1. INTRODUCTION
1.1 In any tax administration the provisions for Inspection, Search, Seizure and Arrest are provided as a deterrent for tax evasion. These provisions are also required to safeguard Government’s legitimate dues. It provides a method which can effectively be used to unearth willful and organized evasion of tax dues. This Chapter provides the insight of the legal provisions and procedures in respect of Inspection, Search, Seizure and Arrest. The provisions of CGST Act and CGST Rules relevant to this Chapter are as under –
| Sr. No. | Section/Rules | Provisions pertaining to |
| 1 | Section 67 | Power of inspection, search and seizure |
| 2 | Section 68 | Inspection of goods in movement |
| 3 | Section 69 | Power to arrest |
| 4 | Section 70 | Power to summon persons to give evidence and produce documents |
| 5 | Section 71 | Access to business premises |
| 6 | Section 72 | Officers to assist proper officers |
| 7 | Section 74 | Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts |
| 8 | Section 129 | Power to waive penalty or fee or both |
| 9 | Section 132 | Punishment for certain offences |
| 10 | Section 137 | Offences by companies |
| 11 | Section 154 | Power to take samples |
| 12 | Rule 139 | Inspection, search and seizure |
| 13 | Rule 140 | Bond and security for release of seized goods |
| 14 | Rule 141 | Procedure in respect of seized goods |
1.2 The options of Inspection, Search, Seizure and Arrest are exercised, only in exceptional circumstances and as a last resort, to protect the Government’s Revenue. Therefore, to ensure that these provisions are used properly, 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 reasons to believe the existence of such exceptional circumstances. In such cases, 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 the specified limit.
2. INSPECTION
2.1 ‘Inspection’ is a softer provision than search, which enables officers to access any place of business of a taxable person and also any place of business of a person engaged in transporting goods or who is an owner or an operator of a warehouse or godown. The inspection can be carried out by an officer of CGST only upon a written authorization given by an officer of the rank of Joint Commissioner or above. A Joint Commissioner or an officer higher in rank can give such authorization only if he has reasons to believe that the person concerned has done one of the following actions:
(a) Suppression of any transaction relating to supply of goods or services or stock in hand;
(b) Claimed excess input tax credit;
(c) Contravention of any provisions of the Act or the Rules to evade tax;
(d) Transporting or keeping goods which escaped payment of tax or manipulating accounts or Stocks which may cause evasion of tax.
2.2 Inspection can also be done of the conveyance, carrying a consignment of value exceeding specified limit. The person in charge of the conveyance has to produce documents/devices for verification and allow inspection. Inspection during transit can be done even without authorization of the Joint Commissioner.
2.3 Legal Framework for Inspection in GST:
(i) As per Section 67(1) of the CGST Act, 2017, the Proper Officer should not be below the rank of Joint Commissioner of Central Tax. The Central Board of Indirect Taxes & Customs (CBIC), vide Circular No. 3/3/2017–GST dated 5th July 2017, has assigned the functions of the Proper Officer for authorizing Inspection to the Additional Commissioner or the Joint Commissioner of Central Tax. The said proper officer can also authorize inspection of any place of business of any transporter or an owner or operator of a warehouse or a godown suspected of keeping goods, which have escaped payment of tax. (Section 67(1) of CGST Act, 2017)
(ii) Rule 139(1) of the CGST Rules, 2017, provides that the said proper officer shall issue an authorization in FORM GST INS-01 authorizing any other officer subordinate to him to conduct the inspection. (Rule 139(1) of CGST Act, 2017)
2.4 Officer of Central Tax competent to carry out Inspection:
According to Section 67(1) of the CGST Act, 2017, the Proper Officer can authorize any other officer of Central Tax to carry out the Inspection. However, according to Rule 139(1) of the CGST Rules, 2017, the officer so authorized by the Proper Officer has to be subordinate to the Proper officer. This means that even though the officer so authorized can be any other officer, he should not be equal in rank or senior in rank to the Proper Officer.
2.5 Manner to conduct Inspection:
The Proper officer can authorize a subordinate officer to carry out Inspection by issuing an Inspection Authorization in FORM GST INS-01. The Inspection Authorization is generated online by the Proper Officer on the CBIC DIN Portal and contains the following important details:
(i) Document Identification Number (DIN) of the Inspection Authorization;
(ii) Name and designation of the officer authorized for Inspection;
(iii) Address of the premises to be inspected;
(iv) Period of validity of the Inspection Authorization;
(v) Violations of law in respect of which reasons to believe have been formed by the Proper officer.
2.6 Persons in respect of whom Inspection can be authorized by the Proper officer:
Inspection can be authorized by the Proper officer when he has reasons to believe that the specified violations of law have been committed by the following persons:
(i) A taxable person;
(ii) Any person, whether or not a taxable person, engaged in the business of transporting goods; or
(iii) An owner or operator, whether or not a taxable person, of a warehouse or a godown or any other place.
2.7 Specified violations in respect of which reasons to believe have to be formed by the Proper Officer:
In terms of clause (a) and clause (b) of Section 67(1) of the CGST Act, 2017, the violations, in respect of which reasons to believe, have to be formed by the Proper officer are as under:
(I) Violations by a taxable person-
(i) Suppressing any transaction relating to supply of goods or services or both;
(ii) Suppressing the stock of goods in hand;
(iii) Claiming input tax credit in excess of his entitlement;
(iv) Contravention of any of the provisions of the CGST Act, 2017 or the Rules made thereunder to evade tax.
(II) Violations by any person, whether or not a taxable person, engaged in the business of transporting goods-
(i) Keeping goods which have escaped payment of tax;
(ii) Keeping his accounts or goods in such a manner as is likely to cause evasion of tax.
(III) Violations by an owner or operator, whether or not a taxable person, of a warehouse or a godown or any other place-
(i) Keeping goods which have escaped payment of tax;
(ii) Keeping his accounts or goods in such a manner as is likely to cause evasion of tax.
2.8 Places which can be inspected:
Under Inspection, only places of business, as under, can be inspected:
(i) Any places of business of the taxable person;
(ii) Any places of business of the person engaged in the business of transporting goods, whether or not a taxable person;
(iii) Any places of business of the owner or the operator, whether or not a taxable person, of warehouse or godown or any other place.
2.9 Inspection in movement:
(I) Any consignment, exceeding value of Rs. 50,000/-, may be stopped at any place for verification of the documents/ devices prescribed for movement of such consignments.
(II) If on verification of the consignment, during transit, it is found that the goods were removed without prescribed document or the same are being supplied in contravention of any provisions of the Act, then they can be detained or seized and may be subjected to penalties as prescribed.
