Chapter 6 Inspection, Search, Seizure, Offences & Penalties – CS Professional Advance Tax Law Notes is designed strictly as per the latest syllabus and exam pattern.
Inspection, Search, Seizure, Offences & Penalties – CS Professional Advance Tax Law Study Material
Question 1.
What is the meaning of “Search warrant” with reference to CGST Act, 2017? State the contents of “Search warrant” also. (June 2019, 5 marks)
Answer:
Meaning of Search Warrant:
The written authority given under an action of a government machinery to go, look through or examine carefully a place, area, person, object etc. to find out the concealed things is called search warrant.
The competent authority to issue search warrant as per Section 67 of CGST Act, 2017 is an officer of the rank of Joint Commissioner or above. A search warrant must indicate the existence of a reasonable belief leading to the search.
Contents of Search Warrant:
Search Warrant should contain the following details:
- The violation under the Act.
- The premise to be searched.
- The name and designation of the person authorized for search.
- The name of the issuing officer with full designation along with his round seal.
- Date and place of issue.
- Serial number of the search warrant.
- Period of validity i.e. a day or two days etc.
Question 2.
Kishore, an unregistered person under GST, purchases the goods supplied by Sanjay who is a registered person without receiving a tax invoice and thus helps in tax evasion.
Determine maximum amount of penalty that may be imposed on Kishore under CGST Act, 2017. (2 marks)
Answer:
Under Section 122(3) of the CGST Act, 2017 any person who aids or abets any of the offences specified in Clauses (i) to (xxi) of sub-section (1), he/ she shall be liable to a penalty which may extend to twenty five thousand rupees. Hence, Kishore is liable for maximum penalty of ₹ 25,000 since he is helping in the tax evasion which is an offence under the CGST Act, 2017.
Question 3.
The proper officer under the CGST Act, 2017 can authorize arrest of any person under section 69 of the CGST Act, 2017. State all those situations when the proper officer can authorize arrest of any person. (Dec 2023, 4 marks)
Answer:
The Commissioner of CGST under section 69 of CGST Act, 2017, by order in writing, can authorize any CGST Officer to arrest a person, if he has reasons to believe that such person has committed following offences as specified in section 132(1 )(a)/(b)/(c)/(d) which is punishable under section 132(1 )(i)(ii) or section 132(2) of the Act.
(a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;
(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
(c) avails input tax credit using such invoice or bill referred to in clause (b);
(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
A person can be arrested, provided that:
- where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees.
- where the person was earlier convicted of any of the above-mentioned offences.
Question 4.
State the circumstances when the proper officer can authorize to ‘arrest’ of any person under the CGST Act, 2017. (June 2022, 4 marks)
Answer:
Various circumstances enumerated in GST law for arrest are as follows:
According to Section 69 of the Central Goods and Services Tax Act, 2017:
1. Where the commissioner has reason to believe that person has committee any offence specified in clause
(a) or clause
(b) or clause
(c) or clause (D) of subsection (I) of section 132 which is punishable under clause (i) or (ii) of subsection (1), or sub-section (2) of the said section, he may, by order, authorised any officer of central tax to arrest such person.
2. Where a person is arrest under sub-section (1) for an offence specified under sub-section (5) of section 132, the officer authorise to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours.
3. Subject to the provision of the Code of Criminal Procedure, 1973,-
(a) Where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132. he shall be admitted to bail or in default of bail, forwarded to the custody to the magistrate.
(b) In the case of non-cognizable and bailable offence, the deputy commissioner or the assistant commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same power and subject to the same provision as an officer- in-charge of police station.
Question 5.
Deepak Garg started supply of goods within the State of Rajasthan from 1st December, 2021. His turnover exceeded ₹ 40 lakhs on 25lh January, 2022. However, he didn’t apply for registration.
Determine the amount of penalty, if any, that may be imposed on Deepak Garg under CGST Act, 2017 on 31st March, 2022, if the tax evaded as on said date, on account of failure to obtain registration is ₹ 8,000. (June 2019, 2 marks)
Answer:
Under Section 122(1) of CGST Act, 2017 where a taxable person who is liable to be registered under this Act but fails to obtain registration, shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded whichever is higher. Hence Deepak Garg is liable for penalty of ₹ 10,000.
Question 6.
