Goods and Services Tax

Inspection, Search, Seizure and Arrest

GST – GST FAQ 2nd Edition – June 2017 as Updated as on 1.1.2018 – 19 – Q 1. What is the meaning of the term Search ? Ans. As per law dictionary and as noted in different judicial pronouncements, the term search , in simple language, denotes an action of a government machinery to go, look through or examine carefully a place, area, person, object etc. in order to find something concealed or for the purpose of discovering evidence of a crime. The search of a person or vehicle or premises etc. can only be done under proper and valid authority of law. Q 2. What is the meaning of the term Inspection ? Ans. Inspection is a new provision under the CGST/SGST Act. It is a softer provision than search to enable 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. Q 3. Who can order for carrying out Inspection and under what circumstances? Ans. As per Secti

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

rson engaged in the business of transporting goods whether or not he is a registered taxable person; iii. any place of business of an owner or an operator of a warehouse or godown. Q 5. Who can order for Search and Seizure under the provisions of CGST Act? Ans. 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. Q 6. What is meant by reasons to believe ? Ans. 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 belie

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

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: i. the violation under the Act, ii. the premise to be searched, iii. the name and designation of the person authorized for search, iv. the name of the issuing officer with full designation along with his round seal, v. date and place of issue, vi. serial number of the search warrant, vii. period of validity i.e. a day or two days etc. Q 9. When do goods become liable to confiscation under the provisions of CGST/SGST Act? Ans. As per section 130 of SGST/SGST Act, goods become liable to confiscation when any person does the following: (i) supplies or receives any goods in contravention of any of the provisions of this Act or rules made thereunder leading to evasion of tax; (ii) does not account for any goods on which he is liable to pay tax under

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ns. Section 67(10) of CGST/SGST Act prescribes that searches must be carried out in accordance with the provisions of Code of Criminal Procedure, 1973. Section 100 of the Code of Criminal Procedure describes the procedure for search. Q 12. What are the basic requirements to be observed during Search operations? Ans. The following principles should be observed during Search: No search of premises should be carried out without a valid search warrant issued by the proper officer. There should invariably be a lady officer accompanying the search team to residence. The officers before starting the search should disclose their identity by showing their identity cards to the person in-charge of the premises. The search warrant should be executed before the start of the search by showing the same to the person in-charge of the premises and his signature should be taken on the body of the search warrant in token of having seen the same. The signatures of at least two witnesses should also be ta

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

signed by the witnesses, the in-charge/ owner of the premises before whom the search is conducted and also by the officer(s) duly authorized for conducting the search. After the search is over, the search warrant duly executed should be returned in original to the issuing officer with a report regarding the outcome of the search. The names of the officers who participated in the search may also be written on the reverse of the search warrant. The issuing authority of search warrant should maintain register of records of search warrant issued and returned and used search warrants should be kept in records. A copy of the Panchnama / Mahazar along with its annexure should be given to the person in- charge/owner of the premises being searched under acknowledgement. Q 13. Can a CGST/SGST officer access business premises under any other circumstances? Ans. Yes. Access can also be obtained in terms of Section 65 of CGST/SGST Act. This provision of law is meant to allow an audit party of CGST/

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

wishes of the owner of the property or who has the possession and who was unwilling to part with the possession. Q 15. Does GST Act(s) have any power of detention of goods and conveyances? Ans. Yes, under Section 129 of CGST/SGST Act, an officer has power to detain goods along with the conveyance (like a truck or other types of vehicle) transporting the goods. This can be done for such goods which are being transported or are stored in transit in violation of the provisions of CGST/SGST Act. Goods which are stored or are kept in stock but not accounted for can also be detained. Such goods and conveyance shall be released after payment of applicable tax or upon furnishing security of equivalent amount. Q 16. What is the distinction in law between Seizure and Detention ? Ans. 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 g

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e seizing officer; v. Certain categories of goods to be specified under CGST Rules (such as perishable, hazardous etc.) can be disposed of immediately after seizure; vi. Provisions of Code of Criminal Procedure 1973 relating to search and seizure shall apply. However, one important modification is in relation to sub-section (5) of section 165 of Code of Criminal Procedure – instead of sending copies of any record made in course of search to the nearest Magistrate empowered to take cognizance of the offence, it has to be sent to the Principal Commissioner/ Commissioner of CGST/ Commissioner of SGST. Q 18. Is there any special document required to be carried during transport of taxable goods? Ans. Under section 68 of CGST /SGST Act, a person in charge of a conveyance carrying any consignment of goods of value exceeding a specified amount may be required to carry a prescribed document as prescribed in the E way Bill Rules. Q 19. What is meant by the term arrest ? Ans. The term arrest has