3. SEARCH
3.1. Legal Framework for Search in GST:
(I) Section 67(2) of the CGST Act, 2017 empowers the proper officer, not below the rank of Joint Commissioner, to authorise in writing any other Central Tax Officer to search any place where any goods liable to confiscation or any documents or books or things relevant to the proceedings under this Act are suspected to be secreted and seize such goods, documents, books or things. (Section 67(2), (4) & (10) of CGST Act, 2017)
(II) Section 67(4) of the CGST Act, 2017, empowers the officer so authorized to seal or break open the door of any premises or to break open any storage space to access any goods, accounts, registers or documents, suspected to be concealed.
(III) Section 67 (10) of the CGST Act, 2017, makes the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure, applicable to search and seizure under this section.
(IV) Rule139(1) of the CGST Rules, 2017, provides that the said proper officer shall issue an authorization in FORM GST INS-01 authorizing any other officer subordinate to him to conduct the search. (Rule 139(1) of CGST Act, 2017)
3.2 Officer of Central Tax competent to authorize Search:
As per Section 67(2) of the CGST Act, 2017, the Proper Officer should not be below the rank of Joint Commissioner of Central Tax. The Central Board of Indirect Taxes & Customs, vide Circular No. 3/3/2017–GST dated 5th July 2017, has assigned the functions of Proper Officer for authorizing Search to the Additional Commissioner or the Joint Commissioner of Central Tax.
3.3 Officer of Central Tax competent to carry out Search:
According to Section 67 (2) of the CGST Act, 2017, the Proper Officer can authorize any other officer of Central Tax to carry out the Search. However, according to Rule 139(1) of the CGST Rules, 2017, the officer so authorized by the Proper Officer has to be subordinate to the Proper Officer. This means that even though the officer so authorized can be any other officer, he should not be equal in rank or senior in rank to the Proper Officer.
3.4 Manner in which the Proper officer can authorize any other officer to conduct Search:
(I) The Proper officer can authorize a subordinate officer to carry out Search by issuing a Search Authorization in FORM GST INS-01.
(II) The Search Authorization is generated online by the Proper Officer on the CBIC DIN Portal and interalia contains the following important details:
(a) Document Identification Number (DIN) of the Search Authorization;
(b) Name and designation of the officer authorized for Search;
(c) Address of the premises to be searched;
(d) Period of validity of the Search Authorization.
3.5 Forming reasons to believe for authorizing search of the Premises:
According to Section 67 (2) of the CGST Act, 2017, the Proper Officer for arriving at reasons to believe for the search, is required to take the following into consideration-
(i) Goods liable to confiscation are secreted in the place to be searched;
(ii) Documents or books or things, which in the opinion of the Proper officer shall be useful for or relevant to any proceedings under the CGST Act, 2017, are secreted in the place to be searched.
3.6 Places which can be searched:
There is no restriction on the places which can be searched. Even places other than places of business can also be searched.
3.7 Stage at which search can be carried out:
There are two stages at which Search can be carried out-
Stage 1: Search can be carried out based on the inputs gathered during an Inspection, which reveal that incriminating goods, documents, books or things may be secreted in a place.
Stage 2: Search can be carried out independently, based on Intelligence developed or Information received that incriminating goods, documents, books or things may be secreted in a place.
3.8 Powers of the Central Tax officer authorized to conduct Search:
(I) The officer authorized by the Proper Officer to conduct Search has been vested with vast powers as per Section 67(4) of the CGST Act, 2017.
(II) In case of non-cooperation from the person whose premises is being searched, the authorized officer has the powers to-
(a) Seal the premises;
(b) Break open the doors of premises;
(c) Break open the almirahs, electronic devices, boxes, receptacles in which any goods, accounts, registers or documents are suspected to be concealed.
(III) Since vast powers have been placed at the disposal of the authorized officer during Search, certain safeguards have to be followed by the officers during the Search.
(IV) These safeguards ensure that the Search is carried out in a transparent manner and the rights of the individuals are not violated.
3.9 Legal Framework of safeguards to be observed during Search:
(I) As per Section 67(10) of the CGST Act, 2017, the provisions of the Code of Criminal Procedure, 1973 have been made applicable to Search. The safeguards to be observed during Search and the powers of the officers conducting the Search are contained in-
(a) Section 47 of Code of Criminal Procedure, 1973 – Search of place entered by person sought to be arrested;
(b) Section 100 of Code of Criminal Procedure, 1973 – Persons incharge of closed place to allow search;
(c) Section 165 of Code of Criminal Procedure, 1973 – Search by Police Officer;
(d) Section 187 of Indian Penal Code, 1860 – Omission to assist public servant when bound by law to give assistance.
(II) The above provisions of Code of Criminal Procedure, 1973 have to be read in the context of CGST Act, 2017 to draw a harmonious meaning.
3.10 Preparation for the Search:
After an actionable intelligence has been prepared in the form of an Information Report or AE-I Report and approval of the competent authority has been obtained, necessary preparation for executing the same is required to be carried out depending upon the nature of the intelligence. An ‘Operation Chart’ should be prepared soon after the Search Authorizations have been signed by the Proper officer. This will enable adequate supervision over actual search work at individual premises.
3.11 Salient features of safeguards to be observed during Search:
The freedom to carry out trade or business is a fundamental right guaranteed under the Constitution of India. Therefore, the power to search a person’s residence/business premises and to seize/detain his goods and property is an extraordinary power given to the CGST Officers under the CGST Act, 2017. This power cannot be exercised injudiciously or without proper application of mind. Therefore, while carrying out search operations, the following basic parameters need to be borne in mind:
(i) Search should be carried out only under a valid Search Authorization issued by the Proper officer. All searches should be made in accordance with the provisions relating to search contained in the Cr. P.C, 1973.
(ii) The premises of a person cannot be searched on the authority of a Search Authorization issued for the premises of some other person.
(iii) The officers conducting the Search and the accompanying Panchas should offer themselves for personal search before as well as after the Search.
(iv) The officers conducting the search should identify themselves by showing their identity cards to the person in-charge of the premises.
(v) A lady officer should invariably be a part of the Search team, especially if a residence is being searched.
(vi) The Search Authorization should be executed before the start of the search and should be served on the person in charge of the premises to be searched by showing the same to him and his signature should be taken on the body of the Search Authorization. The signatures of the witnesses should also be taken on the body of the Search Authorization.
(vii) The search should be made in the presence of two or more independent and respectable inhabitants of the locality, and if no such inhabitants are available or willing, the inhabitants of any other locality should be asked to be witness to the search. The officer conducting the search may issue an order in writing to the inhabitants to witness the search (Section 100 (4) of Cr. P.C, 1973). The witnesses should be told about the purpose of the search.
