Section 153 of GST Act: Taking assistance from an expert

Explanation of Section 153: Taking Assistance from an Expert

Purpose:
Section 153 allows tax or revenue officers of a certain rank (Assistant Commissioner or higher) to seek expert assistance when handling cases that involve complex issues or have significant implications for revenue collection.

Key Points:

1. Who Can Invoke It?
   • Only officers of at least the rank of Assistant Commissioner or higher are authorized to use this provision.
2. When Can It Be Used?
   • At any stage of scrutiny, inquiry, investigation, or other proceedings.
   • This means expert assistance can be sought at the beginning, during, or even toward the conclusion of a case.
3. Why Is It Used?
   • When a case involves complex financial, technical, or legal matters beyond the expertise of tax officers.
   • To ensure accurate assessment, fair proceedings, and safeguard government revenue interests.
4. Types of Experts:
   • Financial analysts
   • Forensic accountants
   • Legal professionals
   • Industry specialists
   • Technology experts (in cases involving digital transactions or fraud)

Significance:

• Helps tax authorities make informed decisions in cases involving sophisticated tax planning, fraudulent transactions, or high-value disputes.
• Ensures transparency and accuracy in investigations and assessments.
• Strengthens the government’s ability to protect revenue and combat tax evasion effectively.

Example-1 of Section 153 in Action: Taking Assistance from an Expert

Scenario: Tax Evasion Investigation of a Large Corporation

A multinational company operating in multiple countries is under investigation for alleged tax evasion through complex transfer pricing arrangements. The case involves cross-border transactions, offshore accounts, and sophisticated financial structures.

Application of Section 153

• The Assistant Commissioner of Income Tax (or a higher officer) is handling the case.
• Given the complexity of international taxation and financial structures, the officer decides to take assistance from an expert under Section 153.

Expert Assistance Sought

1. Forensic Accountant
   • Analyzes the company’s books, identifies discrepancies, and traces hidden income.
2. Transfer Pricing Specialist
   • Reviews whether the company has artificially shifted profits to low-tax jurisdictions.
3. Legal Expert in International Taxation
   • Assists in interpreting tax treaties and foreign exchange laws applicable to the case.
4. Digital Forensics Expert
   • Recovers deleted financial records and emails that may contain evidence of tax fraud.

Outcome

• With expert analysis, the tax department proves the company’s non-compliance, leading to a substantial tax recovery and penalties.
• The company is forced to revise its financial reports and comply with regulations.

Real-World Example: Many countries have used expert assistance in major tax cases, such as the Panama Papers Leak and the Paradise Papers, where forensic accountants, data analysts, and tax law experts helped uncover hidden offshore accounts and tax fraud schemes.

Example 2: Personal Tax Fraud & Digital Transactions

Scenario: High-Net-Worth Individual Hiding Income Using Cryptocurrency

A wealthy individual in the UK reports low taxable income despite leading a lavish lifestyle—owning luxury cars, multiple properties, and frequently traveling abroad. The tax authorities suspect undeclared income and possible use of cryptocurrency to evade taxes.

Application of Section 153

• The Assistant Commissioner of Income Tax handling the case notices discrepancies in the individual’s lifestyle and tax returns.
• Given the complex nature of digital assets and crypto transactions, the officer invokes Section 153 to take expert assistance.

Expert Assistance Sought

1. Blockchain & Cryptocurrency Forensic Analyst
   • Traces crypto transactions through blockchain analysis tools to uncover undeclared digital assets.
2. Forensic Accountant
   • Examines bank statements, luxury purchases, and money transfers to identify unreported income sources.
3. Cybersecurity Expert
   • Recovers deleted transaction records from personal devices and wallets to prove digital asset ownership.
4. Legal & Tax Compliance Expert
   • Interprets laws on cryptocurrency taxation and advises on potential penalties & recovery options.

Outcome

• The expert team uncovers a hidden crypto portfolio worth millions that was used to bypass tax reporting.
• The individual is forced to pay back taxes, penalties, and interest on undeclared income.
• The case sets a precedent for future crypto-related tax investigations.

Real-World Example: Countries like the U.S. (IRS), UK (HMRC), and Australia (ATO) have hired blockchain experts to track tax evasion via Bitcoin and other cryptocurrencies. For example, the IRS partnered with Chainalysis, a blockchain forensic firm, to uncover crypto tax fraud schemes.