Inspection, Search and Seizure under GST Law
Authorisation for Inspection
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 the rules made thereunder to evade tax under this Act; or |
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| (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.
Such authorization shall be given by issue of Form GST INS-01
Search and seizure
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 or books or things
The proper officer shall make order of seizure in Form GSTINS-02
Prohibition Order if goods not seized
where it is not practicable to seize any such goods, the proper officer, or any officer 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
Prohibition Order shall be issued in Form GST INS-03
Retention time for documents seized: 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.
Documents not relevant for proceeding to be returned early
The documents, books or things 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 thereunder,
shall be returned to such person within a period not exceeding thirty days of the issue of the said notice.
Power of the authorized officer during Search
The officer authorised 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.
Photocopy of documents seized
The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised 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.
Release of goods
The goods so seized 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.
Bond shall be issued in Form GST INS-04. Security will be given by furnishing bank guarantee equivalent to the amount of applicable tax, interest and penalty payable.
Goods to be returned if no notice to taxpayer
Where any goods are seized 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:
Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months.
Disposal of goods seized 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, be disposed of by the proper officer in such manner as may be prescribed.
Inventory of goods by proper officer
Where any goods have been seized by a proper officer, or any officer authorised by him, he shall prepare an inventory of such goods in such manner as may be prescribed.
Relevant provisions of the Code of Criminal Procedure, 1973 shall apply.
Seizure of accounts
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 thereunder for prosecution.
Test purchases by authorities
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.