Summary of the GST Instruction No.03/2024 related to Guidelines for handling Multiple Interpretations during CGST Audit and investigation.
- Earlier Board has issued Guidelines to make it easier for regular taxpayer to do business while they are under investigation through instruction No.01/2023-24-GST dated on 30-03-2024. The aim of the guidelines is to ensure smooth investigation process and does not create any unnecessary difficulties for business.
- Afterwards, Government has issued GST Instruction No.03/2024 – Guidelines for handling Multiple Interpretations during CGST Audit and investigation by applying para 2(g) of the earlier issued instruction in audit matters.
- The focus of this instruction is to apply Para 2(g) of Instruction No.01/2023-24-GST dated 30-03-2024 in audit matters. The para 2(g) says In CGST Zone,Principal Commissioner might investigate situation where they believe that taxpayer has not pay full amount of tax they owed due to Multiple interpretations of CGST Act, rules or other official guidelines. However , it may that tax payer might have following a common trade practise in their industry that interpretes the rules differently. This scenario results in more than one interpretation and likelihood of litigation , change in practice etc.
- In these situations, it is desirable that the Zonal (Pr.) Chief Commissioner should refer the matter to relevant policy wing of the board i.e GST Policy or TRU. This should done before the investigation is completed and before show cause notice is issued. This can help to maintain consistency in how the rules are applied and to avoid future legal disputes. If the issue is important , it might also be brought before the GST Council for future consideration.
- The Board desires that during process of audit, CGST Audit Principal Commissioner meets the scenario discussed earlier about different interpretations of tax rules , the Zonal Principal Chief Commissioner should follow the procedure mentioned in para 2(g) of Instruction No.01/2023-24. This applies to on-going audit proceedings.
Instruction No.03/2024-GST dated 14-08-2024
F. No. GST/INV/Instructions/2023-24
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Indirect Taxes and Customs)
New Delhi, Dated 14″ August, 2024.
To,
All Pr. Chief Commissioners/Chief Commissioners, CGST Zones/ CGST & Customs Zones,
All Principal Directors General/Directors General under CBIC,
All Pr. Commissioners/Commissioners, CX & CGST (incl. Audit)
Madany/Sir,
Subject: Applying para 2(g) of Instruction No. 01/2023-24-GST (Inv.) dt. 30-3-2024 in Audit
matters- reg.
The undersigned is directed to say that the Board’s Instruction No. 01/2023-24-GST (Inv.)dated 30-03-2024 has been issued providing guidelines for maintaining ease of doing business while engaging in investigation with regular taxpayers. The para 2(g) of said Instruction is —
“The scenario may arise in a CGST Zone where an issue investigated by one of the (Pr.) Commissioners is based on an interpretation of CGST Act/ Rules, notifications, circulars ete, and it is in the direction of proposing non-payment or short payment of tax, however, the background is that the taxpayer(s) is/are following, or have followed, a prevalent trade practice based on particular interpretation on that issue in the sector/industry. This scenario results in more than one interpretation and likelihood of litigation, change in practice etc.
Insuch cases, it is desirable that the zonal (Pr.) Chief Commissioner make a self-contained reference to the relevant policy wing of the Board i.e. the GST Policy or TRU. The endeavor, to make such reference before concluding investigation, and as much in advance, as is feasible, of the earliest due date for issuing of show cause notice, may be useful in promoting uniformity or avoiding litigation if the matter, after being processed, is amongst those that also gets placed before the GST Council.”
The Board desires that during the process of audit, wherever the relevant CGST Audit (Pr.) Commissioner comes across the scenario described above, the Zonal (Pr.) Chief Commissioner should follow the procedure and endeavor prescribed by Board in para 2(g) of above Instruction. This applies also to on-going audit proceedings.
Yours faithfully,
(Vijay Mohan Jain)
Commissioner, GST-Investigation, CBIC
