Now, GST probe into big corporates, major MNCs needs a ‘written approval’

Central GST officials to seek a prior written nod of zonal Chief Commissioners before initiating any investigation into big industrial houses and major MNCs, as well as “sensitive matters or matters with national implications”

The Department of Revenue has asked the Central Goods and Services Tax (CGST) officials to seek a prior written nod of zonal Chief Commissioners before initiating any investigation in cases relating to big industrial houses and major multinational corporations (MNCs), as well as “sensitive matters or matters with national implications”.

The directive is part of a set of instructions issued on March 30, titled ‘Guidelines for CGST field formations in maintaining ease of doing business while engaging in investigation with regular taxpayers’, which state that each investigation must be initiated only after the approval of the Principal Commissioner.

The guidelines further specify situations where the “prior written approval of the zonal (Pr.) Chief Commissioner shall be required if investigation is to be initiated and action to be taken in a case falling under” four categories.

Apart from large corporates and major MNCs, a written nod is also mandated for matters that are already before the GST Council and “of interpretation seeking to levy tax or duty” on any sector, commodity, or service for the first time, whether in Central Excise or GST. Tax experts were not yet clear about how a ‘big industrial house’ and major MNC would be defined under these norms.

In all these categories of cases, including “sensitive matters or matters with national implications”, the CGST field formation concerned should also collect details regarding the prevalent trade practices and nature of transactions carried out, from stakeholders. “The implications/impact of such matter should be studied so as to have adequate justification for initiating investigation and taking action,” said the guidelines.

The framework was conveyed to officials after the Central Board of Indirect Taxes and Customs (CBIC) discussed the need for CGST field formations to follow a uniform procedure in undertaking enforcement activities, involving “regular taxpayers, which incorporates aspects related to the ease of doing business”.

For all investigations, tax officials have been asked to ascertain if any inquiry has already been initiated on the same subject matter or with respect to the same taxpayer or GST Identification Number (GSTIN) by another investigating office or tax administration. “The position must be placed before the authority who is to approve initiation of investigation,” the guidelines said.