GST: Both Central and State Tax Authorities are Authorized to Initiate Intelligence based Enforcement Action [Read Letter]

The Central Government has recently clarified that both the Central and State tax authorities are entitled to initiate enforcement action against the taxpayers under the GST regime. A letter issued by Mr. Mahender Singh, Special Secretary and Member, Central Board of Excise and Customs (CBEC) said that the GST Council in its 9th meeting held on 16.01.2017 had discussed and made recommendations regarding administrative division of taxpayers and concomitant issues.

The meeting recommended that both the Central and State tax administrations shall have the power to take intelligence-based enforcement action in respect of the entire value chain.

Accordingly, the letter clarified that the officers of both Central tax and State tax are authorized to initiate intelligence-based enforcement action on the entire taxpayer’s base irrespective of the administrative assignment of the taxpayer to any authority. The authority which initiates such action is empowered to complete the entire process of investigation, issuance of SCN, adjudication, recovery, filing of appeal etc. arising out of such action.

“In other words, if an officer of the Central tax authority initiates intelligence-based enforcement action against a taxpayer administratively assigned to State tax authority, the officers of Central tax authority would not transfer the said case to its State tax counterpart and would themselves take the case to its logical conclusions,” the letter said.

“Similar position would remain in case of intelligence-based enforcement action initiated by officers of State tax authorities against a taxpayer administratively assigned to the Central tax authority. It is also informed that GSTN is already making changes in the IT system in this regard,” it added.

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