(viii) The complete Search proceedings should be recorded by the Panchas under a Panchnama. The Panchnama and the list of goods/documents/things should be signed by the witnesses, the owner of the premises and also by the officer duly authorized for conducting the search.
(ix) A copy of the Panchnama should be given to the person in charge/owner of the premises which has been searched.
(x) After the search is over, the duly executed Search Authorization should be returned to the Proper officer who had issued the said Search Authorization with a report regarding the outcome of the search. The names of the officers who had participated in the search should be written on the reverse of the Search Authorization.
3.12 During search proceeding, Instruction No. 01/2020-21 (GST-Investigation) dated 02.02.2021 issued by CBIC and any other instruction issued from time to time by CBIC should be followed.
4. PANCHNAMA
4.1 Panchnama (Mahazar) is the primary document for establishing an offence under the CGST Act, 2017 as it has a very strong evidentiary value. It is the record of events right from the commencement of search to the conclusion of the search and includes stock taking as well as the entire record of the search proceedings. The manner of drawing the Panchnama should be such that it should be a mirror image of the proceedings on the spot.
4.2 Panchnama is a document where the record of proceedings of the search with regard to the recovery of goods, documents, things, etc. are detailed. The Panchnama is required to be signed by the person in whose presence the search was conducted as also by the independent witnesses, besides the officer who executed the Search Authorization.
4.3 A copy of the Panchnama is to be handed over to the persons whose signatures were obtained on the Search Authorization at the time of start of the search. This fact should be recorded in the Panchnama itself. Acknowledgement of the Panchnama having been given to the person in charge of the premises should also be obtained.
4.4 Points to be incorporated in a Panchnama:
(I) Panchnama is the single most important document in the context of search and seizure operations. This document should, therefore, be prepared carefully incorporating, interalia, the following details:
(a) Name, age, address, and occupation of Panchas.
(b) Date, time, and place of proceedings.
(c) Reason/authority for search or purpose of visit.
(d) Mention of the fact that the officers conducting the search disclosed their identity to the Panchas.
(e) Name and designation of the officer leading the search team.
(f) Mention of the fact of presence of the occupants/representatives of the premises to be searched during the course of the search.
(g) Mention of the fact of the Execution of the Search Authorization on the occupant/representative of the premises to be searched.
(h) Mention of the fact that one of the occupants/representatives of the party and both panchas have signed the Search Authorization.
(i) Mention of the fact of offering personal search of each member of the search team before commencing search and again after conclusion of search.
(j) Mention of the fact of presence of a lady officer in the party conducting the search in case of search of residence.
(j) Mention of any important event taking place during the operation e.g. arrival of more officers/persons, calling a photographer for photography, drawing of samples, detection of large amounts of cash, sealing of almirah, cupboard etc.
(k) Mention of the details of production of statutory records and other private records, Account Books etc. presented by the representative of the taxpayer for inspection in case of checking.
(l) Mention of how the verification of goods, inputs were undertaken (procedure adopted for weighment, measurement, test checking of standard packages/units etc). It should be supported by inventory of stocks verified.
(m) Record of the fact that in respect of goods verified physically, no other stock was available/left over. Current day’s production and issue of inputs may be specifically mentioned as excluded.
(n) Making of a separate annexure for inventories of records/documents to be resumed and articles/goods seized.
(o) Mention of the grounds forming the reasons to believe that goods seized were liable to confiscation under the CGST Act, 2017 or the Rules made thereunder and the provisions under which seizure was made.
(p) Mention of the value and duty of goods seized/detained and whether seized goods given in ‘supurdagi’ or taken into possession.
(q) Record of the facts regarding drawal of samples, if any. If sealed, a specimen of the seal to be given on the body of Panchnama.
(r) Mention of the details of brand name, trade name, standard packing and markings given on goods verified/ seized.
(s) In case of concealment of excisable goods, records or evidences, mention of the facts of place of storage (basement etc.) and manner of concealment.
(t) Mention of the fact that each page of records resumed/seized has been numbered following one set pattern viz.1, 2, 3 etc. (and not 1, 3, 5….).
(u) Mention of the fact that the first and last page of every file, register, Account Book etc. has been signed by the authorized representative of the taxpayer or the person on whom the Search Authorization was executed.
(v) Mention of the fact that every loose paper/vital document has been got signed individually from the concerned person from whose seat or cabin the same was recovered and from the person on whom Search Authorization was executed.
(w) In case any portion of the premises, almirah, safe, store etc. is found to be locked and cannot be opened for some reasons or the other, the same may be sealed and a mention may be made accordingly in the Panchnama. This sealed part can be searched using fresh Search Authorization on any following day.
(x) The details of any locker, almirah or any section of premises which has been sealed for reasons that the officers could not immediately obtain access for want of the keys, hypothecation to the bank or any other reason, should be incorporated in the Panchnama.
(y) The grounds for seizure/resumption of records/documents etc. should also be mentioned in the Panchnama.
(II) The above list is only illustrative and not exhaustive as there can be numerous factors which may have to be incorporated in Panchnama depending on the nature of proceedings and the events taking place during the search proceedings.
(III) Further, if two or more firms/units are operating from the same premises or there are common employees etc., the Panchnama should contain relevant details, which may include ground plan, details of plant and machinery installed etc. When no incriminating documents or contraband is found, a ‘nil’ Panchnama should be drawn.
5. DRAWAL OF SAMPLES
5.1 Section 154 of the CGST Act, 2017, empowers the Commissioner or the officer authorized by him to take samples of goods, wherever necessary, and provide a receipt for any samples taken. (Section 154 of the CGST Act, 2017)
5.2 The procedure governing drawal and testing of samples of goods or inputs for various purposes in order to ascertain identity, classification, eligibility for exemption etc. should be followed as per the existing instructions.
1. RECORDING OF STATEMENT
6.1 After the search is completed and the Panchnama has been drawn, it would be expedient for one or two officers led by the senior most officer heading the search team to go through the records on the spot in the context of the intelligence and get explained from the author of such documents and records by recording his statement under summons issued under Section 70 of the CGST Act, 2017. This makes it difficult for the authors to come out with alibis during subsequent investigations or to come out with tutored versions. (Section 70 of CGST Act, 2017)
6.2 While recording the statement, the following precautions should be taken:
(a) Every page of the statement should be signed at the bottom by the deponent and the officer recording the statement.
(b) In the last page, there should be an endorsement that the deponent has recorded the statement without coercion or undue influence.
