The Tamil Nadu Government has issued the circular on Monday empowering the GST officers to Conduct Inspection, Determine the GST amount, ITC wrongly availed or utilized, etc.
There are certain issues arising out of such empowerment of officers who conducted an inspection to raise demand as adjudication officers. In order to demarcate the functions of inspection and adjudication independently without influence from each other, the instructions issued in the circular dated May 31, 2019, are withdrawn with immediate effect.
An audit or inspection, if it results in the unearthing of any tax short paid, ITC wrongly availed, etc., a show-cause notice has to be issued by the proper officer for determining the liability under Section 73 or 74 of the Act as the case may be, followed by passing of an order by adjudicating authority.
In order to issue such show-cause notice, the adjudicating authority needs grounds/materials and therefore it is imperative that the Inspecting officer has to draw a detailed report on the findings of Inspection conducted by him/her. Thus, the Inspecting officer as stipulated in the Circular dated May 31, 2019, has to submit his/her report with specific findings of each item of discrepancies/defects noticed quantifying the amount of turnover, tax, and penalty to the Deputy Commissioner/Joint Commissioner of Intelligence Wing concerned.
On receipt of the inspection report from the inspecting officers, the Joint Commissioner should examine the same with the defects noticed in the IF approved. They have to see whether all the issues be examined as contained in the IF, have been examined and discussed in the said inspection report, and on satisfying the same, the inspection report could be approved by them. If any point/s as contained in the IF has/have been omitted to be discussed in the inspection report then the inspection officers concerned should be directed to examine the omitted point/s of the IF and resubmit the inspection report to the Joint Commissioner.
Once the inspection report is approved, the group head of the Inspecting team shall send his report along with documents collected at the time of inspection to the jurisdictional proper officer within the stipulated time of 30 days from the date of conclusion of the inspection. The inspection team shall send the Inspection report through the back office system itself to the jurisdictional proper officer concerned. A task for adjudication has to be auto-generated to the proper officer login once the inspection team sends the inspection report in the portal. A separate MIS report will be created to watch the progress on the follow-up action on the number of inspection reports sent by the Inspection team and the status of adjudication from the proper officer side. However, until the development of the back office, the Inspecting officer must send the inspection report manually to the proper officer concerned. Both inspecting officer and jurisdictional proper officer shall maintain suitable registers for this purpose and these registers have to be checked by the Deputy Commissioner concerned during the time of Inspection of the subordinate offices.
“On receipt of the above report, the jurisdictional proper officer shall issue show cause notice under section 73/74, as the case may be, without mentioning the correspondence details received from the Intelligence wing within 15 days from the date of receipt of the inspection report. Though the show cause notice must contain the details of the inspection report, it should not be merely the reproduction of the same,” the circular added.
The jurisdictional proper officer shall afford personal hearing wherever the taxpayer requests or where the adverse decision is to be taken and the provisions contained in section 75 of the Act should be strictly adhered to while passing adjudication order under section 73 or 74 of the Act.
Further, the circular stated that if the proper officer finds that any of the proposals contained in the show cause notice issued, based on the inspection report, required to be dropped with reference to objections filed by the taxpayer based on valid documentary evidence or any other valid legal grounds, he has to record his/her specific findings to that effect.
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