MUMBAI: The federal government is about to amend Part 49 of the Items and Companies Tax (GST) regulation that may permit tax officers to dam enter tax credit score of firms if they think fraud, an agenda notice for the GST council assembly circulated to all state finance ministers and senior tax officers indicated.

“Fraudulent ITC (enter tax credit score) availment primarily based on faux invoices has develop into fairly rampant. As investigations get initiated, if the utilisation of such suspected credit score continues, the investigation efforts get annoyed,” the federal government doc reads.

“The commissioner or an officer authorised by him on this behalf, could limit utilisation of full or half quantity from the credit score obtainable within the digital credit score ledger for making any cost in direction of output tax or claiming enter tax credit score refund,” a part of the amended part reads.

Trade trackers stated giving extra powers to the tax officers could create issues within the coming days. Senior tax officers would be capable to partially or absolutely block enter tax credit score of firms henceforth. This comes at a time when oblique tax officers have been arresting promoters if they think “round buying and selling” with an purpose to avail enter tax credit score.

“Giving arbitrary and unfettered powers to commissioners to reject or withhold enter credit score claims primarily based on whims and fancies will result in harassment and ultimately impression the already traumatised economic system. There’s a drawback within the regulation which must be modified, however to suggest to amend a bit with out really popping out with rules on tips on how to decide whether or not the enter tax credit score is definitely faux, will solely add to the prevailing issues,” stated Sujay Kantawala, excessive courtroom advocate who additionally represents a number of promoters arrested by oblique tax officers.


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Tax consultants additionally query what would occur in circumstances the place an organization challenges taxman’s stand and wins a case within the courtroom. “You will need to perceive whether or not in circumstances the place credit score has been wrongly blocked, the taxpayer will get the curiosity for the delayed interval of non-utilisation because the tax payer needs to be appropriately compensated for delay in utilisation of credit score,” stated Abhishek A Rastogi, accomplice at Khaitan & Co.

A number of promoters have challenged in numerous boards oblique tax officers’ proper to arrest them. ET on December 11 reported that a number of promoters had filed a joint writ petition within the excessive courtroom, difficult the validity of the GST statutory provisions associated to arrest and freezing of financial institution accounts.