(c) All corrections/alterations should also be properly authenticated.
6.3 Other formalities to be observed while recording the statement are:
(a) The replies of the person to questions should not be induced by threat, coercion, or fear. The replies should be voluntary.
(b) The questions should be precise and clear, preferably in the hand writing of the person recording the statement.
(c) If the statement is not recorded in the language which the person understands, then the statement should be interpreted and explained to him in the language which he understands and a certificate to this effect should also be recorded. He shall be at liberty to explain or add to his answers.
(d) No police officer/official should be allowed to remain in the room where the statement of the taxpayer is being recorded so that the taxpayer may not take the plea subsequently that the statement was recorded under coercion or pressure.
(e) If any person furnishes the name and address of another person, who has evidence to support the statement of the first person, then the authorised officer should get in touch with the coordinating officers so that the other person is also examined before he could be contacted by the party.
(f) The person whose statement is being recorded should be confronted with all the relevant and vital documents and he should be asked to sign and explain each such document.
(g) All handwritten documents should be got explained by the person in whose hand writing the same are written. Further, he should also be asked to explain as to under whose directions such hand written records were being maintained.
(h) In obtaining the thumb impression of an illiterate person, care should be taken to use a good stamp pad to apply ink evenly and to ensure that the impression is clear and shows the ridges prominently so that there is no difficulty in distinguishing the impression by a finger print expert.
(i) Copy of the statement should not be given to the deponent on the spot. He may, however, be informed that the copy will be supplied to him if any part of the statement is used against him.
6.4 It should be made clear to the person whose statement is being recorded that refusal to answer any question is an offence under Section 179 of the Indian Penal Code, 1860 and refusal to sign the statement is an offence punishable under Section 180 of the Indian Penal Code, 1860. Where a person after giving the statement declines to sign it, the authorized officer should call the witnesses and draw a “Refusal to Sign” Panchnama and record this fact also in the statement and obtain the signatures of the witnesses on the statement as well as on the “Refusal to Sign” Panchnama.
7. SEIZURE DURING SEARCH PROCEEDINGS
7.1 Legal Frame work for Seizure during Search Proceedings:
The legal provisions pertaining to Seizure during Search proceedings are contained in:
(i) Provisos to Section 67(2), Section 67(3), Section 67(5), Section 67(6), Section 67(7), Section 67(8) and Section 67(9) of the CGST Act, 2017. (Section 67(2), (3), (5) (6), (7), (8) & (9) of CGST Act, 2017)
(ii) Rule 139(2), Rule 139(3), Rule 139(4) and Rule 139(5), Rule 140 and Rule 141 of the CGST Rules, 2017. (Rule 139(2), (3), (4), (5) & 140, 141 of CGST Rules, 2017)
(iii) The Seizure Authorization is issued in Form GST INS 01. The Order of Seizure is issued in Form GST INS 02. The Order of Prohibition is issued in Form GST INS 03.The Bond for Provisional Release of goods is called Form GST INS 04. The Release Order of goods is issued in Form GST INS 05.
7.2 Reasons to believe for Seizure during Search Proceedings:
(I) For authorizing or carrying out Search, reasons to believe have to be formed by the Proper officer. A Search Authorization is issued in Form GST INS 01 by the Proper Officer if he has reasons to believe that goods liable to confiscation and documents or books or things which, in the opinion of the Proper officer, shall be useful for or relevant to any proceedings under the CGST Act, 2017, are secreted in any place.
(II) The Search Authorization in Form GST INS 01 issued by the Proper officer itself permits the seizure of such goods, documents, books or things if they are found during the Search proceedings.
7.3 What can be seized during Search Proceedings:
The following can be seized during Search proceedings-
(i) Goods liable to confiscation which are secreted in any place and are found during Search.
(ii) Documents or books or things which are useful for or relevant to any proceedings under the CGST Act, 2017, which are secreted in any place and are found during Search.
7.4 Manner of Seizure during Search Proceedings:
During Search proceedings, goods or documents or books or things are seized under an Order of Seizure in Form GST INS 02. The Order of Seizure contains the following important details:
(i) Document Identification Number (DIN) of the Order of Seizure.
(ii) Address of the premises at which seizure has taken place.
(iii) Details of the Goods or documents or books or things which are seized.
(iv) Names and addresses of Panchas.
7.5 Preparation of Inventory:
(I) Detailed inventory should be prepared of the seizures made at the premises itself. It is necessary to record the exact place from where seizures have been made as it helps to establish the ownership at a later stage. The details of all the marks of identification found on the goods under seizure should be mentioned while preparing the inventory and full signature of the person in charge of the premises being searched and that of the Authorised officer with date and his office seal should be taken. The pages of all the seized documents should be got numbered. The blank pages should be cancelled and numbered. The signatures of the witnesses on first and last pages of the numbered files/registers should also be obtained.
(II) All extracts taken should be properly authenticated. In the case of seizure of loose papers, they should be arranged in bundles in a folder or stitched on the left-hand top. Each paper should be numbered, signed by the authorized representative of the taxpayer, the authorised officer and the witnesses. However, where the number of papers is large, the pages can be numbered and sealed on a side. In the inventory, it may be mentioned that a particular bundle of papers contains specific number of pages.
(III) After the inventory has been prepared, the seized documents etc. should be packed in separate packages and handed over to an officer designated by the leader of the search party. It will be more appropriate if the seized documents etc. are kept in a trunk belonging to the Department or in a particular almirah, which has been taken into custody by the search party.
7.6 Order of Prohibition in case of goods which are not seized:
(I) In certain situations, it may not be practicable to seize the goods which have been found during Search. In such cases, an Order of Prohibition in Form GST INS 03 is served on the owner or custodian of goods.
(II) The Order of Prohibition contains the following important details:
(i) Document Identification Number (DIN) of the Order of Prohibition.
(ii) Address of the premises where the goods have been found.
(iii) Name and designation of the Authorized officer.
(iii) Name and address of the Panchas.
(iv) Details of the Goods in respect of which Order of Prohibition is issued.
(III) The Order of Prohibition also contains the directions that the owner or custodian of goods shall not remove, part with, or otherwise deal with the goods except with previous permission of the Proper officer.
7.7 Manner in which goods or things shall be dealt with immediately after their seizure:
(I) Generally, the seized goods or things are kept in the custody of the Department after their seizure. However, in some situations, the seized goods or things are entrusted for safe custody upon the owner or custodian from whom they have been seized.
(II) The person who is entrusted with safe custody of the goods or things is directed not to remove, part with, or otherwise deal with the goods or things except with previous permission of the Proper Officer.
(III) The document under which the custody of the goods or things is given, is called ‘Supardginama’. The ‘Supardginama’ forms a part of the Order of Seizure in Form GST INS 02. This part of the Order of Seizure is left unfilled in cases where the custody of the seized goods or things is being taken by the Department itself.
(IV) Seized goods should be inspected from time to time by the officers to ensure the safety of the goods, particularly when the seized goods have been handed over under Supardginama.
(V) Similar precautions are required to be taken even in respect of goods placed under detention.
7.8 Manner in which documents or books shall be dealt with immediately after their seizure:
(I) Unlike in the case of seized goods or things, there is no provision to entrust the custody of seized documents or books with any person. Documents or books have to be necessarily kept in the custody of the Department itself after their seizure.
(II) The person from whose custody documents are seized, shall be allowed to make copies or take extracts of the seized documents so that his business operations are not affected.
(III) However, the permission to make copies or take extracts can be refused by the Proper officer, if in the opinion of the Proper Officer, giving the copies or extracts will prejudicially affect the investigation.
(IV) This situation generally arises when a number of leads are being explored simultaneously and divulging the information contained in the seized documents may expose or reveal the further course of action which may be taken by the Department.
(V) The Proper Officer who may refuse to give this permission is the Additional Commissioner or Joint Commissioner of Central Tax according to Circular No. 3/3/2017–GST dated 5th July 2017.
7.9 Return of seized documents or books or things:
(I) The seized documents or books or things should be retained only for so long as may be necessary for their examination and for any inquiry or proceedings. The seized documents or books or things should be returned at the following stages:
- The copies of seized documents or books or things which are relied upon in the Show Cause Notice will be given back as part of the Show Cause Notice.
- The seized documents or books or things which are not relied upon in the Show Cause Notice should be returned within 30 days of the issue of the Show Cause Notice.
(II) A preliminary scrutiny of documents at the premises of search would be desirable so as to minimize the documents being seized. Seizure of unnecessary documents during search may create avoidable problems for the Department at a later stage and therefore, must be avoided.
7.10 Provisional release of seized goods:
(I) The seized goods can be provisionally released on the request of owner or custodian of the goods from whom they were seized. There are two requirements for Provisional release of seized goods:
(a) Bond has to be executed by the owner or custodian of the goods in Form GST INS 04 equivalent to the value of goods.
(b) Security has to be furnished by the owner or custodian of the goods in the form of a Bank Guarantee equivalent to the amount of Tax and Cess, Interest and Penalty payable in respect of the goods.
(II) The person to whom the seized goods are provisionally released will be directed to produce them on the date and place specified by the Proper officer.
(III) The Proper officer for this purpose is the Additional Commissioner or Joint Commissioner of Central Tax according to Circular No.3/3/2017–GST dated 5th July, 2017.
(IV) If the goods are not produced on the specified date and place, the Bank Guarantee shall be encashed and adjusted against the Tax and Cess, Interest and Penalty payable in respect of the goods.
7.11 Final release of notified goods:
(I) Under the procedure for expedited release of notified goods, the notified goods are finally released to the person from whom they were seized.
(II) The owner or custodian from whom the notified goods were seized shall be required to pay an amount which is the lower of:
(i) Market price of the goods;
(ii) Amount of Tax and Cess, Interest and Penalty payable in respect of the goods.
(III) After the payment is made by the owner or custodian, the notified goods shall be finally released to him by a Release Order in Form GST INS 05. Unlike in the case of Provisional release of goods, no request has to be made by the owner or custodian for Final release of notified goods. It is the Department itself which will ascertain whether the seized goods are notified goods and if so, inform the owner or the custodian to pay the specified amount.
7.12 Final disposal of notified goods:
(I) The seized notified goods shall be finally released after the owner or custodian makes the payment of the specified amount.
(II) However, if the payment of the specified amount is not made by the owner or custodian of the seized notified goods, the Release Order in Form GST INS 05 cannot be issued. In this situation, the Proper officer shall finally dispose the seized notified goods.
(III) The amount realized on Final disposal of the seized notified goods shall be adjusted against the Tax and Cess, Interest and Penalty payable in respect of the goods.
7.13. Issue of Show Cause Notice within six months of seizure or within extended period:
(I) The power of seizure is an extraordinary power based on the reasonable belief, therefore, the law provides that the enquiry should ordinarily be completed within six months. But visualizing at the same time that the enquiry may not be completed within the said period in certain cases owing to one difficulty or other, the law in terms of the relevant proviso authorize the Proper officer to extend the prescribed time for a period not exceeding six months on sufficient cause being shown and after following the principles of natural justice. The Proper officer for this purpose is the Principal Commissioner/Commissioner of Central Tax according to Circular No.3/3/2017– GST dated 5th July, 2017.
7.14 Return of seized goods:
(I) If Show Cause Notice is not issued within six months or period as extended from the date of seizure, then the seized goods are required to be returned back/ released unconditionally to the person from whom they were seized, irrespective of whether the same were provisionally released, or finally released on payment of specified amount (if they are Notified goods), or finally disposed (if they are Notified goods) within the period of six months.
(II) The return/ release of the seized goods will not affect the legal proceedings, except to the extent that no redemption fine can be imposed after the goods are returned.
8. SEIZURE IN PROCEEDINGS OTHER THAN SEARCH
8.1 The legal provisions for Seizure in proceedings other than Search are contained in Section 67(11) of the CGST Act, 2017. This Section empowers the proper officer to seize the accounts, registers or documents produced before him by a person suspected of having evaded tax. The said officer shall grant a receipt for the same and retain the records for so long, as may be necessary in connection with any proceedings under the Act. (Section 67(11) of CGST Act, 2017)
8.2 The functions of Proper Officer for Seizure in proceedings other than Search have been assigned to the Superintendent of Central Tax vide Circular No. 3/3/2017–GST dated 5th July, 2017.
8.3 The violations in respect of which reasons to believe have to be formed by the Proper officer have been specified in Section 67(11) of the CGST Act, 2017 as under:
(a) Any person has evaded tax; or
(b) Any person is attempting to evade the payment of any tax.
