The Central Board of Indirect Taxes and Customs (CBIC) issued a series of clarifications on Tuesday to reduce disputes under the Goods and Services Tax (GST) regime, tighten adjudication procedures, and make compliance more predictable for businesses.
The government has also directed the GST officers to not harass the taxpayers by seeking unnecessary documents or raising irrelevant queries while processing registration applications.
The directive came after a series of complaints from applicants about delays and rejections arising from repeated requests for clarifications and additional documents.
In a notification issued by the Finance Ministry on Tuesday, the Ministry said that officers must adhere to the prescribed list of documents and refrain from subjective assessments while scrutinising applications.
The circulars also address other issues ranging from GST registration and show-cause notices to input tax credit distribution and the treatment of export proceeds, seeking to bring greater consistency to tax administration.
“On registration, the detailed guidance addresses several practical issues that have often resulted in ground-level queries and disputes, including co-working spaces, consent-based premises, ATMs and telecom towers, and state-specific information requirements," said Saurabh Agarwal, Tax Partner, EY India.
"Together with defined documentation requirements for different forms of businesses, this should help reduce differing interpretations and make the registration process more predictable for genuine taxpayers,” Agarwal said.
The circular seeks to balance safeguards against fake registrations and fraudulent input tax credit claims with the need to ensure that genuine businesses are not burdened by avoidable procedural hurdles.
The guidance also covers documentation for co-working spaces and consent-based premises, among other situations, and specifies the requirements for different categories of applicants.
According to the government, there are some GST orders which are vague or fail to consider taxpayers’ evidence and arguments, leading to unnecessary litigation and repeated appeals. It has directed tax authorities to examine each case independently, clearly explain their findings and give reasoned decisions based on the law and principles of fairness.
“Vague, omnibus notices and predetermined adjudication have frequently transformed otherwise resolvable disputes into prolonged litigation, locking up working capital, escalating legal costs and consuming judicial resources through repeated appeals and remands," said Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat.
"The clarification aims to correct disputes at their origin rather than remedy defective proceedings through years of litigation,” said Mishra.