POWER OF INSPECTION IN GST - WHAT SECTION 67 PROVIDES!!

Provisions of section 67: At a glance

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.

Gist of Section 67 on Inspection Search and Seizure

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:

1. Suppressed any transaction relating to goods or services or stock in hand.
2. Claimed excess input tax credit over and above the entitlement.
3. Contravened any provisions of the Act or Rules to evade tax.
4. Keeping of goods which has escaped payment of tax by transporter or warehouse / godown keeper

The following safeguards are provided:

1. If goods liable to confiscation or any documents/books/record/things, which may be useful for or relevant to any proceedings, are secreted in any place then all such places can be searched
2. All such goods/documents/books/record/things may be seized, however, if it is not practicable to seize any such goods then the same may be detained. The person from whom these are seized shall be entitled to take copies/extracts of seized records
3. The seized documents/books/things shall be retained only till the time the same are required for examination/enquiry/proceedings and if these are not relied on for the case then the same shall be returned within 30 days from the issuance of show cause notice
4. The seized goods shall be provisionally released on execution of bond and furnishing a security or on payment of applicable tax, interest and penalty
5. In case of seizure of goods, a notice has to be issued within six months, if no notice is issued within a period of six months then all such goods shall be returned. However, this period of six months can be extended by Commissioner for another six months on sufficient cause.
6. An inventory of the seized goods/documents/records is required to be made by the officer and the person, from whom the same are seized, shall be given a copy of the same.
7. To ensure that the provisions for search and seizure are implemented in a proper and transparent manner, the Act stipulates that the searches and seizures shall be carried out in accordance with the provisions of Criminal Procedure Code, 1973 (Bharatiya Nagarik Suraksha Sanhita, 2023 w.e.f. 01.07.2024). It ensures that any search or seizure should be made in the presence of two or more independent witnesses, a record of entire proceedings is made and forwarded to the Commissioner forthwith.