Lately, the intelligence wing of GST has been successful in unearthing many fraudulent tax-evasion cases. But the flip-side is that many taxpayers see the intelligence wing’s intervention as an ordeal. They want such inquiry/investigation to be limited to cases where there is substantial evidence of tax evasion. Most of the GST compliance violations (intended/unintended) can be resolved by the indirect taxes board by means such as issuing a show-cause notices to the assessee, demanding a written response, seeking a certificate from a chartered accountant, or calling for the conduct of audit by jurisdictional GST officials. All these actions could be performed without the interference of GST’s intelligence wing.
However, there have been claims that officials from the intelligence wing sometimes get involved even in small issues such as mismatch of returns or input tax credit (ITC). Proceedings with the intelligence team — inquiry/investigation/audit — is understood to be a repeat of what the assessee has already had with the jurisdictional officers. Assessees would have gone through inquiry/audit by GST jurisdictional officers and CAG audit by the time investigation by the intelligence officers starts.
In addition, there have been instances of assessees being summoned by the intelligence team to give evidence or produce documents. This process is said to be long-drawn-out and may require the physical presence of the top management (if the assessee is a company). What’s more worrying is that taxpayers feel threatened by the intelligence officials’ power to arrest. Thus, assessees feel they are bound to meet the demands of these officers. Given the ordeal they face, assessees lament that the power to summon must be exercised as a last resort — that is, only when an assessee does not co-operate even after multiple tax-notices.
Taxpayers also want changes in the law to mandate the intelligence wing to provide a statement to the assessee — before conducting any investigation or audit — with details about why the department believes there is huge tax evasion by the assessee.