Tamil Nadu GST Department Issues Circular on Test Purchases by Field Officers

The Tamil Nadu Government issued a circular regarding the use of Section 67(12) of the Tamil Nadu GST Act, 2017 by tax officers as a decoy buyer from suppliers of evasion-prone commodities/sectors such as cement, tiles, iron and steel, jewelry, timber, auto spares, edible oil, medical shops, groceries, construction materials, bakery products, FMCG, hotels, educational institutions, rental service, and so on.

Text of the Circular is Given Below:

SUB: TNGST Act, 2017 conduct of test purchase under sub-section 12 of Section 67 of  TNGST Act, 2017 certain guideline issued – modification Reg.,

In supersession of the circular issued in the first cited, with regard to provision contained in sub section (12) of section 67 of the TNGST Act, 2017 relating to conduct the test purchase by the field officers in intelligence wing and in excise of the powers conferred under section 168 of the TNGST Act, 2017, the following guideline are issued for the purpose of uniformity in the implementation of the above said provisions of the Act.

Provision under the TNGST Act, 2017:

i. Section 67 (12) of the TNGST Act 2017 states that, the commissioner or an officer authorized by him may cause purchase of any goods or services or both by any person authorized by him from the business premises of any taxable person, to check the issue of tax invoice or bills of supply by such taxable person and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling ant tax invoice/ bill of supply issued earlier.

ii. As per Notification No. 4 dated 12-07-2017 issued by the Commissioner, the Joint Commissioners (ST) concerned have been authorized for the purpose of Section 67 of the TNGST Act, 2017.

iii. Further, Section 31 of the TNGST Act, 2017 mandates the issuance of tax invoice or a bill of supply for every supply of goods or services or both.

iv. Section 122 (1) of the TNGST Act, 2017, states that, a taxable person who supplies any goods or services or both, without issue of any invoice or issues an incorrect or false invoice, with regard to any such supply, shall be liable to pay a penalty of Rupees Ten Thousand or an amount equivalent to the tax evaded or the tax not deducted under Section-51 or short deducted or deducted but not paid to the Government or tax not collected under Section 52 or short collected or collected but not paid to the Government or Input Tax Credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.

Purpose of Test Purchase:

i. To ensure compliance is issuing tax invoice/ bill supply by the taxable person.

ii. To prevent composition taxable persons/ unregistered persons from collecting tax from the customers.

iii. Thereby prevent possible evasion of tax.

To Read Detailed Circular Download PDF Given Below: