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Tax Insights
21 November 2022
Maharashtra State Tax Authority releases guidelines on issuance of recurring SCNs
In brief
The Commissioner of State Tax, Maharashtra, Mumbai has issued a trade circular1 clarifying guidelines on uniformity in the issuance of recurring show cause notices (SCNs) where enforcement action is initiated by a State authority against a taxpayer assigned to the Centre and vice-versa. These guidelines are issued with an intent to ensure timely action by one of the authorities post issuance of SCNs.
In detail
The circular has been issued to address the varied practices followed by the authorities where investigation is conducted by the State tax officer against a taxpayer assigned to the Centre jurisdiction and vice-versa. In this regard, the following guidelines are issued.
Enforcement action by both Centre and State tax authorities
• The circular re-iterates that the taxpayer is open to enforcement action by both State and Central tax authorities, irrespective of their administrative jurisdiction.
• However, once enforcement action is initiated by an authority, all consequential actions of such
enforcement, viz. adjudication, review, revision, rectification and appeal will lie with such authority who had initiated such enforcement action.
Granting of refunds
• The circular carves out an exception specifying that refund can be granted only by the jurisdictional tax authority since granting of refund is an independent process.
• Such refund, however, will be processed only after considering the specific findings of the authorities who had initiated investigation.
Recurring SCNs
• Recurring SCNs do not require fresh investigation where the grounds remain the same.
1 Trade Circular No. 12T of 2022 (No. JC (HQ-5)/GST/Recurrent SCN/22-23/ADM-8B-74, Mumbai) date 17 November 2022
2 PwC Tax Insights
• Recuring SCNs create additional burden on the authority who initiated the investigation, to track subsequent compliance by the taxpayer post conclusion of investigation, collect data and records, etc.
• Therefore, recurring SCNs can be issued by the jurisdictional authorities (having access to returns and records), in the normal course of assessment of the taxpayer to ensure that these authorities are better placed to check the existence of the same facts and grounds before the issuance of the recurring SCN.
The takeaways
These guidelines are issued in line with the office memorandum of the GST Council2 to bring uniformity in the practice followed by the authorities in case of cross investigations and issuance of recurring SCNs. The circular is clarificatory and may apply to already initiated proceedings as well. It will be interesting to see how these guidelines are being followed by the Centre and State tax authorities within the State of Maharashtra in the future. We may also expect other states to issue similar circulars to clarify the approach to be adopted in case of such investigations.
2 No. B. 8198 dated 19 October 2022
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