Jogiram (P).Ltd. claimed ITC of ₹ 2,50,000 with an intention to defraud the Revenue. What is the rate of interest at which the liability could be discharged voluntarily ? Can the Revenue levy penalty, if so, how much? Can the tax, interest, penalty and any payment due under reverse charge, be adjusted against ITC of a registered person?(Dec 2019, 5 marks)
Answer:
Utilisation of ITC:
Section 74 of the CGST Act, 2017 says that when a registered person has not paid tax or short paid or received erroneously refund or claimed input tax credit by reason of fraud or any willful mis-statement or suppression of facts, he shall be liable to pay such tax along with interest payable under section 50 of the Act. Presently, the rate of interest notified under Section 50 is 18%. Where the registered person pays such tax along with interest voluntarily before the service of notice under Section 74, it shall be liable to pay penalty at the rate of 15% of such tax in terms of Section 74(5) of the Act.
Section 49(4) of the CGST Act provides that the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed.
Section 2(82) of the CGST Act defines the term “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;
Thus, the amount available in the electronic credit ledger i.e. input tax credit can be used only towards payment of output tax and the definition of output tax includes only tax chargeable on taxable supplies and excludes tax chargeable under reverse charge.
In light of above, input tax credit can be used only for the payment of tax and cannot be used for payment of interest, penalty and tax under reverse charge.
Question 7.
State the consequences of the following violations/defaults under the provisions of GST Laws:
(a) A fails to pay GST of Rupees 50,000 to the Government on the due date prescribed.
(b) Chauhan Trader makes an Input Tax Credit (ITC) claim of Rupees 40,000 in respect of a car purchased for use by the proprietor in the business.
(c) K, a registered person purchased goods from L and claimed Rupee 1,20,000 as input tax credit while L, the seller, declared Rupees 1,00,000 as outward tax in respect of the goods sold by him to K. L. did not rectify this mismatch till the time allowed to rectify the discrepancy.
(d) Refund of unutilized Input Tax Credit delayed by the department beyond 60 days after the order passed by proper officer.
(e) Govind failed to furnish the annual return under section 44 of the CGST Act, 2017 by the due date. (Aug 2021, 5 marks)
Answer:
(a) As per Section 50(1) of Central Goods and Services Tax Act, 2017 every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at the rate of 18%.
Accordingly in the given situation, A would have to pay interest on ₹ 50,000 @ 18% for the period during which the Goods and Services Tax of ₹ 50,000 remain unpaid.
(b) In terms of Section 17(5) sub-section (1) of Central Goods and Services Tax Act, 2017, Input Tax Credit (ITC) shall not be available in respect of Motor Vehicles for transportation of persons having approved seating capacity of not more than 13 persons (including the driver), except when they are used for:
(a) further supply of such vehicles or conveyances ; or
(b) transportation of passengers; or
(c) imparting training on driving, flying, navigating such vehicles or conveyances; or for transportation of goods (for other transporters and not goods transport agencies).
Hence, Chauhan Trader would not be able to take ITC for car purchased for use by the proprietor and shall have to pay the ITC wrongly sought to be claimed amounting to ₹ 40,000 along with interest @ 18% for the period during which this amount remain unpaid.
(c) As per Section 50(3) of Central Goods and Services Tax Act, 2017, where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twenty-four percent as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed.
Hence, K is liable to pay interest on excess ITC claim of ₹ 20,000 @ 24% per annum.
(d) Section 56 of the Central Goods and Sen/ices Tax Act, 2017 provides that if any tax ordered to be refunded to any applicant is not refunded within 60 days from the date of receipt of application. Interest at the rate of 6 % shall be payable from the date immediately after the expiry of 60 days from the date of receipt of refund application. Accordingly in the instant case the Government shall be liable to pay interest @ 6% on the refund of tax for delay in payment.
(e) Annual return: Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual return which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section: Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the ’ Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.
According to Section 47 of Central Goods and Services Tax Act, 2017,
(1) any registered person who fails to furnish the details of outward supplies required under section 37 or returns required under f section 39 or section 45 [or section 52] by the due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.
(2) any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter percent, of his turnover in the State or Union territory.
Question 8.
Mention the Provisions of the penalty under the GST Law’ relating to the following offences :
(i) Ram collects ₹ 25,000 on account of GST from customers and failure to pay it to the credit of government beyond a period of three months from its due date.
