Focus on real tax evasion, not issues prone to interpretation, tax officials told

New Delhi: Tax officers should balance the need for enforcing compliance with the need to ensure ease of doing business in the country, senior finance ministry officials said at a national conference of the indirect tax authority. 

At the second edition of the ‘national conference of enforcement chiefs of state and central GST formations’ held in the capital on Tuesday, revenue Secretary Sanjay Malhotra stressed on the importance of maintaining “a fine balance between enforcement actions and ease of doing business,” an official statement said. 

Malhotra urged central and state tax officers to focus on fake registrations during a special drive that has been launched and emphasized the need to track down the masterminds and beneficiaries of fake tax credits so that strict action can be taken. Malhotra said recent changes in GST returns will help in tackling GST evasion in a systematic manner.

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Sanjay Agarwal, chairman of Central Board of Indirect Taxes and Customs (CBIC) spoke about the need for enforcement agencies to stay ahead of evaders so that the sanctity of the GST system is preserved. He advised enforcement units of the tax administration “to focus on real evasion rather than interpretative issues and general industry practice,” the statement said.

Special GST drive

The government has launched a two-month special drive launched on 16 August to weed out fake GST registrations used by wrongdoers to evade tax.

“Based on certain identified risk parameters, close to 59,000 potential fake firms have been identified for verification and further enquiry,” the statement said.

The statement also said, quoting the Director General of GST Intelligence, that tax evasion of Rs. 1.2 trillion related to wrongful use of tax credits, has been detected since year 2020. 

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Extensive use of technology and disclosure requirements have helped the tax administration to scale up GST revenue collections over the years. CBIC has already told field officers that it is possible for tax officials and tax payers to interpret certain legal provisions differently and in such cases, senior field officers who investigate the matter must sound out the top authority before issuing show cause notices, Mint reported on Tuesday.