Prosecution allowed for over Rs 5 crore GST evasion: GST investigation wing

NEW DELHI:  In a bid to give clear guidance to the tax officers, the GST investigation wing on Friday issued a detailed advisory on launching prosecution under the central goods and services Act, 2017. 

The guidelines stated that the nature of evidence collected against the person involved should be assessed carefully as sanction of prosecution has serious repercussions. Also the prosecution should normally be launched where the amount of tax evasion or misuse of ITC, or fraudulently obtained refund in relation to specified offences is more than Rs 5 crore.

However, the limit of Rs 5 crore as prescribed under Section 132 of the CGST Act should not be applicable in the cases of habitual evaders and arrest matters. “Decision should be taken on case-to-case basis considering various factors such as nature and gravity of offence, quantum of tax evaded or input tax credit (ITC) wrongly availed, or refund wrongly taken and the nature as well as quality of evidence collected,” the Central Board of Indirect Taxes & Customs said.

As per the guidelines, in the case of public limited companies, prosecution should not be launched indiscriminately against all the directors of the company but should be restricted to only persons who oversaw day-to-day operations of the company and have taken active part in committing the tax evasion etc. or had connived with it.

Rajat Mohan, partner, AMRG & Associates, said the CBIC made a conscious effort to prescribe detailed guidelines on prosecution, enabling tax officers to move in the right direction and alleviate harassment endured by the innocent taxpayers for long. Anita Rastogi, GST and indirect tax partner, PwC, said,

“Investigations have been a focus area of government and therefore it becomes important to provide clear instructions to officers. Uniform procedures should be followed across India. It helps the taxpayer to be aware of the methodology being adopted by the government officials. The key to this is that the officers follow the guidance and no variance is created or else the objective of instructions gets defeated”.