In a bid to reach out to industry and limit the possible overreach of tax authorities in investigations, the Central Board of Indirect Taxes and Customs (CBIC) has instructed the Customs field formations to maintain “balance” while carrying out investigations for tax evasion related to import and export of goods in the interest of “ease of doing business”. In the set of instructions issued on November 1, the CBIC said such evasion cases are categorised as commercial intelligence and fraud cases and they need to be differentiated from outright smuggling cases which involve contraband items. The CBIC has asked the field formations to not approve any such investigation without the approval of the commissioner and conclude investigation into commercial intelligence (CI) cases within a year. The Board has also asked officers to seek information and documents in CI matters in writing with full disclosure of the specific nature of the inquiry being initiated by the authorities. “The Commissioner is responsible for developing and approving any intelligence, investigation and its completion. Each investigation must be initiated only after the approval of the Commissioner. A CI case investigation must reach the earliest conclusion which is normally not more than one year,” the instructions issued by the Investigation-Customs wing of the CBIC under the Ministry of Finance said. Earlier in March, the CBIC had issued a similar set of guidelines to its Goods and Services Tax (GST) field formations asking them to maintain ease of doing business while engaging in investigation with regular taxpayers. The new instructions come now after concerns being raised by a section of taxpayers on investigations lingering for years and sometimes processes being initiated without adequate written documentation by authorities. The CBIC has told the officers to analyse all intelligence inputs and relevant aspects in CI matters before initiating investigation including cross checking with available data, technical literature, prevalent industry practice, judicial pronouncements, extant legal framework, precedence etc. “It is desirable to undertake as complete an analysis as feasible, before the actual investigation is initiated,” it said. The Commissioner may also decide whether the commercial intelligence is to be brought to the notice of Directorate of Revenue Intelligence (DRI) in case it may have cross jurisdictional relevance, the CBIC said. The Board underlined that ease of business is to be maintained in the process of such investigations by seeking documents preferably by writing letters, as far as possible. “The time frame specified for appearance, or producing information, should be reasonable and keeping in view the mode of communication of the letter Before seeking any information or documents, the relevancy and propriety of what is being sought shall be recorded (on e-file), ensuring that it is holistic and result of preparation, and also so as not to have repeated issuance of letter/summons or seeking of piecemeal information,” it said. The Board also highlighted that it is “not necessary” to keep investigation pending till limitation in law and the conclusion of investigation should also mean recording that it is not being pursued further as nothing objectionable was found in terms of matter investigated. “The closure report consequent to the appropriate payment of government dues by the person concerned should also not be delayed and should have a brief self- explanatory narration of the issue and the period involved. Timely actions, i.e. without delay, at these stages are all part of preventive vigilance ensuring that no room remains for malpractices,” it said.
