Factory visit by GST officer

[Mehul Pandya]

Dear sir,

Our unit is mentioned under SGST Jurisdiction. But today 3 CGST officer came to our business premises and told to produce some export and refund related documents. We are filling refund claims at SGST office and submitting all the original documents there. Now same all the docs are required by CGST officers too. They have given one inquiry letter and given us 2 days time to produced all the purchase and sales invoices from the date of registration.

So my question is they can do so when unit is alloted to SGST ? They have also not mentioned any GST clause under which they have initiated inquiry... Is there any remedy available in LAW ?

[KASTURI SETHI]

Yes. SGST Officers can visit unit falling in the jurisdiction of CGST office and vice versa. SGST officers, after completion of investigation, would submit draft SCN to the CGST Officers for issuance of the same and adjudication. The visiting officers must have written permission of the Deputy Commissioner. Commissioner can authorise any officer to visit the unit for the purpose of investigation. Permission is compulsory for the visiting GST officers. An assessee can ask for permission letter from the visiting officer.

We see that sometimes State Vigilance staff visits the office of Central Govt. on specific information. Ultimate purpose is to investigate whether there is evasion or not.

[KASTURI SETHI]

As per Section 67 and 71 of CGST Act, visiting officers are to be authorised by the proper officer not below the rank of Joint Commissioner.

[Ganeshan Kalyani]

It is proposed in the Finance Budger that Central Government will be able to refund State tax. This might be the reason or in the recent newpaper it was given that there are number of registrations but actually there was no place of business in real. Hence, the visit. The visit would increase in near future to curb wrong person doing bogus transaction.

[KASTURI SETHI]

Rightly observed by Sh.Ganeshan Kalyani Ji.

[Mehul Pandya]

They didn't have any written permission. They visited the site and told that they will required audit report, sales and purchase invoices etc.... They also given us letter without any supporting clause or rules under GST.

[KASTURI SETHI]

All the records and docs have to be supplied to the department otherwise penalty can be imposed upon the party for non-compliance Non-submission of docs means creating hurdle in the way of investigation.

[KASTURI SETHI]

Dear Sh.Pandya Ji,

Correct your line of action. Asking for permission letter has become time barred. No use of asking for section or clause in the letter issued by the State department. Proper action is to produce all the records demanded by the State Department. It is very much within GST law. The party is legally bound to submit the records. It is correct advice.

[DR.MARIAPPAN GOVINDARAJAN]

You may produce the documents as required. Any wrong is done by the officers then you may allege the same in the reply given to the show cause notice.

[Ganeshan Kalyani]

With the GST being implemented the transparency has come where you already shared the invoice wise outward supply. The same is becomes purchase for the other party to the transaction. Thus providing the details again would make no difference. Just take care that you provide the same details because if there is any difference in data already available in GSTN and that you provide now then you will have to justify the same. Thanks.

[Mahadev R]

It is also advised to have proper entries in the security register about the visits. A letter indicating such visit and information provided could be written to such office. This could help in contesting against the allegation of 'suppression of facts' in terms of Section 74 to reduce the penalty.

[KASTURI SETHI]

If Show Cause Notice is issued it would be mentioned therein that the SGST staff visited the unit on date etc. No use of collecting documentary evidence at belated stage. Moreover, all the facts/aspects cannot come to the notice of the visiting team whether Audit or flying squad on a particular day or days. If any new issue emerges later on, a new SCN can be issued. I mean to say no benefit of reduced penalty is possible. There are so many factors to invoke extended period.

[YAGAY andSUN]

However, there are plethora of judgment that extended period cannot be invoked if department had conducted audits etc.

[Mahadev R]

I dont think there is a SCN issued in this case (at least based on facts mentioned). Though there are various factors to invoke extended period, having a evidence or documentation to prove that a visit / audit / inspection has happened would be a good ground. There are many instances wherein it has been relied upon.

[KASTURI SETHI]

Sh.Mahadev R. Ji,

I agree with you. Still the matter is under investigation. I also agree with the views of M/s.Yagay and Sun, Sirs.

[Mehul Pandya]

Our SGST officers are very much satisfied with the all the docs and sanctioned refund claim. Our jurisdictional office is also SGST. They have not any issue in this case. Moreover we are filling return regularly and paying tax too as applicable. But at the other side @ Range Superintendent of CGST We have given reply of all the queries along with copy of documents as they required even though they haven't any written permission from JC. Now they demanding daily new or irrelevant things. In other words I would say they are demanding documents like Conducting Audit without any audit letter. We have also shown Original Files to them. It gives feels like whether we have done any crime by taking refund or what ?? We have submitted return, invoices,SB verfied with icegate,GST returns, Challans, Export Invoice, Purchase and Sales Bills, Audit Report etc etc. Now They are still demanding more and more documents like factory lay out plan with engineer sign stamp, expenses vouchers on daily basis. Our books are clear and there is no question of any demand but we dont know how to end up their requirements.....

[DR.MARIAPPAN GOVINDARAJAN]

Very pathetic situation.

[KASTURI SETHI]

You will have to be calm and patient. keep your cool.I have observed that sometimes an assessee thinks that records are neat and clean but actually the situation is reverse. It often happens so. The officers of the department cannot visit any unit without permission. They do not do so. They will not disclose anything during investigation. Resort to amicable approach. or wait for the conclusion of the investigation.

[Srinivasan Krishnamachari]

Dear Querist,

GST refunds granted by State needs only payment advice, to be issued by the Centre and vice versa. Action of one is binding on the other and needs to be mutually honoured as per GST Law, as far refunds.

If there are any investigations to be done, it is for the Center's Central GST Intelligence, that has concurrent powers to investigate, in GST, even of State register units and again vice versa.

Beyond this nothing meets the eye in terms of CGST Laws, requiring intervention with state registrations.

Even, the powers given to the JC to authorize calling for records are confined to each one's registered units, only as far you can see from the GST Laws of center and state, except for cross-empowerment in investigation by designated Agencies and not by jurisdictional authorities.

At best one's concerns and apprehensions can be shared /exchanged with one another, in case not their own registration,which is more appropriate and highly recommended to avoid criss crossing jurisdictions of each other, at the inconvenience of registrants, is the general advisory given to its officers, by both Authorities,as far I know.

K. Srinivasan

[Srinivasan Krishnamachari]

Dear Querist,

GST refunds granted by State needs only payment advice, to be issued by the Centre and vice versa. Action of one is binding on the other and needs to be mutually honoured as per GST Law, as far refunds.

If there are any investigations to be done, it is for the Center's Central GST Intelligence, that has concurrent powers to investigate, in GST, even of State register units and again vice versa.

Beyond this nothing meets the eye in terms of CGST Laws, requiring intervention with state registrations.

Even, the powers given to the JC to authorize calling for records are confined to each one's registered units, only as far you can see from the GST Laws of center and state, except for cross-empowerment in investigation by designated Agencies and not by jurisdictional authorities.

At best one's concerns and apprehensions can be shared /exchanged with one another, in case not their own registration,which is more appropriate and highly recommended to avoid criss crossing jurisdictions of each other, at the inconvenience of registrants, is the general advisory given to its officers, by both Authorities,as far I know.

K. Srinivasan