(LL.B, FCA, DISA(ICAI)) (GST CONSULTANT) Enforcement under GSTagra-icai.org/1-1-2018/18-06-2108/PPT Expert Chat-Open House on GST 16... · Enforcement under GST Open House Discussion

Enforcement under GST

Open House Discussion. (On 16 June 2018)

CA.SAURABH AGARWAL

(LL.B, FCA, DISA(ICAI))

(GST CONSULTANT)

Index

S.NO. Issues Regarding Duration

1 Seizure of goods and Penalty u/s 129(3)

2 Important Circulars Regarding Penalty u/s 129(3)

3 Various Allahabad Court Judgments u/s 129(3)

4 How to face SIB Survey ?

5 Post-Survey Proceedings

(u/s 74 of SGST/CGST Act.)

2 PREPARED BY CA.SAURABH AGARWAL (+91-9412509030)

(S 68) : INSPECTION OF ‘GOODS-IN-MOVEMENT’


Q1: Can goods be seized for ‘Under-Valuation’ ?


• (1)-Consignment of umbrella.

• Estimated Market value = Rs1000/- (per piece) (in local market, as per mobile unit officer)

• Consignment of 10,000 pcs Billed at 300/- per piece.

• Undervaluation = (1,000 - 300)*10,000 = 70,00,000

• Penalty & Tax demanded = Rs. 16,80,000/-

Case-Study

•Does Mobile officer has power to seize the goods ?

•Answer is ‘NO’ •As per Para-4 of UPGST Circular No. 1819010 dt 09/05/2018

•Seizure cannot be done by mobile officer in

•“Under-Valuation cases”

Circular

Q2: Can goods be seized for ‘Rate of Tax dispute’ ?


•(1)-Consignment of footwear with ‘No MRP’ •Estimated Market value as per mobile unit officer

Rs.1000/- to 1100/- in local market.

•Consignment Billed at 450/- per pair @ 5%

•Mobile officer determines rate @ 18%

Case-Study

•Does Mobile officer has power to seize goods ?

•Answer is ‘NO’ •As per UPGST Circular No. 1819010 dt 09/05/2018

•Seizure cannot be done by mobile officer in disputes regarding “rate of tax”

Circular

Q3: Is “Intension to evade tax” is necessary for seizure ?


CASE

• M/S ZEBRONICS INDIA PVT LTD.

• [ALLAHABAD HC] (Dt. 04/12/2017)

• 2017 -UPTC -1207

ISSUE • NO TDF WITH VEHICLE

HELD

• NO PENALTY- ON TECHNICAL DEFECT

• NO PENALTY- “The proper officer was himself not satisfied as to the ‘intension’ to evade tax being present in the facts of the case”

• (para 9)



CASE

• M/S RAMDEV TRADING COMPANY

• [ALLAHABAD HC] (Dt. 30/11/2017)

• VSTI 2017(VOL 30) B-767

ISSUE • NO TDF WITH VEHICLE

HELD


• NO PENALTY- “There is no allegation whatsoever as to the intension of the petitioner to evade tax”

• (para 28)



CASE

• M/S RAJ IRON BUILDING MATERIALS VS UOI

• 2018-UPTC [VOL 98]-217

• DATED: 22/12/2017

ISSUE • NO E-WAY BILL WITH GOODS

HELD


• NO PENALTY- “There is no intention to evade any tax hence penalty order and seizure order cannot be sustained and are hereby quashed.”

Q4: Can Mobile Officer force that entire amount u/s 129(3) be deposited as ‘Penalty’ ?


• (1)- After passing the penalty order u/s 129(3)

• the Mobile unit officer asks/forces the assessee

• to deposit entire amount as “Penalty” Issue

• Amount to be deposited for release of goods :

• Applicable Tax + Penalty equal to applicable tax Provision

• As per UPGST Circular No. 1819010 dt 09/05/2018

• Applicable Tax –to be deposited under head “Tax”

• Penalty - to be deposited under head “Penalty”

Circular

Hon’ble Allahabad High Court orders…….

“In cases where No E-Way bill is found with goods:

‘Seizure order’ and ‘Penalty proceedings’ to be ‘set aside’

if E-Way Bill is produced before seizure ”

Seizure Orders ‘set aside’ by Allahabad High court where e-way bill is produced before ‘seizure order’ is passed.

M/s Axpress Logistics India (P) Ltd.

2018 NTN (VOL 66)-245 (Dt. 09/04/2018)

M/s Bhumika Enterprises

2018 UPTC(VOL 99)-536

M/s Shubham Fertilisers & Chemicals

2018 NTN(VOL 67)-15

PREPARED BY CA.SAURABH AGARWAL (+91-9412509030) 11

Cases ‘set aside’ by Allahabad High court where e-way bill is produced before ‘seizure order’ is passed.

M/s Maa Vindhyavasini Tobacco (P) Ltd.

2018-UPTC (VOL 99)-544 (DT 19/04/2018)

M/s Mahalaxmi Traders

2018 NTN(VOL 67)-36 (dt. 17/04/2018

M/s Century Rayon

2018 UPTC (VOL 99]-528 (Dt. 11/04/2018)


Malafide Intension of Mobile officers ?

• Flow chart of Proceedings regarding ‘seizure of goods’ by mobile unit officer.


Interception

Memo

(MOV-02)

Physical Verification

(MOV-04)

Detention Order

(MOV-06)

SCN (Penalty)

(MOV-07)

Penalty order

u/s 129(3)

(MOV-09)

• In cases where there is No E-way bill is found with goods.

• Asseessee produces E-Way bill “before detension order” is passed and claims relief referring to a dozen of Allahabad High court Judgments.

• The Mobile unit officer passes the detention order & penalty order before the time fixed for PV, this represents malafide/ill- intension of mobile unit officer.

