GST: CONFISCATION & SEIZURE DURING SEARCH

Situations for Confiscation leading to search

Under section 67(2) of the CGST Act, 2017, search can be ordered where the CGST/SGST officer has reasons to believe that goods are liable to confiscation. In terms of section 130 of CGST Act, 2017, goods become liable to confiscation when any person does the following acts:

1. supplies any goods in contravention of any of the provisions of this Act or rules made there under leading to evasion of tax;
2. does not account for any goods on which he is liable to pay tax under this Act;
3. supplies any goods liable to tax under this Act without having applied for registration;
4. contravenes any of the provisions of the GST Act or rules made there under with intent to evade payment of tax.
5. uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made there under unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance.

As per section 67(11) of CGST Act, 2017, where the proper officer has reasons to believe that any person has evaded or is attempting to evade the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him and shall grant a receipt for the same, and shall retain the same for so long as may be necessary in connection with any proceedings under this Act or the rules made thereunder for prosecution.

Retention of seized items

As per second proviso to section 67(2), the goods, documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceeding under the GST law.

Copies of document seized

In terms of section 67(5), the person from whose custody any documents are seized shall be entitled to make copies thereof or take extracts there from in the presence of an authorized officer at such time and place as allowed except, where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation.

Return of documents etc. seized

According to section 67(3) of the GST Act, 2017 the documents, books or things or any other documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made thereunder, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice.

As per section 67(7) the seized goods are liable to be returned to the person from whom they were seized. Where any goods are seized and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized and the aforesaid period of six months may be extended by the competent authority for a further period not exceeding six months, on sufficient cause being shown.

Inventory of items seized

As per section 67(9), where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorised by him he shall prepare an inventory of such goods in such manner as may be prescribed.

Manner of seizing goods

As per rule 139 (1 and 2) of CGST Rules, 2017, where any goods, documents, books or things are liable for seizure under sub-section (2) of section 67, the proper officer or an authorised officer shall make an order of seizure in FORM GST INS-02. The proper officer or an authorised officer may entrust upon the owner or the custodian of goods, from whose custody such goods or things are seized, the custody of such goods or things for safe upkeep and the said person shall not remove, part with, or otherwise deal with the goods or things except with the previous permission of such officer. The officer seizing the goods, documents, books or things shall prepare an inventory of such goods or documents or books or things containing, inter alia, description, quantity or unit, make, mark or model, where applicable, and get it signed by the person from whom such goods or documents or books or things are seized.

Where it is not practicable to seize any such goods, the proper officer or the authorised officer may serve on the owner or the custodian of the goods, an order of prohibition in FORM GST INS-03 that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.

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