The tax counsel would now suffer the execution when an assessee makes the voluntary payment of the tax in an investigation. The Central Board of Indirect Taxes and Customs (CBIC) rendered its field formation that the tax recovery dues must be executed by complying with the last legal process post to issuing the adjudication order and not in the searches.
The action is taken due to the complaints of the use of force and pressure from the tax council for making the recovery in the investigation.
“In case of any wrongdoing on the part of any tax officers, strict disciplinary action as per law may be taken against the defaulting officers,” CBIC specified in an internal department note said to the principal commissioners/commissioners of Central GST (all zones), the commissioner, GST Investigation, circulated in the late evening on May 25.
When a complaint is obtained via assessee for the use of the coercion through any of their officers to get the amount deposited in the inspection then it needs to be enquired.
Under the law, no recovery would be formed unless the amount becomes subjected to pay as per the passed order by the adjudicating authority.
“It is clarified that there may not be any circumstance necessitating recovery of tax dues during the course of search or inspection or investigation proceedings,” guidelines mentioned that when the assessee wants to deposit the GST liability then the same would be finished through form DRC 03 on the GST portal.
The action is meaningful because it seems that there was a rise in the instances of the complaints with respect to the GST officials through the force measures to recover the unpaid taxes in raids and investigations.
For the same concern, some assessees have approached High courts as per the added guidelines.
The Gujarat High court has shown its judgment and has recommended the department guide the officials with respect to any measures.
Karnataka High court led that if tax is collected in the investigation by pressure, this collection is in violation of articles 265, and 300A of the constitution and is liable for a refund.
“The matter has been examined. Board has felt the necessity to clarify the legal position of voluntary payment of taxes for ensuring correct application of law and to protect the interest of the taxpayers, CBIC stated.”
Position of Legal
The CBIC said that no recovery shall be formed under the law unless the amount gets subjected to pay in pursuance of an order given by the adjudicating authority.
“It is clarified that there may not be any circumstance necessitating recovery of tax dues during search or inspection or investigation proceedings,” As per the guidelines, through DRC-03 on the GST portal the assessee is enabled to deposit the GST liability.
