1. In
any tax administration the provisions for Inspection, Search, Seizure and Arrest are provided to
protect the interest of genuine tax payers (as the Tax evaders, by evading the
tax, get an unfair advantage over the genuine tax payers) and as a deterrent
for tax evasion. These provisions are also required to safeguard Government’s
legitimate dues. Thus, these provisions act as a deterrent and by checking
evasion provide a level playing field to genuine tax payers.
2. It
may be mentioned that the options of Inspection, Search, Seizure and Arrest are
exercised, only in exceptional circumstances and as a last resort, to protect
the Government Revenue. Therefore, to ensure that these provisions are used
properly, effectively and the rights of tax payers 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 authorise, 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 specified limit. Further, the arrests under GST
Act can be made only under authorisation from the Commissioner.
The
circumstances which may warrant exercise of these options are as follows:
Inspection
‘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. As discussed above the inspection can be carried out by
an officer of CGST/SGST 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:
Suppression of any
transaction relating to supply of goods or services or stock in hand
Claimed excess input tax
credit
Contravention of any
provisions of the Act or the Rules to evade tax
Transporting or keeping
goods which escaped payment of tax or manipulating accounts or stocks which may
cause evasion of tax
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 authorisation of Joint Commissioner.
Inspection
in movement
Any consignment, value of
which, is exceeding Rs. 50,000/-, may be stopped at any place for verification
of the documents/ devices prescribed for movement of such consignments.
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 the same can be detained or seized and may be
subjected to penalties as prescribed.
To ensure transparency and
minimise hardships to the trade, the law provides that if during verification,
in transit, a consignment is held up beyond 30 minutes the transporter can feed
details on the portal. This will ensure accountability and transparency for all
such verifications. Moreover, for verification during movement of consignment
will also be done through a Digital interface and therefore the physical
intervention will be minimum and as has already been mentioned that in case of
a delay beyond 30 minutes the transporter can feed the details on the portal.
Search
& Seizure
The provisions of search
and seizure also provides enough safeguards and the GST Law stipulates that
search of any place of business etc. can be carried out only under
authorisation from an officer not below the rank of Joint Commissioner and if
he has a reason to believe that the person concerned has done at least one of
the following:-
Goods liable to
confiscation or any documents/ books/record/things, which may be useful for or
relevant to any proceedings, are secreted in any place then all such places can
be searched
All such
goods/documents/books/record/things may be seized, however, if it is not
practicable to seize any such goods then the same may be detained. The person
from whom these are seized shall be entitled to take copies/extracts of seized
records
The seized
documents/books/things shall be retained only till the time the same are
required for examination/enquiry/proceedings and if these are not relied on for
the case then the same shall be returned within 30 days from the issuance of
show cause notice
The seized goods shall be
provisionally released on execution of bond and furnishing a security or on
payment of applicable tax, interest and penalty
In case of seizure of
goods, a notice has to be issued within six months, if no notice is issued
within a period of six months then all such goods shall be returned. However,
this period of six months can be extended by Commissioner for another six
months on sufficient cause.
An inventory of the
seized goods/documents/ records is required to be made by the officer and the
person, from whom the same are seized, shall be given a copy of the same.
To ensure that the
provisions for search and seizure are implemented in a proper and transparent
manner, the Act stipulates that the searches and seizures shall be carried out
in accordance with the provisions of Criminal Procedure Code, 1973. It ensures
that any search or seizure should be made in the presence of two or more
independent witnesses, a record of entire proceedings is made and forwarded to
the Commissioner forthwith.
Arrests
In the administration of
taxation the provisions for arrests are created to tackle the situations
created by some unscrupulous tax evaders. To some these may appear very harsh
but these are necessary for efficient tax administration and also act as a
deterrent and instil a sense of
discipline. The provisions for arrests under GST Law have sufficient inbuilt
safeguards to ensure that these are used only under authorisation 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 points of these provisions are:
Provisions for arrests are
used in exceptional circumstance and only with prior authorisation from the
Commissioner.
The law lays down a
stringent criteria and procedure to be followed for arresting a person. A
person can be arrested only if the criteria stipulated under the law for this
purpose is satisfied i.e. if he has committed specified offences (not any
offence) and the tax amount is exceeding rupees 200 lakhs. However, the
monetary limit shall not be applicable 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.
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