Confiscation of Goods

[Krishna Murthy]

Sir, Search u/s 132 was conducted by the Income Tax Department and found there was excess stock available in the premises. The assessee has admitted the same as income under Income Tax Act and paid relevant taxes there in. Now, the GST department says that since the goods were not accounted for in the books of accounts, the same is liable for confiscation under Sec 130 of GST Act. Is this valid?

I am of the view that GST Department cannot directly rely on the Search conducted by the Income Tax Department and they have to make independent enquiry and issue proper notice u/s 67(2) of GST Act before resorting to confiscation under GST Act. Is my view correct.

[KASTURI SETHI]

(i) There is no doubt that Income Tax Act and GST Act are separate and different and both operate in different fields.

(ii) You must be aware that MOU was signed between CBDT and CBIC for cooperation and synergy between the CBDT and CBIC. Constitutionally, both the department can share information about the assessees.

(iii) Thus the result of search conducted by the Income Tax Department will have repercussions regarding the evasion of GST. In other words, search will pave the way for investigation by the GST department.

(iv) The question of confiscation will arise only after the completion of investigation by the GST department. GST department will follow the proper procedure and will not confiscate on the basis of search only by the Income Tax department.

[Sadanand Bulbule]

Dear querist

In a way, all such economic departments are inter-woven for the purpose of sharing the factual inputs periodically to protect and recover the revenue under the respective Acts. Although the governing provisions differ, the final object is the same with due process of respective laws. So one has to be very careful and understand the multiple adverse consequences.

I fully endorse the view of Sh. Sethi Sir.

[Krishna Murthy]

Dear Experts Thankyou for your replies. From your answers it is clear that GST department has to follow proper procedure duly issuing proper notices before taking any action. Though there is information sharing between both IT and GST Departments, as on the date of initiation of action by the GST Department, the excess stocks are accounted for post search proceedings by Income Tax Department.

Can the GST department take action against historic data available with the IT department.

[KASTURI SETHI]

Q. Can the GST department take action against historic data available with the IT department. ?

Ans. Yes. Respective department will take action against the offender.

[Padmanathan KV]

Dear querist, what is the exact position in your case? has any show cause notice been issued under section 130?

AI Summary

Confiscation of goods: information sharing may trigger GST probes, but GST must carry out independent investigation and issue notice. Income Tax search results may prompt a GST investigation because of interdepartmental information sharing, but GST authorities cannot confiscate goods solely on the basis of an IT search. The GST department must conduct its own enquiry, comply with statutory investigation procedures and issue the required notices before resorting to confiscation; historic data from the IT department may be used to initiate GST proceedings, subject to GST-specific procedural compliance.