GST Interpretation or Classification Matters: DGGI to not Send Demand Notices without Prior Approval from CBIC Policy Wing [Read Notification]

In a significant development aimed at easing the burden on industries and GST taxpayers across the nation, the government has implemented new protocols concerning GST demand notices. Henceforth, the Directorate General of GST Intelligence ( DGGI ) will be required to obtain approval from the policy wing under the Central Board of Indirect Taxes and Customs ( CBIC ) housed in the North Block before issuing any tax demand notices related to matters of interpretation or classification.

This direction is designed to mitigate the contentious issue of conflicting tax assessments between taxpayers and the investigative arm of the CBIC, DGGI. Under the GST regime, the DGGI plays a crucial role as the central intelligence agency, tasked with vigilant monitoring of tax dues, evasion, and misreporting.

A statement from authoritative sources within the government affirmed, "The DGGI will now refrain from issuing tax demand notices without prior clearance from the policy wing of CBIC, particularly in cases involving disputed interpretations or classifications."

The move comes in response to long standing grievances from various sectors, where discrepancies in tax assessments have frequently led to payment delays and a backlog of unresolved cases.

Critics of the previous approach argue that unilateral tax demands often exacerbated financial strains on businesses, forcing prolonged disputes and administrative burdens.

The Guidelines issued by the Directorate General of Goods and Services Tax ( GST ) Intelligence ( DGGI ) stated that, (f) Each investigation must be initiated only after approval of Pr. ADG/ADG of ZU, except in following situations where prior approval of higher officer, shall be required

(I) Prior written approval of the DG of SNU if investigation is to be initiated and action to be taken in a case falling under the following four categories, namely case involving (i) matters of interpretation seeking to levy tax/ duty on any sector/ commodity/ service for the first time, whether in Central Excise or GST; or (ii) big industrial house and major multinational corporations; or (iii) sensitive matters or matters with national implications; or (iv) matters which are already before GST Council.

Moreover, for cases of the category (iii) or (iv), before any precipitative action is taken in investigation, the respective DG SNU shall necessarily bring the matter to the notice of the Pr. DG. 

(g) In all of above category of cases, the concerned Zonal Head should collect details regarding the prevalent trade practices and nature of transactions carried out from the stakeholders. The implications / impact of such matter should be studied so as to have adequate justification for initiating investigation and taking action.”

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