Misuse of power

[SATISH TOMER]

Can a jurisdictional officer investigate in to firms cancelled on his own motion and issue SCN under Section 74 by alleging that purchases were made from firms cancelled suo-moto. My question is if Special Investigation wing (SIB) has been formed in the department for such kind of matters, why officer is indulging in such issues. whether it is beyond the powers of AO or not. If, yes please give some legal backing also. Thanks in advance.

[Sadanand Bulbule]

Dear querist

The jurisdictional Proper Officer [PO] empowered under Section 74 of the CGST Act has all the powers including investigation and to determine tax liability if he satisfiesthe essential ingredients prescribed under Section 74[1] with verifiable evidences.

SIB is only an independent wing of the department to provide collated verifiable evidences to the jurisdictional PO empowered under Section 74 to initiate suitable proceedings. That's all.

[KASTURI SETHI]

Dear Querist,

It is NOT misuse of power. It is a way of interpretation and understanding taxation laws. Legal backing coupled with crystal clear explanation already given by Sh.Sadanand Bulbule, Sir.

[Sadanand Bulbule]

Dear querist

Plz note that the purpose of investigation is to bring the facts of fraudulent transactions to the surface and it is the bottom line to initiate proceedings under Section 74(1). So investigation can be made by multiple agencies to reach the same conclusion. As such there is no misuse of power. 

Nothing prevents you to justify your merits on record. Why fret about it, if your business  transactions are as per law?  

[Sadanand Bulbule]

The GST department is entitled to examine/enquire/investigate any business transaction which may cause prejudice to the revenue within the frame of law to come to a logical conclusion. There is nothing to worry as long as the transactions are right.

AI Summary

Investigation under Section 74: jurisdictional officers may investigate and issue notices when statutory ingredients are satisfied.
The jurisdictional Proper Officer may investigate and initiate proceedings under Section 74 when the statutory ingredients are satisfied with verifiable evidence. The Special Investigation Wing serves to collate and provide evidence to the Proper Officer but does not remove the Proper Officer's authority; multiple agencies may conduct enquiries converging on the same facts, and such parallel investigation is not per se misuse of power.