9. INSPECTION, DETENTION, SEIZURE AND RELEASE OF GOODS AND CONVEYANCES IN TRANSIT
9.1 The provisions relating to Inspection of goods in movement are contained in Section 68 of the CGST Act, 2017. Section 68 of the CGST Act, authorises the Government to mandate carrying of certain documents or devices by the person in charge of a conveyance carrying any consignment of goods of specified value. Where such conveyance is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the said documents and/or devices for verification. The person in charge of the said conveyance is liable to produce the documents and devices and also allow the inspection of goods. The provisions regarding detention, seizure and release of goods and conveyances in transit are contained in Section 129 of the CGST Act, 2017. (Section 68 of CGST Act, 2017)
9.2 Section 129 of the CGST Act, 2017 provides for detention or seizure of goods while in transit or being stored in transit and of conveyance used for transport of such goods that contravene the provisions of this Act or the rules made thereunder. It further provides the procedure for release of such goods and/or conveyance after detention or seizure on payment of tax, specified penalty or furnishing a security equivalent to such tax and penalty. (Section 129 of CGST Act 2017)
10. ARREST
10.1 The provisions for arrests are created to tackle the situations created by some unscrupulous tax evaders. The provisions for arrests under GST Law have sufficient inbuilt safeguards to ensure that these are used only under authorization from the Commissioner. Besides this, the GST Law also stipulates that arrests can be made only in those cases where the person is involved in offences specified for the purposes of arrest and the tax amount involved in such offence is more than the specified limit. The salient features of these provisions are:
(I) Provisions for arrests are used in exceptional circumstance and only with prior authorization from the Commissioner.
(II) A person can be arrested only if the criteria stipulated under the law for this purpose is satisfied and the tax amount is exceeding rupees 200 lakhs. However, if the offences are committed again even after being convicted earlier i.e. repeat offender of the specified offences can be arrested irrespective of the tax amount involved in the case.
(III) However, where the tax involved is less than Rs. 500 lakhs, the offences are classified as non-cognizable and bailable and all such arrested persons shall be released on Bail by Deputy/Assistant Commissioner. But in case of arrests for specified offences where the tax amount involved is more than Rs. 500 lakhs, the offence is classified as cognizable and non-bailable and in such cases the bail can be considered by a Judicial Magistrate only.
10.2 Section 132 of CGST Act, 2017 provides that the offences relating to taxable goods and /or services where the amount of tax evaded or the amount of input tax credit wrongly availed or the amount of refund wrongly taken exceeds Rs. 5 Crore, shall be cognizable and non- bailable. Other offences under the act are non-cognizable and bailable. (Section 132 of CGST Act 2017)
10.3 Offences listed under clauses (a), (b), (c) or (d) of Section 132(1) and punishable under sub-clause (i) or (ii) of Section 132(1) and offences punishable under Section 132(2), in respect of which powers for arrest are provided under Section 69(1), require Commissioner’s warrant, commonly understood as ‘arrest warrant’, to be executed by any Authorized Officer.(Section 132(1), (2) of CGST Act 2017)
10.4 Officer executing the warrant, is required to establish the identity of the person and place the said person under arrest. The Officer is then required to report execution of warrant back to Commissioner. The Officer is required to inform the detenue (or arrested person) about the grounds for arrest and then to produce before Magistrate within 24 hours to consider releasing him on bail or grant remand for further investigation.
10.5 Remand application is to be filed by the officer before Magistrate seeking custody for investigation. The Magistrate may grant remand for custodial interrogation or order judicial remand with visitation authorized to conduct interrogation of detenue.
10.6 All other cases which do not require Commissioner’s warrant, are commonly understood as ‘summons cases’, that is, cases under other clauses of Section 132(1), which are stated in Section 132(4) to be ‘non-cognizable and bailable’ offences. (Section 132(1),(4) of CGST Act, 2017)
10.7 Issuance of show cause notice under Section 74 for offence and detention under Section 69 for prosecution under Section 132 may be taken up in parallel proceedings independently. (Section 74, 69 & 132 of CGST Act, 2017)
10.8 Offences attracting punishment under section 132, lists 12 offences for which prosecution can be launched. The offences are given hereunder –
(a) Supply of goods or services or both without the cover of invoice with an intent to evade tax;
(b) If any person issues any invoice or bill without actual supply of goods or services or both leading to wrongful input tax credit or refund of tax;
(c) Any person who avails input tax credit using invoice referred in point (b) above or fraudulently avails input tax credit without any invoice or bill;
(d) Collection of taxes without payment to the Government for a period beyond 3 months of due date;
(e) Evasion of tax, or obtaining refund with intent of fraud where such offence is not covered in clause (a) to (d) above;
(f) Falsifying financial records or production of false records/ accounts/ documents/ information with an intent to evade tax;
(g) Obstructs or prevents any officer from doing his duties under this Act;
(h) Acquires or transports or in any other manner deals with any goods which he knows or has reasons to believe are liable for confiscation under this Act or rules made thereunder;
(i) Receives or in any way, deals with any supply of services which he knows or has reason to believe are in contravention of any provisions of this law;
(j) Tampers with or destroys any material evidence or documents;
(k) Fails to supply any information which he is required to supply under this law or supply false information;
(l) Attempts or abets the commission of any of the offences mentioned above.
10.9 Section 132 of the CGST Act, 2017 enables institution of prosecution proceedings both against the offenders and also against those persons who are instrumental in committing such offence. Such persons who are aiding the commission of the offence are punishable only if they retain the benefits arising from the offence.
10.10 If any person commits any offence specified in points (f), (g) or (j) in para 10.8 above, he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
10.11 Repetitive offences, without any specific/ special reasons recorded in the judgment of the Court, will entail an imprisonment term of not less than 6 months and can extend up to 5 years plus fine. All the offences covered in Section 132 are non-cognizable and bailable except the offences specified in points (a) to (d) as mentioned in para 10.8 above if the amount of tax evaded or input tax credit wrongly availed or utilized or refund wrongly taken exceeds Rs. 5 crores.
10.12 Every prosecution proceeding initiated requires prior sanction of the Commissioner. Placing a person under arrest based on Commissioner’s ‘order’ under Section 69(1) is independent of the ‘sanction’ by Commissioner to initiate prosecution proceedings (para 3 and 6 of Instruction No.4/2022-23 [GST-Inv.] dated 1 Sept 2022).
10.13 While arrest of persons is limited to cases covered by Section 69(1) of CGST Act, 2017 but prosecution of offences is independent and operates irrespective of whether those persons (accused) have been arrested under Section 69 or not. Omission to arrest does not bar persons (accused) from being prosecuted.
