The Central Board of Indirect Taxes and Customs (CBIC) has issued an instruction instructing the Zonal Chief Commissioners to consult the GST Policy Wing or TRU.
before concluding audits involving conflicting interpretations of CGST provisions due to prevalent trade practices.
The proactive step, applicable to ongoing audits as well, ensures policy alignment & reduces unnecessary litigation by maintaining uniformity.
The scenario may arise in a CGST Zone where an issue investigated by one of the (Pr.) Commissioners is based on an interpretation of CGST Act/ Rules, notifications, circulars ete, and it is in the direction of proposing non-payment or short payment of tax. However, the background is that the taxpayer(s) is/are following, or have followed, a prevalent trade practice based on particular interpretation on that issue in the sector/industry.
The scenario results in more than one interpretation and likelihood of litigation, change in practice etc. In such cases, it is desirable that the zonal (Pr.) Chief Commissioner make a self-contained reference to the relevant policy wing of the Board i.e. the GST Policy or TRU. The endeavor, to make such reference before concluding investigation, and as much in advance, as isfeasible, of the earliest due date for issuing of show cause notice, may be useful in promoting uniformity or avoiding litigation ifthe matter, after being processed, is amongst those that also gets placed before the GST Council.
“The Board desires that during the process of audit, wherever the relevant CGST Audit (Pr.) Commissioner comes across the scenario described above, the Zonal (Pr.) Chief Commissioner should follow the procedure and endeavor prescribed by Board in para 2(g) of above Instruction. This applies also to on-going audit proceedings,” the instruction read.
Instruction No. 03/2024-GST