(ii) Shyam collects ₹ 7,500 on account of GST from customers and failure to pay it to the credit of government beyond a period of three months from its due date.
(iii) Jai fails to deduct tax in accordance with the provision of section 61 of CGST Act, 2017 of ₹ 15,000, such deduction of an amount which is less than the amount required to be deducted from his client.
(iv) Vijay fails to collect tax in accordance with the provision of section 52 of CGST Act, 2017 of ₹ 2,000 such deduction of an amount which is less than the amount required to be collected from his client.
(v) R.K. claimed and obtained ₹ 1,50,000 fraudulently by way of refund under CGST Act, 2017. (June 2022, 5 marks)
Answer:
| Case | Offences Prescribed | Penalties Prescribed |
| (i) | Ram collects ₹ 25,000 on account of GST from customers and failure to pay it to the credit of government beyond a period of three months from its due date. | Penalty of ₹ 25,000 As per Section 122(1) of Central Goods and Services Tax Act, 2017 prescribed following penalties:
(a) INR 10,000/-or |
| (ii) | Shyam collects ₹ 7,500 on account of GST from customers and failure to pay it to the credit of government beyond a period of three months from its due date. | Penalty of ₹ 10,000 As per Section 122(1) of Central Goods and Services Tax Act, 2017 prescribed following penalties:
(a) INR 10,000/-or |
| (iii) | Jai fails to deduct tax in accordance with the provision of Section 51 of Central Goods and Services Tax Act, 2017 of ₹ 15,000 deduction of an amount which is less than the amount required to be deducted. | Penalty of ₹ 15,000 As per Section 122(1) of Central and Services Tax Act, 2017 prescribed following penalties: (a) INR 10,000/-or (b) tax not deducted /collected, or short deducted/collected, or deducted/collected but not paid, (i.e. ₹ 15,000) whichever is higher |
| (iv) | Vijay fails to collect tax in accordance with the provision of Section 52 of Central goods and Services Tax Act, 2017 of ₹ 2,000 such deduction of an amount which is less than the amount required to be collected. | Penalty of ₹ 10,000 As per Section 122(1) of Central Goods and Services Tax Act, 2017 prescribed following penalties:
(a) INR 10,000/-or |
| (v) | R.K. claimed and obtained ₹ 1,50,000 fraudulently by way of refund under Cental Goods and Services Tax Act, 2017. | Penalty of ₹ 1,50,000 As per Section 122(1) of Central Goods and Services Tax Act, 2017 prescribed following penalties:
(a) INR 10,000/-or |
Question 9.
From the following details of April, 2023, calculate the amount to be paid, for release of goods detained of seized u/s 129 of the CGST Act, 2017, if owner of the goods does not come forward for payment of applicable tax and penalty Details are as follows:
| Particulars | Amount (₹) |
| Value of goods
Applicable GST on such goods |
30,00,000
3,60,000 |
Would your answer be different if goods were exempted from GST and value remains the same ₹ 30,00,000? (Dec 2022, 4 marks)
Question 10.
J & Co. self-assessed its tax liability as ₹ 80,000 for the month of April, 2023 but failed to make the payment.
Subsequently the Department initiated penal proceedings against J & Co. for recovery of penalty under section 73 of the CGST Act, 2017 for failure to pay GST and issued show cause notice on 9l August, 2023 which was received by J & Co. On 13th August, 2023.
J & Co. deposited the tax along with interest on 25th August, 2023 and informed the department on the same day.
Department is contending that company is liable to pay a penalty of ₹ 40,000 (i.e. 50% of ₹ 80,000).
Examine the corectness of the stand taken by the Department with reference to the provisions of the CGST Act, 2017. Explain the relevant provisions in brIef. (Dec 2022, 4 marks)
Question 11.
What is meant by commencement of audit?
Answer:
The term commencement of audit is important because audit has to be completed within a given time frame in reference to this date of commencement. Commencement of audit means the later of the, following:
(a) the date on which the records/accounts called for by the audit authorities are made available to them, or
(b) the actual institution of audit at the place of business of the taxpayer.
Question 12.
Who can order for carrying out “Inspection” and under what circumstances?