10.14 Section 132(1) of CGST Act, 2017 deals with punishment for offences specified therein. Section 69 grants the power to the Commissioner to arrest a person where he has “reasons to believe” that the alleged offender has committed an offence specified under Sections 132 (1) (a)/(b)/(c)/(d) of CGST Act, 2017, which is punishable under Clause (i) and (ii) of sub-section(1), or sub-section (2) of Section 132 of CGST Act, 2017. Thus, the prerequisite to arrest a person is that he should be liable for punishment of offences under specific clauses in Section 132 which are referred to in Section 69. Therefore, before placing a person under arrest, the aforesaid legal requirements must be satisfied. (Section 132(1) (a)/(b)/ (c)/(d) of CGST Act 2017)
10.15 Power of arrest should be exercised in exceptional circumstances during investigation, which illustratively may be-
(a) The person was concerned in the non-bailable offence or credible information has been received, or a reasonable suspicion exists, of his having been so concerned;
(b) The arrest is necessary to ensure proper investigation of the offence;
(c) The person, if not restricted, is likely to tamper the course of further investigation or is likely to tamper with evidence or intimidate or influence witnesses;
(d) The person is mastermind or key operator effecting proxy/benami transaction in the name of dummy GSTIN or non-existent persons, etc. for passing fraudulent input tax credit etc;
(e) As unless such person is arrested, his presence before investigating officer cannot be ensured.
10.16 Arrests in case of offences committed by companies or partnership firms:
(I) In case the offence has been committed by a limited company or a partnership firm, then as per the provisions of Section 137 of CGST Act, 2017, the following persons are vicariously liable for the offence: (Section 137 of CGST Act 2017)
(a) Person who, at the time of commission of the offence, was in charge of (i.e. in overall control of the day to day business of the company/ firm) and was responsible to the company/ firm/ association of persons for the conduct of the business of the company, unless he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission of the offence.
(b) Director of the company, partner of a firm, manager, secretary or any other officer of the company/ firm, if it is proved that the offence has been committed with their consent or connivance or is attributable to their neglect.
(II) In the case against companies and firms, therefore, the persons vicariously liable can be arrested provided that the ingredients as mentioned in Section 137 are fulfilled. Separate and independent allegations have to be made in such a case for offences committed under Section 137. The vital ingredient for arrest in offences under Section 137 is that “an offence” should have been committed and the person proposed to be arrested is “in-charge of and responsible for running of business”.
10.17 Procedures for Arrest:
(I) Commissioner shall record on file that after considering the nature of offence, the role of person involved and evidence available, he has reason to believe that the person has committed an offence punishable under the CGST Act, 2017 as mentioned in Section 69 of CGST Act, 2017 for which his immediate arrest is necessary. (Section 69 of CGST Act, 2017)
(II) Once a person is arrested in an offence, which is cognizable and non-bailable, the arrested person must be produced before the Magistrate having jurisdiction, within 24 hours of the arrest. The Magistrate may take him in judicial custody to further the interest of investigation. However, a person can be kept in judicial custody only for a maximum period of 60 days. If a complaint is not filed within 60 days, i.e. prosecution not initiated, the accused is granted bail as a matter of right under Section 167 (2) of the Cr. PC.
(III) Investigating officers may ensure that the following documents are kept handy at the time of arrest:
(a) AE-I report where detection is based on a prior information/ intelligence.
(b) Preliminary Investigation/Offence Report containing the name of the offender, names of the company/ firms, approx. tax evasion detected or suspected, brief facts of the case, documents and statements relied upon, relevant sections of CGST Act, 2017 or other laws attracted to the case, facts giving rise to the reason to believe that the person has committed an offence punishable under the CGST Act, 2017.
(IV) Copies of the documents relied upon have to be prepared as these documents might have to be produced before the Magistrate, if the same is asked, when the accused is produced before her/him. As the Courts, generally, insist of submission of relied upon documents like Panchanamas / Mahazars, Statements, etc., in original along with remand application, it is advisable to prepare one additional set of these documents in original, at the time of search proceedings / recording of statement, etc. for the purpose.
(V) An Arrest Memo containing brief facts of cases, details of person arrested, gist of evidence, relevant sections under CGST Act, 2017, the grounds of arrest, date and time of arrest etc., needs to be given to the arrestee under proper acknowledgement. The Arrest Memo should be made in triplicate and the original should be furnished to the accused. Dated signatures of the person arrested along with the time should be obtained on the other two copies as a token of having received the Arrest Memo. At least one independent witness needs to be present while furnishing arrest memo to the accused. A separate arrest memo has to be made and provided to each individual/ arrested person. This should be kept in mind in the event there are several arrests in a single case.
Format of arrest memo prescribed under Circular No.128/47/2019-GST dated 23.12.2019 is a useful reference. Arrest Memo should be in a language which the accused can understand. In case of an illiterate person or when the Arrest Memo is in a language not understood by the person arrested, the Arrest Memo should be read out and explained in vernacular also to the accused and the fact should be recorded on the Arrest Memo.
(VI) Further there are certain modalities that should be complied with at the time of arrest and pursuant to an arrest, which include the following:
(a) A person who has been arrested or detained, is entitled to have one friend or relative or other person known to him or having interest in his welfare being informed, as soon as possible. Therefore, it is imperative to inform the relative or friend of arrestee. Telephonic information to the satisfaction of the arrestee is sufficient. The fact of intimation along with details of family members/well-wishers intimated may be recorded in the Arrest Memo.
(b) Immediately after the arrest, the Arresting Officer should conduct a ‘Jama Talashi’ of the accused and record a report on ‘Jama Talashi’ on the body of all the three copies of the Arrest Memo along with his dated signatures in the presence of independent witnesses. ‘Jama Talashi’ essentially means taking an inventory of the goods/valuables which the arrested person is carrying on his person. This includes clothes, ornaments, wallet, watches, shoes, socks, spectacles, pen etc. It is advisable that the valuables which the arrested person is carrying on his person are kept in a sealed cover in custody of the officer authorised to arrest. A precise inventory of such valuables should be made. These valuables should be released to the person on his release on bail.
(c) A woman should be arrested by a lady officer. Where a woman is to be arrested, unless the police officer is a female, the police officer shall not touch the person of the woman for making an arrest and arrest would be presumed on her submission to custody on oral intimation. Save in exceptional circumstances, no woman shall be arrested after sunset and before sunrise, and where such exceptional circumstances exist, the same shall be by making a written report and obtaining prior permission of the Judicial Magistrate within whose jurisdiction the offence is committed or the arrest is to be made.
(d) The arrested person should be medically examined by a medical officer in service of central or state government, or by registered medical practitioner, upon non-availability of such medical officer. If an arrested person is a female then such an examination shall be made only by, or under supervision of a female medical officer, and in case the female medical officer is not available, by a female registered medical practitioner.
