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CBIC’s Tax Recovery Update: What Businesses Must Know!

editor — Tue, 04 Jun 2024 10:45:40 +0000

The Central Board of Indirect Taxes and Customs (CBIC) has issued new guidelines to its field units regarding tax demand recovery from businesses.

In a communication dated May 31st, the apex body has instructed tax officers to abstain from initiating recovery actions within three months of issuing a tax notice, as per Section 78 of the CGST Act. This allows businesses ample time to address the tax demands or pursue legal options.

Nevertheless, CBIC has granted the flexibility for field units to commence recovery proceedings earlier in exceptional cases where there’s a credible threat to revenue interests. These circumstances may include imminent business closure, deteriorating financial health of the taxable entity, or the likelihood of insolvency.

The CBIC has stressed the necessity for any decision to expedite recovery to be backed by substantial evidence and not merely routine practice. Field officers are mandated to conduct a thorough assessment of the business’s status, financial condition, and credibility before initiating early payment demands.

This initiative follows concerns raised over the indiscriminate use of the ‘exceptional circumstances’ clause by tax officers, prompting businesses to seek legal intervention to halt recovery processes.

Recognizing the need to balance revenue protection with facilitating a business-friendly environment, CBIC aims to ensure a fair application of tax laws under the GST regime. Tax experts have lauded this move as a positive stride toward maintaining fairness and promoting a conducive atmosphere for businesses.

Source: https://knnindia.co.in/news/newsdetails/sectors/no-recovery-proceedings-within-three-months-of-tax-notice-cbic

Merely uploading SCN under the category “Additional Notices” instead of “Notices” on the GST portal does not constitute sufficient intimation to the taxpayer

editor — Tue, 09 Apr 2024 05:43:22 +0000

Introduction:

The Hon’ble Delhi High Court, in the case of Anhad Impex v. Assistant Commissioner, addressed the issue of whether the misplacement of a Show Cause Notice (SCN) in the “Additional Notices” category instead of “Notices” on the GST portal constitutes sufficient intimation to the taxpayer. This analysis examines the court’s findings and the implications for similar cases.

Facts of the Case:

Introduction:

Facts of the Case:

M/s. Anhad Impex ("the Petitioner") received an Impugned Order dated November 29, 2023, from the Assistant Commissioner ("the Respondent"), creating a demand under Section 73 of the CGST Act.
The Petitioner asserted that they never received the SCN, which formed the basis of the Impugned Order, thus depriving them of the opportunity to respond or participate in adjudication proceedings.
SCNs are typically uploaded under the "Notices" section on the GST portal, but in this instance, it was placed in the less accessible "Additional Notices" category, leading the Petitioner to miss it.
The Respondent contended that uploading the notice on the GST portal suffices as per Section 169 of the CGST Act.

Issue:

Whether the misplacement of the SCN in “Additional Notices” rather than “Notices” warrants the invalidation of the demand order?

Held:

The court noted that the Petitioner's lack of response to the SCN indicated a lack of proper and timely intimation.
Placing the SCN under "Additional Notices" instead of "Notices" made it less accessible, infringing upon principles of natural justice and provisions of the CGST Act.
Referring to precedents such as East Coast Constructions & Industries Ltd. v. Asstt. Commissioner and Murugesan Jayalakshmi v. State Tax Officer, the court emphasized the importance of proper categorization on the portal.
Consequently, the Impugned Order was set aside, with directions for the Petitioner to respond to the SCN, and the Respondent to re-adjudicate the matter with a personal hearing within four weeks.

CBDT Issues Guidelines on Income Tax Appeal Filing to Reduce Litigation

editor — Tue, 19 Mar 2024 06:24:06 +0000

The Central Board of Direct Taxes (CBDT) has issued Circular No. 5/2024 dated March 15, 2024, under Section 268A of the Income-tax Act, 1961, providing guidelines for the Department’s appeal filings before the Income Tax Appellate Tribunal (ITAT), High Courts (HCs), and for Special Leave Petitions (SLPs)/appeals before the Supreme Court (SC) with the aim of reducing litigation. This circular supersedes Circular No. 3/2018 from July 11, 2018, Circular No. 17/2019 from August 8, 2019, and a board letter dated August 20, 2018.

In line with the guidelines, monetary limits and other conditions for filing departmental appeals under the Income-tax Act, 1961 have been specified for ITATs, HCs, and SC. However, exceptions have been provided where the decision to appeal or file an SLP shall be based on merits without regard to the tax effect and the monetary limits.

These exceptions include cases where:

It contained Any provision of the Act or the Rules or notification issued thereunder has been held to be constitutionally invalid.on both external and internal assets generated or acquired during the relevant financial year under various tax categories such as CGST, SGST & IGST, and HSN codes.
Any order, notification, instruction, or circular of the Board or the Government has been held to be illegal or ultra vires the Act.
The assessment is based on information related to any offence received from law enforcement or intelligence agencies.
Prosecution has been filed by the Department in the relevant case and the trial is pending.
Strictures/adverse comments have been passed against the Department.
The tax effect is not quantifiable or not involved, such as in the case of registration of trusts or institutions.
Addition relates to undisclosed foreign income/undisclosed foreign assets.
Cases involving organized tax evasion or accommodation entries.
Mandated by a Court’s directions.
Writ matters.
Matters related to wealth tax, fringe benefit tax, equalization levy, and other matters outside the Income Tax Act.
Litigation arising out of disputes related to TDS/TCS matters.

The Circular further clarifies that appeals or SLPs shall not be filed in cases where the tax effect does not exceed specified monetary limits for ITAT, HCs, and SC. The tax effect is defined as the difference between the tax on the total income assessed and the tax that would have been chargeable had the total income been reduced by the amount of income in respect of the disputed issues.

Additionally, procedures for calculating the tax effect in cases involving TDS/TCS are outlined, and reporting mechanisms are established to ensure compliance with the Circular’s provisions.

The Circular aims to streamline the appeals process, reduce unnecessary litigation, and provide clarity to taxpayers on their Income-tax assessments. It emphasizes the importance of deciding on appeal filings based on the merits of each case and encourages the resolution of disputes in a fair and efficient manner.

Source: https://www.nyca.in/wp-content/uploads/2024/03/Circular-No.-5-2024-Filing-of-appeals-by-Dept.pdf