Answer:
As per Section 67 of CGST/SGST Act, Inspection can be carried out by an officer of CGST/SGST only upon a written authorization given by an officer f 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:
- suppressed any transaction of supply;
- suppressed stock of goods in hand;
- claimed excess input tax credit;
- contravened any provision of the CGST/SGST Act to evade tax;
- a transporter or warehouse owner has kept goods which have escaped payment of tax or has kept his accounts or goods in a manner that is likely to cause evasion of tax.
Question 13.
Who can order for Search and Seizure under the provisions of CGST Act?
Answer:
An officer of the rank of Joint Commissioner or above can authorize an officer in writing to carry out search and seize goods, documents, books or things. Such authorization can be given only where the Joint Commissioner has reasons to believe that any goods liable to confiscation or any documents or books or things relevant for any proceedings are hidden in any place.
Question 14.
What is meant by ‘reasons to believe’?
Answer:
Reason to believe is to have knowledge of facts which, although not amounting to direct knowledge, would cause a reasonable person, knowing the same facts, to reasonably conclude the same thing. As per Section 26 of the IPC, 1860, “A person is said to have ‘reason to believe’ a thing, if he has sufficient cause to believe that thing but not otherwise.” ‘Reason to believe’ contemplates an objective determination based on intelligent care and evaluation as distinguished from a purely subjective consideration. It has to be and must be that of an honest and reasonable person based on relevant material and circumstances.
Question 15.
What is a Search Warrant and what are its contents?
Answer:
The written authority to conduct search is generally called search warrant. The competent authority to issue search warrant is an officer of the rank of Joint Commissioner or above. A search warrant must indicate the existence of a reasonable belief leading to the search. Search Warrant should contain the following details:
- the violation under the Act,
- the premise to be searched,
- the name and designation of the person authorized for search,
- the name of the issuing officer with full designation along with his round seal,
- date and place of issue,
- serial number of the search warrant,
- period of validity i.e. a day or two days etc.
Question 16.
When do goods become liable to confiscation under the provisions of CGST/SGST Act?
Answer:
As per section 130 of SGST/SGST Act, goods become liable to confiscation when any person does the following:
- supplies or receives any goods in contravention of any of the provisions of this Act or rules made thereunder leading to evasion of tax;
- does not account for any goods on which he is liable to pay tax under this Act;
- supplies any goods liable to tax under this Act without having applied, for the registration;
- contravenes any of the provisions of the CGST/SGST Act or rules made thereunder with intent to evade payment of tax.
Question 17.
What powers can be exercised by an officer during valid search?
Answer:
An officer carrying out a search has the power to search for and seize goods (which are liable to confiscation) and documents, books or things (relevant for any proceedings under CGST/SGST Act) from the premises searched. During search, the officer has the power to break open the door of the premises authorized to be searched if access to the same is denied. Similarly, while carrying out search within the premises, he can break open any almirah or box if access to such almirah or box is denied and in which any goods, account, registers or documents are suspected to be concealed. He can also seal the premises if access to it denied.
Question 18.
What is meant by the term ‘Seizure’?
Answer:
The term ‘seizure’ has not been specifically defined in the Model GST Law. In Law Lexicon Dictionary, ‘seizure’ is defined as the act of taking possession of property by an officer under legal process. It generally implies taking possession forcibly contrary to the wishes of the owner of the property or who has the possession and who was unwilling to part with the possession. Space to write important points for revision
Question 19.
What is the distinction in law between ‘Seizure’ and ‘Detention’?
Answer:
Denial of access to the owner of the property or the person who possesses the property at a particular point of time by a legal order/notice is called detention. Seizure is taking over of actual possession of the goods by the department. Detention order is issued when it is suspected that the goods are liable to confiscation. Seizure can be made only on the reasonable belief which is arrived at after inquiry/investigation that the goods are liable to confiscation.
Question 20.
What is meant by the term “arrest”?
Answer:
The term ‘arrest’ has not been defined in the CGST/SGST Act. However, as per judicial pronouncements, it denotes ‘the taking into custody of a person under some lawful command or authority’. In other words, a person is said to be arrested when he is taken and restrained of his liberty Order of lawful warrant.
Question 21.
When can the proper officer authorize ‘arrest’ of any person under CGST/SGST Act?
Answer:
The Commissioner of CGST/SGST can authorize a CGST/SGST officer to arrest a person if he has reasons to believe that the person has committed an offence attracting a punishment prescribed under section 132(1) (a), (b), (c), (d) or Sec 132(2) of the CGST/SGST Act. This essentially means that a person can be arrested only where the tax evasion is more than 2 crore rupees or where he has been convicted earlier under CGST Act.