(e) In case of non-cooperation of the arrested person either during the arrest or post arrest formalities such as refusal to sign the arrest memo, obstruction of medical officer from performing examination, refusal to divulge contact details of family members, etc., while all means may be adopted to effect arrest, it is prudent to document the non-cooperation and obstruction of duty in the form of panchnama for the purpose of record and also for undertaking further necessary legal action.
(f) After the medical examination, the arrestee should be produced in the Court of Chief Judicial Magistrate with the least delay and within 24 hours of the arrest for seeking remand. In case, it is not possible to produce him before the CJM for reason that the court is situated at a distant place, then the arrested person should be produced before a local duty Magistrate for seeking transit remand. Further, in case the arrestee is declared as medically unfit and is prescribed further examination/observation by the medical officer, he/she may still be produced before the CJM who will issue necessary orders based on medical records and facts and circumstances of the case. The amount to be indicated in the personal bail bond and security will depend, inter- alia on the amount of tax involved. Attempts should be made to produce the arrested person before the Magistrate on the same day. Arrested person should generally not be retained in the office in night as it can often lead to allegations of physical injury. In the eventuality that it is not possible to produce the arrested person before the Magistrate on the same day and there are no facilities to keep him in custody for the night, he can be handed over to the jurisdictional police station. However, it may be mentioned here that in such circumstances the officer in-charge of the police station has the power to admit the person to bail with the condition that he will appear before the Magistrate on the next day. Generally, the arresting officer should take back the person arrested from custody of police and then the department should produce the arrestee before the Magistrate.
(g) The officer authorized under Section 69 to arrest and produce the arrested person before a Magistrate can either request for Judicial Remand or Custodial Remand. Custodial Remand is normally not granted unless special reasons for the same are given like requirement of presence of the accused for recovery of documents etc. In case the Magistrate remands the accused to judicial custody and the preventive officers want to record a statement at the place of the accused i.e., Judicial Custody (Jail), then they should apply to the Magistrate for the same. A statement in the judicial custody can only be recorded with the permission of the Magistrate. Magistrate, on being satisfied about the urgency and importance of the statement of the accused, grants permission to officers to visit the place where the accused has been kept under Judicial Custody and accordingly directs the Jail Superintendent to facilitate the access of officers to visit the accused for the purpose of investigation. (Section 69 of CGST Act, 2017)
10.18 Precautions to be taken during arrest:
(I) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to arrest and the procedure thereof must be adhered to. It is therefore necessary that all field officers of CGST/SGST be fully familiar with the provisions of the Code of Criminal Procedure, 1973.
(II) One important provision to be taken note of is Section 57 of Cr.P.C., 1973, which provides that a person arrested without warrant shall not be detained for a longer period than, under the circumstances of the case, is reasonable but this shall not exceed twenty-four hours (excluding the journey time from place of arrest to the Magistrate’s court). Within this period, as provided under Section 56 of Cr.P.C., the person making the arrest shall send the person arrested without warrant before a Magistrate having jurisdiction in the case.
10.19 There are certain safeguards provided under Section 69 of the CGST Act, 2017 for a person who is placed under arrest. These are:
(i) If a person is arrested for a cognizable offence, he must be informed in writing of the grounds of arrest and he must be produced before a magistrate within 24 hours of his arrest;
(ii) If a person is arrested for a non-cognizable and bailable offence, the Deputy/ Assistant Commissioner of CGST/ SGST can release him on bail and he will be subject to the same provisions as an officer in-charge of a police station under Section 436 of the Code of Criminal Procedure, 1973;
(iii) All arrest must be in accordance with the provisions of the Code of Criminal Procedure,1973 relating to arrest.
10.20 Commissioner’s warrant must be executed by the Proper Officer speedily and unexecuted warrants will expire within the time specified therein unless extended. Warrants cannot remain outstanding indefinitely. Executed and lapsed warrants must be returned to the Commissioner for noting or declaration of the absconder or for further directions. Refer para 5 in Instruction No.2/2022- 23 [GST-Inv.] dated 17 Aug 2022 regarding ‘post arrest’ formalities.
10.21 Bail and Bond Bail:
(I) Bail and bond Bail is an acceptance by way of undertaking to comply with the orders of the Magistrate (or Proper Officer) releasing the detenue or arrested person to enter appearance when required in investigation or trial.
10.22 Anticipatory bail:
(I) Non-bailable cases entitle persons to seek anticipatory bail where there is a reasonable apprehension that the Proper Officer may issue a warrant to arrest; in such cases anticipatory bail under Section 438 of Cr. P.C may be sought from Magistrate or Appellate Court.
11. PROCEDURE FOR SANCTION OF PROSECUTION
11.1 GST Investigation wing, CBIC has issued Instruction No. 04/2022-23 [GST Investigation], dated 01.09.2022 prescribing guidelines for launching of prosecution under the CGST Act, 2017.
11.2 Where during the course of investigation, arrest(s) have been made, all efforts should be made to file prosecution complaint in the Court within 60 days of arrest. The proposal of filing complaint in the prescribed format of investigation report should be forwarded to the competent authority (i.e., the sanctioning authority) within 50 days of arrest. The proposal shall be examined and decision as per Section 132 of the CGST Act, 2017 shall be taken. If prosecution sanction is accorded, he shall issue a sanction order along with an order authorising investigation officer (Superintendent) of the case to file the prosecution complaint in the competent court.
11.3 Officer in the rank of JC/ADC must ensure that all the documents /evidences and list of witnesses be kept ready before forwarding the proposal of filing complaint to the Pr. Commissioner/Commissioner or Pr. ADG/ADG of DGGI, as the case may be.
11.4 In cases where it is deemed fit to launch prosecution before adjudication of the case, the officer in the rank of JC/ ADC or Jt. Director/Addl. Director, as the case may be, who supervised the investigation shall record the reason for the same and forward the proposal to the sanctioning authority. The decision of the sanctioning authority shall be informed to the adjudicating authority so that there is no need for him to examine the case again from the perspective of prosecution.
11.5 In other cases, the adjudicating authority should invariably indicate at the time of passing the order itself whether it considers the case fit for prosecution. Wherever SCNs have been issued by DGGI, the recommendation of adjudicating authority shall be sent to Pr. ADG/ADG of the Zonal Units concerned.
11.6 The sanctioning authority may suo moto take into consideration the seriousness of offence, examine whether the case is fit for sanction of prosecution, irrespective of whether the adjudicating authority has recommended for prosecution or not.
11.7 Once sanction for prosecution has been obtained, prosecution in the court of law should be filed as early as possible. Any delay beyond 60 days shall be brought to the notice of the sanctioning authority.
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Source: Handbook of GST Law and Procedures for Departmental Officers issued by Ministry of Finance.
