Inspection Search and Seizure

Inspection

Particulars

Remarks

Governing Provisions

Section 67 of CGST Act 2017 and Rule 139, 140 and 141 of CGST Rules 2017

Meaning of Inspection

The term has not been defined under the law therefore it has to be understood in general sense. Generally it means careful examination or scrutiny.

Circular (Flyer No 49) dated 1st Jan 2018

‘Inspection' is a softer provision than search which enables officers to access any place of business or of a person engaged in transporting goods or who is an owner or an operator of a warehouse or godown

Who can order for Inspection

Joint Commissioner or any other officer above the rank of Joint Commissioner

Inspection can be initiated against whom

(A) Taxable Persons if the matter is related to
(1) suppression of transaction related to supply of goods or services or both
(2) suppression of transaction related to stock of goods in hand
(3) excess claim of ITC over entitlement of ITC
(4) contravention of any provision of the act or the rules made thereunder with the intention to evade payment of tax.
(B) Any other person if the other person is engaged in
(1) business of transporting goods which have escaped payment of tax
(2) owner or operator of a warehouse or godown or any other place where goods are kept which has escaped payment of tax
(3) keeps accounts or goods in a manner likely to cause evasion of tax payable

How Inspection can be initiated

Joint commissioner must have reason (as mentioned above) to believe and he must authorise its officers in writing.

Reason to believe

It contemplates an objective determination based on intelligent care and deliberation as distinguished from a purely subjective consideration. Reason to believe is not suspicion or doubt but it is higher level of state of mind. A person is said to have reason to believe if has sufficient cause to believe that thing but not otherwise.

Manner of issue of authorisation for Inspection

INS-01. The form is to authorise the officer to conduct Inspection. It contains the name and details of authorised officers along with the reason to conduct Inspection. In addition to the reasons mentioned above it contains specific reason of “claim of refund in excess of his entitlement”

Pre information to conduct Inspection

No. Pre information to the Assessee or taxable person is not required to conduct inspection

Search and Seizure

Meaning of Search

The terms not defined in law and therefore general meaning is resorted to. Search means examine a place or person or vehicle or anything thoroughly in order to find something or someone.

Maning of Seizure

The terms not defined in law and therefore general meaning is resorted to. Seizure means the action of capturing someone or something using force.

When Search or Seizure can be ordered

(1) Either after pursuant to inspection. (2) Or Otherwise

Reason of ordering Search or Seizure

Where officer not below the rank of Joint Commissioner has reason to believe that any goods liable to confiscation or documents books or things which shall be useful or relevant to any proceedings under this act are secreted in any place, he may authorise in writing for search and seizure.

Form of Order for Authorisation for Search

INS-01. The form is to authorise the officer to conduct Search. It contains the name and details of authorised officers along with the reason to conduct Search.

Form of Oder for Seizure

INS-02. The form contains details of the goods and documents seized along with the details of witnesses.

List of inventory and documents seized

The office had to prepare inventory of goods and documents and get it signed with the authorised person.

What is Seizure is not possible

Offices shall take custodian vide issue of prohibition order in INS-03.

Places to be Searched

The place of search shall be places as mentioned above where inspection can be carried upon. It is place of business, warehouse or godown or vehicles.

Extended place of Search

Officers have power to seal or break open the door of premises or break open any almirahs, electronic devises, box, receptacle in which goods, accounts, registers and documents of the person are suspected to be concealed.

For how long Seized goods and documents can be kept by the department

(1) The documents not relied upon for issue of seizure notice shall be returned within 30 days of issue of notice.
(2) Seized goods shall be released upon execution of bond or furnishing of security or payment of tax, interest and penalty.

(3) Goods seized without notice to be released within 6 months. The period can be extended for further six months.
(4) Documents can be kept by the proper officer till the completion of proceedings if it has reasons to believe, in writing, that the person may evade payment of tax.

Form of issue of Bond

INS-04

If goods are perishable

Goods shall be released in INS-05 provided market price of such goods or amount of tax, interest or penalty, whichever is lower is paid.

Perishable Goods

The list of goods mentioned in Notification No 27/2018-Central Tax dated 13-06-18 are perishable goods.

Test Checks

The officer may conduct test checks about compliances of procedures by causing purchase and return of goods or services or both.

Office No 203, Amrit Kalash, Residency Road, Near Bombay Motor Circle, Jodhpur - 342001, Rajasthan