“Ease of Harassment by GST officers” Vs. “Ease of Doing Business”

[Athena Law]

1. We keep on hearing the rhetoric of “Ease of doing business” from various platforms. On the ground wherever IT-enabled services has been brought into place; some degree of ‘ease of doing businesses has been achieved. But wherever the decision is to be taken by a government servant i.e. human being or wherever there is a human interface, ‘’the ease of harassment by the Government officer’’ has increased many folds.

2. Let us focus on some representative Show Cause Notices and Order for cancellation of registration issued by GST department.
   1. The Show Cause Notice dated 03/02/2022 (Annexure-1) issued for cancellation of registration to one Mr./Mrs Sonal Gupta gives reasons for cancellation as “Non-compliance of any specified provisions in the GST act or rules made thereunder as may be prescribed”. No provision of GST Act or Rules made thereunder has been pin pointed which has been violated by the Assessee. No transaction is pin pointed which has been undertaken in violation of any provision of law. This Notice gives time of 7 days for submitting reply but calls for personal appearance of party within 4 days on 07/02/2022. Finally, vide order dated 16.02.2022 the registration has been cancelled (Annexure-2). The cancellation order acknowledges to have received the reply but does not discuss what reply has been filed and why the GST authority does not agree to assessee’s reply. It simply says that after going through the reply authority is of opinion that the GST registration is liable to be cancelled for reasons “All the provision of Section 29 of the CGST Act, 2017 will be applicable for recovery of govt.,found, if pending”. So again, no specific reason has been given for cancellation of registration and whatever has been mentioned is just meaningless. It also shows some amount to be recovered which is actually shown as NIL. Thus, it is not a case of tax default also.

1. 2. Another SCN dated 14.02.2022 (Annexure-3) issued to Shri Madan Gopal Gupta seeks cancellation of GST registration for the reasons “Others” and seeks reply within 7 days along with personal appearance before the officer.

3. Without going into any kind of argument one can easily conclude that above actions are arbitrary, reckless and either without application of mind or with sinister motive of extortion and torture. It is very clear that no reasons/grounds for cancellation of registration is given in the Notice/order. We fail to understand as to how anyone is going to reply this. The notices do not give even address of the office to be attended. Whenever assessee appears for personal hearing in these type of matters, there are oral threats and negotiations for extortion of money and depending upon the so called practical response of assessee these notices are either withdrawn or registration is cancelled.

4. Above practices are being followed through out India and what has been discussed above is just an illustrative example. In GST regime when assessee is not required to visit officers for physically submitting returns and taking their acknowledgement, the officers have developed their own mode of “ease of harassment” and issuing baseless Notices like the one discussed above.

5. Above malpractices are taking place simply because there is no accountability fastened on the officers. When assessee litigates and challenges their decision, the courts simply restore the registration, but no harm is caused to the officer who has taken this arbitrary decision. Therefore, officers are inclined to take similar arbitrary action for other assessee also when their illegal demands are not met; because at most, their arbitrary decisions will be quashed under a costly litigation route but they will not suffer any personal disadvantage.

6. To address these issues following strategy should be adopted when a notice/order which is baseless and arbitrary on face of it  is issued.
   1. The officer has issued this baseless notice purely for terrorizing the trade and extorting money and thus disciplinary proceedings for removal of such errant government official must be initiated.

1. 2. Or, the officer simply does not understand anything of GST law and like a novice, he selects something arbitrary from the GST portal and issues notices/orders without knowing the consequences of such notice. Again, in that case, the officer cannot be allowed to hold a responsible position to decide fate of others where his knowledge and skill levels are highly inadequate. Thus, in this case also disciplinary proceedings should be initiated for removal of the officers because his actions are unbecoming of government servants.

7. If the above actions are undertaken then every officer before issuing arbitrary notice will think twice and trade can be saved from torture by officers to some extent. We must fix the accountability of the officers for the decisions being taken by them.