Tax sleuths to end maximum penalty for minor breaches

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In a bid to ensure genuine taxpayers are not harassed, the Office of the Commissioner of Commercial Tax has evolved protocols for the department’s Roving Squad so that they don’t levy a maximum penalty for minor breaches. The protocols were framed after several complaints were brought to the notice of additional chief secretary and commissioner of commercial taxes, T V Somanathan, wherein the Roving Squad officers have been levying maximum penalty for minor breaches of tax regulations and procedural requirements, without adhering to penalty as envisaged under section 126 of Central Goods and Service Tax (CGST) or State Goods and Service Tax (SGST).

This comes in the wake of Office of the Commissioner of Commercial Tax renaming its Enforcement Wing as ‘Intelligence Wing’ and carving out a technical cell, data cell, and survey cell. The Intelligence Wing which comes into being from this month is assigned a set of protocols by Somanathan to ensure that the powers under Section 67 and 68 are not misused by the officials, thus maintaining uniformity and discipline in its functionality. As per the protocols for the Roving squad, a vehicle check should be conducted only during the hours of duty and no e-way bill is required, pertaining to commodities specified in sub-rule (14) of Rule 138 of GST and vehicles should not be detained for not possessing e-way bill. The protocol also states that physical verification of goods once done during transit at one place of the State or Union Territory, should not be forced for further physical verification unless specific information relating to tax evasion is made available. In case, wherein the Roving Squad Officer fails to take any decision during duty hours, he/she has to hand over detained goods and conveyance to the adjudicating unit immediately.

The Roving Squad has also been advised not to levy any penalty if the offence is less than Rs 5,000 or wherein a mistake or omission in documentation is easily rectifiable and has been committed without fraudulent intent. However, Rs 5,000 will be levied against those who violate the e-way bill purpose or destination for which it was generated or the expiry of e-way bill. However, Rs 25,000 will be charged if any person repeatedly indulges in the same violation.  Meanwhile, the new investigation wing will be under the control of Joint Commissioner (Intelligence), who will have control over the entire intelligence division. As per the guidelines, preparation of investigation file on trivial issues will have to be avoided and the investigation file should be backed by sound data. Interestingly, a protocol has been laid against the roving squad after complaints surfaced that officials are levying a maximum penalty for even minor breaches.

Probable tax evasion crimes:

  • Non-disclosure or suppression of purchases made from the unorganized sector to avoid tax.
  • Showing lower turnover with meager profits than actual to avoid tax payment.
  • Taxpayers dealing with metals and stones, not issuing invoices to un-report sales.
  • Tax evasion in the real estate sector, particularly in the construction segment like electrical goods, marbles, tiles, sanitary wares, etc.
  • Claiming input tax credit against fake invoices and ineligible claim of an input tax credit.

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