Individuals assessed with an annual turnover of more than Rs 1.5 crore are administered by the Center and the state tax authorities in a ratio of 50:50 on computerized random sampling.
In order to resolve jurisdictional issues while dealing with enforcement cases, the GST Board has clarified that the revenue authorities, whether Central or State, who initiate the enforcement action will be responsible to carry out all consecutive actions such as appeal, review, arbitration.
The GST Council Secretariat, in a memorandum from the office, stated that various practices are followed by field formations regarding the issuance of recurring show cause notices (SCNs) as well as other follow-up actions in cases where a investigation was opened and finalized by the central tax office. authorities in respect of taxpayers under the State Tax Administration and vice versa.
“In some cases, the authority initiating the investigation also issues recurring SCNs while in other cases, it is up to the relevant jurisdictional tax authority, which administers the taxpayer, to issue recurring SCNs,” said he declared.
The Council stated that a taxpayer located in one state is open to enforcement action by both authorities.
“An enforcement action against a taxpayer, assigned to the state tax authorities, may be initiated by the central tax authorities (and vice versa). In such cases, all subsequent actions relating to the case, including, but not limited to, appeal, review, adjudication, rectification, review shall rest with the authority that initiated the enforcement action,” the Council Secretariat said.
Reimbursement in such cases, however, can only be granted by the competent tax authority, administering the taxpayer.
He also stated that additional/recurring SCNs are issued by the actual jurisdictional authorities (who are responsible for assessing taxpayer returns) as they will be able to access taxpayer records and returns.
AMRG & Associates Senior Partner Rajat Mohan said that in most cases law enforcement agencies have been found to pick up the cases for investigation. However, after an initial tax filing, subsequent actions are left in abeyance for the relevant jurisdictional officers.
“The lack of clarity around who will take action after the SCN is issued (after an investigation) has deterred tax officials from bringing cases to a logical end,” Mohan said.
This clarification by the GST Council Secretariat would allow additional fees to be levied in long-forgotten cases, he added.