TaxTMI 
TaxTMI 
TaxTMI 
In any tax administration the provisions for Inspection, Search, Seizure and Arrest are provided to protect the interest of genuine tax payers (as the tax evaders, by evading the tax, get an unfair advantage over the genuine tax payers) and as a deterrent for tax evasion. These provisions are also required to safeguard Government's legitimate dues. Thus, these provisions act as a deterrent and by checking evasion provide a level playing field to genuine tax payers.
It may be mentioned that the options of Inspection, Search Seizure and Arrest are exercised, only in exceptional circumstances and as a last resort, to protect the Government Revenue. Therefore, to ensure that these provisions are used properly and effectively and the rights of taxpayers are also protected, it is stipulated that Inspection, Search or Seizure can only be carried out when an officer, of the rank of Joint Commissioner or above, has reason to believe the existence of such exceptional circumstances. In such cases, the proper officer, not below the rank of the Joint Commissioner may authorize, in writing, any other officer to cause inspection, search and seizure. However, in case of arrests the same can be carried out only where the person is accused of offences specified for this purpose and the tax amount involved is more than specified limit. Further, the arrests under GST Act can be made only under authorization from the Commissioner.
The provisions of search and seizure provides enough safeguards to the taxpayers and the GST Law stipulates that search of any place of business etc. can be carried out only under authorization from an officer not below the rank of Joint Commissioner and if he has a reason to believe that the person concerned has:
- Suppressed any transaction relating to goods or services or stock in hand.
- Claimed excess input tax credit over and above the entitlement.
- Contravened any provisions of the Act or Rules to evade tax.
- Keeping of goods which has escaped payment of tax by transporter or warehouse / godown keeper
Gist of Section 67 - Inspection Search and Seizure
Criteria | Event/Activity |
Who can do | Proper officer not below rank of Joint Commissioner |
When (Reason) | Reason to believe must exists |
What | Inspection of place of business, search any place, seizure of goods, documents, books or things for 6 months |
How | By himself or authorizing any officer of central tax in writing |
Empowered to |
|
Steps involved in inspection under Section 67
- Gathering intelligence from various sources including third parties
- Examination on material on record
- Filing note of findings for approval in form GST INS-01 for inspection (Reason to believe)
- Issuance of authorization for inspection of premises based on reason to believe
- Approval to specify as to only inspection and search to be carried out
- Authorization to be given to officer not below the rank of Assistant Commissioner.
- Ensuring that lady officer is also present in cases where inspection is at residence or where women are occupied
- Authorized officer ensuring that:
- Reach the correct location of the premises to be inspected
- Carry authorization / warrant and there identity cards
- Obtain acknowledgement of (a) and (b) above
- Carrying out the inspection only in the area covered in form GST INS-01 within the scope of reason to believe.
- Carrying out inspection only where search is note authorized (for ex-in inspection only things can be examined, inspected or observed but officers cannot break open rooms or almirah or drawers etc. which is allowed only in search)
- Where inspection is ordered but it is feel that such inspection needs to be converted into a search, a further authorization should be sought.
- Ensuring that search is limited:
- Goods liable for confiscation
- Documents, books or things which are secreted at a location which is a subject of inspection and search.
The option of breaking open almirah, of box or electronic devices should be resorted to only when party is not co-operating and access is denied.
- Secured articles may be liable to confiscation or seizure.
- It should be secured that inspection is carried out during the working hours but if required, search proceedings must not be stopped.
- On the exit of authorized officers from the premises after the search is over, the authorization granted as per form GST INS-01 is extinguished.
- Issuing order of seizure in form GST INS-02 containing details of items seized, witnesses and time of conclusion.
- Issuance of order of prohibition in form GST INS-03 for goods liable for confiscation but cannot be seized practically or where goods are logging with third parties.
- Wherever required, goods seized or confiscated can be provisionally released on furnishing of bond / security in form GST INS-04.
- Depending upon nature of goods confiscated is may be decided to dispose off the items by an order in form GST INS-05.
- To conclude the proceedings, the officers may:
- Issue SCN u/s 74 or
- Dropping proceedings
- Return of seized articles / items within 6 months from the date of order of seizure.
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