There might have been chances when you came across instances of the Directorate General of GST Intelligence (DGGI), issuing notices and alleging tax evasion. You might have questioned yourself what this organization is all about. In what way does it operate? In what way does the same discover the instances of tax evasion?
The operations of DGGI and its functionality are stated as-
What is DGGI Under GST?
DGGI is related to curbing the evasion of GST. Before the start of GST in 2017 the company was known as the Directorate General of Central Excise Intelligence (DGCEI). The same is the Apex intelligence organization operating under the CBIC, entrusted with the task of collecting intelligence associated with GST evasion.
A Brief Description of DGGI’s Function
DGGI character is concerned with the collection, collation, and dissemination of intelligence on all points connecting to GST, Central Excise (CE) & Service Tax (ST) which have all India repercussions, to discover methods and alert field formations, alert other law enforcement agencies for the trends of evasion and investigate offences that comprise of evasion of GST, CE or ST which have multi-commissionerate ramifications, and also recommend policy amendments.
Main Extention Point of DGGI
The Directorate General of GST Intelligence (DGGI) has its headquarters in New Delhi, with four sub-national units (North at Delhi, South at Bengaluru, East at Kolkata, and West at Mumbai) headed by Director-Generals, 26 zonal units, and 40 regional units. It is a slim organization with a working force of about 1500.
What is the Function of DGGI?
Collecting intelligence is a tough procedure. It comprises the analysis of data utilizing the updated data analytical tools, of revenue, of the performance of sectors or industries, of specific companies in those sectors or industries, and of differences or mismatches in submissions incurred via a company to distinct legal authorities all such are from different open sources.
For the sharing of intelligence and modus operandi, there is also close interaction with the state GST enforcement wings. It comprises the collection of intelligence/information from individuals who can be disgruntled employees or any public-spirited individual.
Status of DGGI’s Informants? Are they Given Awards?
Yes. To uplift such informers there is a reward scheme. Informers are qualified for rewards of up to 20% of the net sale proceeds of the contraband goods seized and/or the amount of duties or service tax evaded, including the amount of penalty imposed and recovered. For the officers who have detected the case, along with managing the investigation to its successful and logical conclusion when the case has achieved finality there is a similar reward scheme available.
How DGGI Confirms the Inspection of Data?
Having collected the intelligence, it is analyzed to ensure its integrity. And if discovered actionable then the action is commenced. With a simple letter pursuing data from the entity involved, invoking the provisions of the GST law, an investigation can start.
Section 70 of the CGST Act furnishes for summoning proof or a person who the DGGI believes has the related documents. under summons an inquiry initiated is considered to be a judicial proceeding u/s 193 and 228 of the IPC. Until enough causes are provided for not honoring the summons is mandated to be honored.
What are DGGI Rules and Processes?
Actionable intelligence can directed to inspection, search, and seizure. Section 67 of the CGST Act outlines that where the Joint Commissioner has reason to acknowledge that a taxable individual has stopped any transaction for the supply of goods or services or both, or has avail for the input credit not due, or indulged in violation of the law, he enables to authorize an officer to inspect, search premises, and seize documents.
The provisions of the CrPC shall apply to these investigations. The vital component is ‘reason to believe’. The courts stressed that the causes to consider cannot be a whim and need to be recorded in writing and the proof needs to be such leading to the officer finishing that the sole way in the investigation is to scrutinize the premises.
Information Collected During Raids or Search Operations
Investigating or obtaining documents, the DGGI can summon all persons related to explain the issue. U/s 70 of the CGST Act the statements are recorded.
Where the Commissioner has grounds to consider that the collected proof recommends that the individual has executed any offence related to supplying goods without an invoice, issuing an invoice without the supply of goods, claiming ITC wrongly, collecting tax, and not paying the same before the government, faking documents, blocking officers in the release of their duties, or tampering with proof, these individuals can be arrested.
Section 69 has allowed these authorities of arrest-reason to believe is again an important part. CrPC provisions will control the course to be adopted hence the arrest reason needs to be reported and the individual is required to be produced before a magistrate within 24 hours of the arrest.
What is the Deadline for Releasing Showcase Notices?
Post collection of all the proof, a charge of evasion of GST in the form of a Show Cause Notice (SCN) is developed. The SCN has to provide the information of the alleged evasion, the proof laid on in reaching this conclusion, and the quantum of such evasion.
Recommended: Best Strategies to Handle GST SCN with Basic Reply Format
Typically 30 days is provided to the party, extendable on appeal, to provide their defense against the allegations. Investigating officers allotted a chance for a personal hearing and cross-examining. The case is adjudicated by the related authority; a chance for appeal is available for both the department and the party.
How Does DGGI Affect Taxpayers or Companies?
With the assistance of advanced analytics and the huge availability of information in the public domain, companies must note that any attempt at evasion shall be detected and indeed the companies should comply with the needs of the statute.
Evasion must be within the compliance officers, get a stringent audit of their processes accomplished via the competent auditors, update themselves with lawful developments, and engage strictly with the department at the time when the local office secures the interaction sessions with the industry. They must have the motive to consistently follow the legal and where they think that the law does not have any reason involved with the CBIC via industry forums.
DGGI Process for a New SOP
CBIC must issue the recent SOP, the same recommends that on the events the DGGI has been excited. Based on the interpretation of law/intent, the investigative agencies must prevent the matters. The same must be left before the makers of the policy.
These cases must be directed before CBIC so that measures can be taken all over India. With the norms of the industry, the CGST field formations must involve and address the issues that everyone wishes to deliberately evade the law.
