powers among the commissions, joint commissioners, and assistant commissioners on blocking the tax credit.
Towards restricting the ITC exceeding Rs 5 cr principal commissioner/ commissioner opts for the decision. In which the fiscal amount lies in the range of Rs 1 to 5 cr in addition to that the commissioner or the joint commissioner shall opt for the decision and below Rs 1 cr deputy commissioner/ assistant commissioner rank officer will take the decision on ITC blocking.
The tax expert specified that If these broad guidelines are followed by central as well as state tax officers in letter and spirit, these will surely reduce the litigation for honest taxpayers who are currently facing harassment at the hands of tax officers.