• Allahabad HC in such cases has given relief to assessee and acknowledged the ill-intension of mobile unit officers not mentioning time of passing detention/penalty order.

• Cases referred: M/s Modern Tyres (2018-TLD-138), M/s Singh Tyres [2018-UPTC(vol 99)-539]


Powers of State GST officers ? S.No. Proper Officer Section

1 Sector officer DC-- AC-- CTO--

10, 35, 54, 61, 62, 63, 64, 65, 66, 67(11), 68, 70,

73, 74(FWS cases), 75, 76, 78, 79, 81, 123,

126,127, 129, 130,142

2 SIB Officer DC- AC- CTO-

68, 70,126,

127(other than proceedings u/s 74),

129(goods- in-transit),

130

3 SIB Officer Joint Commissioner (JC)-

67, 68, 70, 71, 72

4 Mobile Unit Officers AC- CTO-

67(11),68,70,126,127,129,130

(Source : UPGST office order 278 dt. 01/07/2018)


SIB Survey Proceedings under GST

• Stock Taking

• Seizure

Survey

Produce Books

+ statement on record

Hearing

• By survey Officer

• To Jurisdictional AO

• Within 90 days

SIB Report

Determination of tax

By Jurisdiction

al AO

[order u/s 74(9)]

Order

u/s 74


(Source: UPGST Circular No. 1819012 dt. 24/05/2018) (Note-1 : Vide UP office order No.278 dt. 01/07/2017 :-

‘Proper officer’ for proceedings u/s 74 is the ‘Jurisdictional Adjudicating Officer’ of the assessee and not the survey officer.


S 67 Power of inspection, search, seizure and arrest

‘Joint commissioner & above’ • may

• “authorize in writing”

• (GST INS 01)

• any ‘other officer’ of CGST/SGST to inspect

• any places of business

• where he has

• “reasons to believe”


Reasons to ‘believe’ -vs-

Reasons to ‘suspect’ Supreme court says………

In the case of :-

Indian Oil corporation [159 ITR 956 (SC)]

Held ‘reasons to believe’ is not the same thing as ‘reasons to suspect’ ”

Mere Gossip/rumour is no “reason to believe”


S 67(1)(a): Reasons to believe that…………………

That a ‘taxable person’ has :-

• (a)-”suppressed any transaction” • in relating to :-

• (i)- ‘Supply’ of goods/services

• ‘or’ • (ii)-The ‘stock’ of ‘goods in hand’ • ‘or’ • (iii)-claimed ‘excess ITC’ • ‘or’ • (iv)- ‘contravention’ of ‘any provision’

to evade tax.


S 67(1)(b): Reasons to believe…………………

(1) (b)-any person :-

(i)-Transporter

Or

(ii)-Warehouse Operator

Or

(iii)-Godown

or

(iv)-any other place.

is keeping “goods”

which have

“escaped payment of tax”


22

Search Warrant :

Any attempt to :-

► mislead, tamper with the evidence

► refusal to answer the questions

► making false statement

► providing false evidence

PREPARED BY CA.SAURABH AGARWAL (+91-9412509030)

Refusing to answer

(Imprisonment = upto 6 months)

False statement on oath

(Imprisonment = upto 3 years)

Giving false evidence

Cheating with knowledge

(Imprisonment = upto 3 years)



25

S 67(2): During Search:-

If ‘proper officer’ has “reasons to believe” that any ‘goods’ or ‘documents’ are ‘relevant’ for any proceedings under GST

Seizure Order

(GST INS 02)

Allahabad High court Order on sec 67(2)

M/s Sri Hari traders vs State of UP (writ 782/2018) (Dt. 14/05/2018)

(2018-TLD-113) Facts: Due to ‘seizure of records’ the petitioner is not able to defend himself. Seizure Order challenged in writ. Held: Direction given to provide copy of ‘documents seized’ on cost to petitioner.


26

During Search:-

Where “not practicable” to

Seize any ‘goods’

Order of Prohibition

(GST INS 03)



28

Release of seized ‘goods’

Provisional Release

Bond (INS-04) =

value of goods

Bank Guarantee =

Applicable tax, interest, penalty

Final

Release

Applicable tax, interest & Penalty

(Source : UPGST Circular No. 1819012 dt 24/05/2018) PREPARED BY CA.SAURABH AGARWAL (+91-9412509030)

Post-SIB Proceedings before Jurisdictional AO u/s 74

Option-1

Before SCN

Pay Tax +Interest

Penalty = 15% x Tax

E-FILE

DRC-03

Option-2

After SCN (within 30 days)

Pay Tax + Interest

Penalty = 25% x tax

E-FILE

DRC-03

Option-3

After order

(within 30 days)

Pay tax + Interest

Penalty=

50% of tax

E-FILE

DRC-07

Option-4

File Appeal (u/s 107) against order

passed

by AO

u/s 74(9)

29 (To file DRC on GST Portal → Login →services →user services →my application →File DRC 03)

S 69 : Power to arrest by ‘GST Officer’

30

Same as ‘section 13’ of the Central Excise Act 1944

U/S

69 Where the commissioner has

‘reasons to believe’

(a) Supplies goods/services

without Invoices

(b) Issues Invoice

without supply of goods or services or both

(c) avails input tax credit

using such invoice or bill referred to in clause (b);

(d) collects any amount as tax but fails to pay the same to the Government

beyond a period of three months from the date on which such payment becomes

due;

31 GST

Ab

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Documents

(LL.B, FCA, DISA(ICAI)) (GST CONSULTANT) Enforcement under GSTagra-icai.org/1-1-2018/18-06-2108/PPT Expert Chat-Open House on GST 16... · Enforcement under GST Open House Discussion