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

is placed under arrest. These are: a. 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; i. 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; ii. All arrest must be in accordance with the provisions of the Code of Criminal Procedure, 1973 relating to arrest. Q 22. What are the precautions to be taken during arrest? Ans. 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. One important provision to be taken

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

th their designations. The particulars of all such police personnel who handle interrogation of the arrestee must be recorded in a register. ii. The police officer carrying out the arrest shall prepare a memo of arrest at the time of arrest and such memo shall be attested by at least one witness, who may be either a member of the family of the arrestee or a respectable person of the locality from where the arrest is made. It shall also be counter signed by the arrestee and shall contain the time and date of arrest. iii. A person who has been arrested or detained and is being held in custody in a police station or interrogation center or other lock up, shall be entitled to have one friend or relative or other person known to him or having interest in his welfare being informed, as soon as practicable, that he has been arrested and is being detained at the particular place, unless the attesting witness of the memo of arrest is himself such a friend or a relative of the arrestee. iv. The

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

xamination by the trained doctor every 48 hours during his detention in custody by a doctor on the panel of approved doctors appointed by Director, Health Services of the concerned State or Union Territory, Director, Health Services should prepare such a panel for all Tehsils and Districts as well. viii. Copies of all the documents including the memo of arrest, referred to above, should be sent to the Magistrate for his record. ix. The arrestee may be permitted to meet his lawyer during interrogation, though not throughout the interrogation. x. A police control room should be provided at all district and State headquarters where information regarding the arrest and the place of custody of the arrestee shall be communicated by the officer causing the arrest, within 12 hours of effecting the arrest and at the police control room it should be displayed on a conspicuous notice board. Q 23. What are the broad guidelines for arrest followed in CBEC? Ans. Decision to arrest needs to be taken

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ng one crore rupees. Q 24. What is a cognizable offence? Ans. Generally, as per Cr. PC, cognizable offence means serious category of offences in respect of which a police officer has the authority to make an arrest without a warrant and to start an investigation with or without the permission of a court. However, GST being a special legislation, only the officers, duly empowered under the Act can act as above. Q 25. What is a non-cognizable offence? Ans. Non-cognizable offence means relatively less serious offences in respect of which a police officer does not have the authority to make an arrest without a warrant and an investigation cannot be initiated without a court order, except as may be authorized under special legislation. Q 26. What are cognizable and non-cognizable offences under CGST Act? Ans. 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

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

er who has issued the summon upon any subject which is the subject matter of examination and to produce such documents and other things as may be required. Q 29. What can be the consequences of non- appearance to summons? Ans. The proceeding before the official who has issued summons is deemed to be a judicial proceeding. If a person does not appear on the date when summoned without any reasonable justification, he can be prosecuted under section 174 of the Indian Penal Code (IPC). If he absconds to avoid service of summons, he can be prosecuted under section 172 of the IPC and in case he does not produce the documents or electronic records required to be produced, he can be prosecuted under section 175 of the IPC. In case he gives false evidence, he can be prosecuted under section 193 of the IPC. In addition, if a person does not appear before a CGST/ SGST officer who has issued the summons, he is liable to a penalty up to ₹ 25,000/- under section 122(3) (d) of CGST/SGST Act. Q

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e reduced to writing and intimated to the officer according such permission at the earliest opportunity; v. in all cases, where summons are issued, the officer issuing summons should submit a report or should record a brief of the proceedings in the case file and submit the same to the officer who had authorized the issuance of summons; vi. senior management officials such as CEO, CFO, General Managers of a large company or a Public Sector Undertaking should not generally be issued summons at the first instance. They should be summoned only when there are indications in the investigation of their involvement in the decision making process which led to loss of revenue. Q 31. What are the precautions to be observed while issuing summons? Ans. The following precautions should generally be observed when summoning a person: – (i) A summon should not be issued for appearance where it is not justified. The power to summon can be exercised only when there is an inquiry being undertaken and the

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Leave a Reply