Ashok Sharma, Advocate
Our economy is at a critical juncture in its efforts to accelerate growth. The principal concerns are deteriorating public finances and the most direct way to raise tax to GDP ratio is to improve tax payers compliance. GST is commonly described as indirect, comprehensive, broad-based consumption Tax and it subsumed many Central and State Taxes and now it become the single largest contributor to the tax revenues of the Government, Goods and Services Tax (GST) revenues and administration have a critical role to play in achieving this objective. Any setback or slowdown in GST revenue mobilization adversely impacts economic planning.
Search and Seizure provisions can be found in various Indian legislations which give powers to the competent authority to collect evidence in relation to violation of the legislation concerned. The nature of search and seizure varies from authority to authority. The authorities generally are entrusted with the power to perform searches and seizures of persons and their belongings, and occasionally use force in their duty. But this power must be exercised with utmost caution and within the boundaries of the law. When the authorities exceed those boundaries they jeopardize the admissibility of any evidence collected for prosecution. While performing the powers of search and seizure, at each point, reporting to a senior responsible officer is mandatory, so that no officer acts in an arbitrary way.
The Central Goods and Service Tax authorities who are entrusted with the task of implementation of the GST law enjoy wide and sweeping powers in respect of inspection, search seizure and arrest.
The useful sections and rules:
|THE CENTRAL GOODS AND SERVICES TAX ACT, 2017|
|Section 67||Power Of Inspection, Search And Seizure.|
|Section 68||Inspection Of Goods In Movement.|
|Section 69||Power To Arrest.|
|Section 70||Power To Summon Persons To Give Evidence And Produce Documents.|
|Section 71||Access To Business Premises.|
|Section 72||Officers To Assist Proper Officers.|
|Section 132||Punishment Of Certain Offences.|
|THE CENTRAL GOODS AND SERVICES TAX RULES, 2017|
|Rule 139||Inspection, Search And Seizure.|
|Rule 140||Bond And Security For Release Of Seized Goods.|
|Rule 141||Procedure In Respect Of Seized Goods.|
|CODE OF CRIMINAL PROCEDURES (Crpc),1973|
|Section 100||Persons In Charge Of Closed Place To Allow Search.|
|Section 165||Search By Police Officer.|
|Section 436||In What Cases Bail To Be Taken.|
|INDIAN PENEL CODE (IPC), 1860|
|Section 187||Omission To Assist Public Servant When Bound By Law To Give Assistance.|
Search and Seizure
Search and Seizure is defined as “A hunt by law enforcement officials for property or communications believed to be evidence of crime, and the act of taking possession of this property”. There are various laws in the country which prescribes for the provision of ‘search and seizure’. Reason for having the provision of search and seizure is to give jurisdiction to the authority to conduct a search and seize the evidence. At the same time, it gives a protection, or safeguards the interest of the common man from being violated by the excesses of the authority having powers to search or to seize.
Section 67 and corresponding Rule 139 of Central Goods and Services Tax, 2017 prescribed the various provisions and rules to define the search, seizure and inspection and as per provisions of CGST Act the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorize in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things.
Reasons to Believe
In case of Prabhubhai Vastabhai Patel Vs R.P. Meena 226 ITR 781 (Guj) The Conditions for valid search was discussed and court summarized conditions laid down by various judgments. The foremost condition for valid search is that the Authority must have information and reason to believe and not suspect. It must be information and not rumor or gossip or hunch. Information must exist prior to authorization. Reason to believe must have reasonable bearing / connection to information. Existence of condition precedent is open to judicial scrutiny. But sufficiency of information is not open.
The CGST Act empower any officer under this Act, authorized by the proper officer not below the rank of Joint Commissioner, to have access to any place of business of a registered person to inspect books of account, documents, computers, computer programs, computer software whether installed in a computer or otherwise and such other things as he may require and which may be available at such place, for the purposes of carrying out any audit, scrutiny, verification and checks as may be necessary to safeguard the interest of revenue.
The proper officer not below the rank of Joint Commissioner, shall issue an authorization in FORM GST INS-01 authorizing any other officer subordinate to him to conduct the inspection or search or, as the case may be, seizure of goods, documents, books or things liable to confiscation.
The proper officer or an authorized officer shall make an order of seizure in FORM GST INS-02 and where it is not practicable to seize any such goods, the proper officer or the authorized 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.
The Proper Officer or an authorised officer can:
Officers to assist proper officers
All officers of Police, Railways, Customs, and those officers engaged in the collection of land revenue, including village officers, officers of State tax and officers of Union territory tax shall assist the proper officers in the implementation of this Act. The Government may, by notification, empower and require any other class of officers to assist the proper officers in the implementation of this Act when called upon to do so by the Commissioner.
Presence of Counsel
The Madras High Court, in the G. Giribabu & Anr. (2010) 326 ITR 575 Madras) case, decided that a person summoned cannot insist that he should be permitted to appear with his counsel during preliminary enquiry proceedings.. The case arose under the FEMA provisions. The petitioners’ case before the high court was that the right to be represented by an advocate flows as the cross examination is justified as if before a court of law. The FEMA/I-T authorities have no jurisdiction or power to deny the presence of an advocate. The right of fair procedure is part of the requirement of article 21 of the Constitution of India.
In another matter The Hon’ble court held that the functions that the AOs under the IT Act and officers of the ED under FEMA perform are of an inquisitive and officers of the ED under FEMA perform are of an inquisitive nature seeking and collecting information-not that of deciding any issues. Basically, these are information gathering exercises. When the information gets collected through the machinery of these provisions and it is to be put to use in passing orders, the parties involved are to be given opportunity to have their say in accordance with the principle of natural justice and they get full opportunity for cross-examination and, at that stage, the assessee /party proceeded against, can be represented by his/her counsel-not at the enquiry stage.
The Central Goods and Services Tax Act, 2017 is a new legislature and its provisions are yet to tested in court of Law but the provisions regarding inspection, search, seizure and arrest as prescribed in various current direct and erstwhile indirect tax law of the country are well defined through Court Judgments and Tribunal decisions and it may be concluded that It is correct that “No one would wish that any of those who defraud the revenue should go free. They should be found out and brought to justice. But it is fundamental in our law that the means which are adopted to this end should be lawful means. A good end does not justify a bad means”.