Simplified GST Series- Section 67 /Power of Inspection, Search and Seizure/CGST Act 2017-
Section 67- Power of inspection, search and seizure:
(1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to
believe that –
(a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or rules made there under to evade tax under this Act; or
(b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act
he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place.
Analysis- Inspection – A proper officer not below the rank of Joint Commissioner,
may issue an authorisation to any other officer subordinate to him to carry out an inspection,
If such proper officer ‘has reasons to believe’ that:
- the taxable person:
(i) has suppressed any transaction of supply of goods or services or both; or
(ii) has suppressed information relating to stock in hand; or
(iii) has claimed input tax credit in excess of his entitlement; or
(iv) has contravened any of the provisions of the GST law, with an intent to evade taxes
- any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place:
(i) is keeping goods which have escaped payment of tax; or
(ii) has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under the GST law
Reason to believe- The words of the section are ‘reason to believe’ and not ‘reason to suspect’.” The word “believe” is a much stronger word than “suspect”
(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, 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 authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents, books or things:
Provided that where it is not practicable to seize any such goods, the proper officer, or any office authorized by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:
Provided further that the 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 proceedings under this Act
(3) The documents, books or things referred to in sub-section (2) 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 there under, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice.
Analysis-
Search and seizure: A proper officer not below the rank of Joint Commissioner, may issue an authorisation (in form GST INS-01) to any other officer subordinate to him (or himself) may search and seize any goods / documents / books / things which in his opinion would be useful for / relevant to proceedings under the GST Law, when he has reason to believe that:
(a) Any goods liable to confiscation are secreted in any place. In this regard, it may be noted that where it is not practicable to seize such goods, an order (In form GST INS-03) may be served on the person / custodian of the goods that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of the officer.
(b) Any documents or books or things are secreted in any place. In this regard, it may be noted that the seized documents / books / things are to be retained only for such period as is necessary for their examination / inquiry / proceedings, but shall be returned within 30 days of issue of notice if the same have not been relied upon for the issue of notice.
Retention-
The said officer: (a) shall retain the documents or books or things so seized (which he relied upon) so long as may be necessary for their examination and for any inquiry or proceedings under this Act
(b) shall return the documents, books or things seized or produced by a taxable or any other person on which no reliance has been placed for issuing notice, within a period of 30 days from the issue of notice.
(4) The officer authorized under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied.
(5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts there from in the presence of an authorized officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation.
(6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.
(7) Where any goods are seized under sub-section (2) 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:
Analysis-
Power to Seal/Break the Door of Premises (where access is denied):
Proper officer for the process of inspection, search and seizure shall have the power to: (a) to seal, break open the door of any premises or
(b) To break open any almirah, electronic devices, box, receptacle in which:
(i) any goods, accounts, registers or
(ii) Documents of the person are suspected to be concealed.
Copies of Documents Seized: (a) The person from whose custody, documents are seized is entitled to: (i) make copies or (ii) take extract of such documents in the presence of an authorized GST officer at the place and time as indicated by the officer.
(b) Copies or extracts may be denied if the officer believes that such an act will prejudicially affect the investigation.
Provisional Release of Seized Goods : The goods so seized shall be released on a provisional basis, upon:
(a) execution of Bond in Form GST INS -04 for the value of the goods and
(b) furnishing of security in form of Bank Guarantee equal to amount of applicable tax (incl. SGST / UTGST / IGST / Cess) + interest + penalty.
Return of Seized Goods: If no notice has been issued within 6 months (or an extended period of another 6 months by the proper officer, on the basis of sufficient grounds), the seized goods/exhibits ought to be returned to the person from whom the goods were seized.
(8) The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by the proper officer in such manner as may be prescribed.
(9) Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorized by him under sub-section (2), he shall prepare an inventory of such goods in such manner as may be prescribed.
(10) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word “Magistrate”, wherever it occurs, the word “Commissioner” were substituted.
(11) 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 there under for prosecution.
(12) The Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.
Analysis-
Perishable/Hazardous Goods: The Government may, by way of a notification, specify the goods or class of goods which are to be disposed of by the proper officer a as soon as the same have been seized where:
(a) the goods are of perishable nature; or
(b) the goods are of hazardous nature; or
(c) the goods would depreciate in value by passage of time or
(d) there are constraints of storage space or
(e) any other relevant considerations as may be prescribed.
The Proper Officer shall also maintain an inventory of the said specified goods in the prescribed manner,
√ Applicability of Code of Criminal Procedure, 1973: The provisions of Code of Criminal Procedure, 1973 relating to search and seizure shall be applicable to the GST Laws and in section 165(5) of the code of criminal procedure, the word ‘Magistrate’ should be read as ‘Commissioner ’.
√ Surprise Check: The Commissioner or an officer authorized by him can further authorize any other person to purchase any goods and / or services in order to check the manner of issuance of tax invoices / bills of supply and: (a) The tax paid thereon shall be refundable by the taxable person when the goods so purchased are returned (no time limit prescribed in this regard) and
(b) The taxable person shall cancel the tax invoice or any bills of supply issued earlier in this regard.
As you all know due date of GST AUDIT/ANNUAL RETURN for F.Y 2018-19 is approaching i.e 30.09.2020 so any queries/doubts related to filling of GSTR-9/9C can also be mailed at mamta0581@gmail.com.
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