Question 22.
What are cognizable and non-cognizable offences under CGST Act?
Answer:
In section 132 of CGST Act, it is provided 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 ₹ 5 crore, shall be cognizable and non-bailable. Other offences under the act are non-cognizable and bailable.
Question 23.
When can the proper officer issue summons under CGST Act?
Answer:
Section 70 of CGST/SGST Act gives powers to a duly authorized CGST/SGST officer to call upon a person by issuing a summon to present himself before the officer issuing the summon to either give evidence or produce a document or any other thing in any inquiry which an officer is making. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.
Question 24.
What is the relevant date for issue of Show Cause Notice?
Answer:
(i) In case of section 73(cases other than fraud/ suppression of facts/willful misstatement), the relevant date shall be counted from the due date for filing of annual return for the financial year to which demand relates to.
The SCN has to be adjudicated within at period of three years from the due date of filing of annual return. The SCN is required to be issued at least three months prior to the time limit set for adjudication. {sec.73(2&10)}
(ii) In case of section 74(cases involving fraud/ suppression of facts/willful misstatement), the relevant date shall be counted from the due date for filing of annual return for the financial year to which demand relates to. The SCN has to be adjudicated within at period of five years from the due date of filing of annual return. The SCN is required to be issued at least six months prior to the time limit set for adjudication. {sec.74(2&10)}
Question 25.
Who can authorize the act of carrying out ‘Inspection’ and under what circumstances?
Answer:
As per Section 67(1), Inspection can be carried out by any officer of Central tax only upon a written authorization in Form GST INS-01 given by a proper officer not below the rank of Joint Commissioner. Such proper officer can give such authorization only if he has reasons to believe that the person concerned has –
(a) suppressed any transaction of supply;
(b) suppressed stock of goods in hand;
(c) claimed excess input tax credit;
(d) contravened any provisions of this Act or rules made thereunder to evade tax;
(e) a transporter or an owner or operator of a warehouse or godown or any other place, has kept goods which have escaped payment of tax or has kept his accounts or goods in a manner that is likely to cause evasion of tax.
Question 26.
Is there any special document required to be carried during transportation of taxable goods?
Answer:
Yes. The person in charge of a conveyance carrying any consignment of goods of value exceeding a specified amount to carry with him such documents and devices as may be prescribed by the Government. On interception of the conveyance, the person in charge shall produce the prescribed documents and devices for verification and allow inspection of goods by the proper officer.
Question 27.
When can, the proper officer authorize arrest of any person under section 69?
Answer:
The Commissioner of CGST, by order, can authorize any CGST officer to arrest a person, if he has reasons to believe that such person has committed an offence specified in clause (a) or (b) or (c) or (d) of section 132(1) which is punishable under clause (i) or (ii) of section 132(1) or section 132(2) of the Act. This essentially means that a person can be arrested only When the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken exceeds 2 Crores or where a person has earlier been convicted for an offence under section 132 of the CGST Act.
Inspection, Search, Seizure, Offences & Penalties Notes
Inspection
‘Inspection’ is a new provision under the CGST/SGST Act. The word ‘inspection’ has not been defined in the Act. Inspection is a softer provision of ‘search’ which enables officers to access to business premises. Inspection 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.
Search
As per Black’s Law Dictionary, search is ‘an examination of a man’s house or other buildings or premises, or of his person, with a view to the discovery of contraband or illicit or stolen property, or some evidence of guilt to be used in the prosecution of a criminal action for some crime or offence with which he is charged.’
Search Warrant and its contents
The written authority to conduct search is generally called search warrant. The competent authority to issue search warrant is an officer of the rank of Joint Commissioner or above. A search warrant must indicate the existence of a reasonable belief leading to the search. Search Warrant should contain the following details:
- the violation under the Act,
- the premise to be searched,
- the name and designation of the person authorized for search,
- the name of the issuing officer with full designation along with his round seal,
- date and place of issue,
- serial number of the Search warrant,
- period of validity i.e. a day or two days etc.
