6 STEP PROCESS ON HOW TO HANDLE GST - INSPECTION AT ASSESSES PREMISES

[AttnVivek Jalan]

It is seen in many states that GST Officials are visiting clients premises by invoking Sec 67(1) of The CGST Act 2017 on Inspection. Many of these are Multinational Companies located in various countries of the globe and doing business in India from the past many years and are registered in multi states in India. In the state where such inspections are happening itself they are doing business since last many many years.

Lets discuss on how to handle such Inspections by the Government officials through a 6 Step Process –

1. Please check the GST-INS 01 with the notified form and whether the tick boxes to declare “exceptional circumstances for reasons to believe” are there and whether they have been ticked.  If not, then the authorization is faulty and the same may be brought to the notice of the officers
2. Understand from the officer whether any specific “exceptional circumstance exists suppression,  evasion, contravention or manipulation  to evade tax”  incase of your Company
3. Provide necessary documents to the best of the information and in the given circumstances
4. Undertake to provide balance documents in a given period
5. Prepare a fitting submission of “Objections and Protest” against the arbitrary action of Inspection at the assesses’ place.
6. Prepare from today with GST sanitization every month – we will discuss GST-sanitization tool in our next article.

Remember Consistency is the hallmark of the unimaginative!

We hereby provide a draft of submission of “Objections and Protest” against the arbitrary action of Inspection at the assesses’ place -

1. First state that you responsible and law abiding Corporate citizens, using reliable ERP Systems and having transparent Accounting and Taxation practices. State also about the various states and countries in which you are doing business.
2. Object and protest against such arbitrary  Investigation carried out without any prior notice at the premises.
3. State that Sec 67(1) read with Rule 139(1) and CBIC’s Flyer make it abundantly clear that Inspection can be carried out only after fulfilling the following conditions –

1.  Inspection can be carried out only in exceptional circumstances of suppression, evasion, contravention or manipulation

2. Inspection should be carried out as a last resort

3. Inspection provisions should be carried out properly, effectively and the rights of tax payers should also be protected

4. Inspection can only be carried out when an officer, of the rank of Joint Commissioner or above, has reason to believe the existence of such exceptional circumstances

5. Such reason to believe should be indicated atleast in the Notified Form INS-1 which required selection of the checkbox to give an indication to the same.

4. In the instant case the above conditions were not at all fulfilled for carrying out the Inspection due to the following reasons –
   1. There was no exceptional circumstance due to which Inspection was invoked as there was not even a single event of suppression, evasion, contravention or manipulation which was unearthed during such investigation.
   2. Such inspection was not carried out as a “Last resort”. Invoking of Inspection as the Last Resort implies that the assessee has failed the tests of inquiry and thus as a last resort investigation is resorted to.
   3. There was no ‘reason to believe’ any act of suppression,  evasion, contravention or manipulation -

In Income Tax Officer v. Lakhmani Mewaldas 1976 (3) TMI 1 - SUPREME COURT , the Supreme Court held that there should be a live link or close nexus, between the material before the ITO and the formation of his belief that income had escaped assessment.

5. The assese’s rights guaranteed under Article 14, 19 and 301 of The Constitution of India were violated and that the Inspection was bad in Law and against the Constitution of India. It was also against Section 67(1) of The CGST Act 2017 itself.
6. On the basis of the above it has to be prayed that Since the Inspection proceedings are bad in Law and against the Constitution of India and also against Section 67(1) of The CGST Act 2017 itself, the same to be set aside.