Reason to believe’
The expression, ‘reason to believe’ is not defined anywhere in GST law but needs to be understood through judicial interpretation, as pronounced in following cases:
‘Reason’ means a course or justification. ‘Believe’ means to accept as true or to have faith in it. In Dy. Director of Income Tax v Mahesh Kumar Agarwal (2003) 262 ITR 338 (Calcutta), it was observed that it is a statement of fact employed as an argument to justify or condemn some act. When information is received or the basic facts are harnessed in support of an argument, the resultant fact assumes the shape of a ‘reason’ and when a number of reasons are considered in relation to each other, the final result to this consideration assumes the shape of “belief”.
In ITO v Lakhmani Mewal Das (1976) 103 ITR 437 (SC), it was held that the expression ‘reason to believe’ does not mean a purely subjective satisfaction on the part of the income-tax officer. The reason must be held in good faith. It cannot be merely a pretense.
Distinction in law between ‘Seizure’ and ‘Detention’
Denial of access to the owner of the property or the person who possesses the property at a particular point of time by a legal order/notice is called detention. Seizure is taking over of actual possession of the goods by the department. Detention order is issued when it is suspected that the goods are liable to confiscation. Seizure can be made only on the reasonable belief which is arrived at after inquiry/investigation that the goods are liable to confiscation.
E-way bill number
Upon generation of the e-way bill on the common portal, a unique E-way Bill Number (EBN) shall be made available to the supplier, the recipient and the transporter on the common portal.
Access
The term ‘access’ has not been defined in the GST law. However, ‘access’ does not mean inspection or search. ‘Access’ literally means approach or the means or power of approaching. According to Section 2(1 )(9) of Information Technology Act, 2000, ‘access’ with its grammatical variations and cognate expressions means gaining entry into, instructing or communicating with the logical, arithmetical, or memory function resources of a computer, computer system or computer network.
Powers of the Officers and Circumstances warranting access / inspection
The access to business premises shall be for the carrying out of inspection.
Inspection may be carried out for the purposes of carrying out any audit, scrutiny, verification and checks as may be necessary to safeguard the interest of revenue.
Accordingly, any proper officer authorized by the Additional / Joint Commissioner of GST shall have:
- access to any business premises Inspection of
- 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.
Seizure
“Seizure” has not been defined in the GST law. In Law Lexicon Dictionary, “seizure” is defined as the act of taking possession of property by an officer under legal process. It generally implies taking possession forcibly contrary to the wishes of the owner of the property or who has the possession and who was unwilling to part with the possession.
Powers of Search and Seizure
Power of search and seizure in any system of jurisprudence is an overriding power of the state to provide security and that power is necessarily regulated by law – M.P. Sharma v Satish Chandra, District Magistrate 1954 AIR 300; (1954) 2 ELT 287 (SC).
Confiscation of goods
Under Section 67(2) of the CGST Act, 2017, search can be ordered where the CGST/SGST officer has reasons to believe that goods are liable to confiscation. In terms of Section 130 of CGST Act, 2017, goods become liable to confiscation when any person does the following acts:
- supplies any goods in contravention of any of the provisions of this Act or rules made there under leading to evasion of tax;
- does not account for any goods on which he is liable to pay tax under this Act;
- supplies any goods liable to tax under this Act without having applied for registration;
- contravenes any of the provisions of the GST Act or rules made there under with intent to evade payment of tax.
uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made there under unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,
Procedure for releasing the seized goods
Rule 140 of GST Rules, 2017 deals with bond and security for release of seized goods.
The seized goods may be released on a provisional basis upon execution of a bond for the value of the goods in FORM GST INS-04 and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable.
The “applicable tax” shall include central tax and State tax or central tax and the Union territory tax, as the case may be and the cess, if any, payable under the Goods and Services Tax (Compensation to States) Act, 2017.
Circumstances under which Goods be Confiscated and Penalty Be Levied
As per section 130 of the CGST Act, 2017, the goods are liable for confiscation and any person shall be liable to penalty in the following cases:
- On supply or receipt of goods in contravention of provisions of the Act or rules leading to evasion of tax.
- On not accounting for any goods which are liable to pay tax under the Act.
- On supply of goods liable for taxation under the Act, without having applied for registration.
- Contravention of any of the provisions of the Act or rules with an intention to evade payment of tax.
- Uses any conveyance or means of transport for carriage of goods in contravention of provisions of this Act or rules made thereunder, unless the owner proves that it was used without his knowledge or connivance.
All such goods or conveyances shall be liable for confiscation and person shall be liable for penalty under section 122 of the Act.