It is important for all taxable persons under GST Act to know their rights and duties under the Act while carrying out their businesses. This new indirect system provides power to certain persons / officers to conduct inspection, search, seizure and arrests to safeguard the interest of genuine taxpayers and to trace and mitigate the revenue leakages.
Any transportation or movement of goods by a registered person worth exceeding Rs 50,000 must be accompanied by an e-Way bill. The required documents like e-Way bill and invoice must be carried out by the person in charge of the vehicle carrying goods exceeding Rs 50,000.
‘Inspection’ is a lenient provision than ‘search’. It enables officers to access any place of business or of a person involved in transporting goods or who is either an operator or an owner of a warehouse.
A Joint Commissioner (or an officer of higher rank) may have “reasons to believe” that in order to avoid tax, any person has committed the following mishaps:
In all such scenarios, a joint commissioner can authorise any other officer in FORM GSTINS-01 to inspect places of businesses of the taxable person or the transporter or owner / operator of the warehouse.
Inspection can be carried out only if there is written authorisation of an officer of the rank of Joint Commissioner or above. An officer of the Central Goods and Service Tax (CGST) department or State Goods and Services Tax department carries out an inspection once s / he gets the authority to do so.
The provision of search and seizure also provides enough protection. It is different from “inspection” which means to investigate something. “Search” means to find something illegal. It is an action taken by Government / Departmental Officials. It is a careful examination of the person, place or object to find something concealed or to ascertain crime evidence. It can only be carried out under the valid and appropriate Written legal authority.
Either based on inspection results or other concerns leading to such action, Joint Commissioner of SGST / CGST or a superior officer can order for a “search” if he has “reasons to believe” –
In either of the scenarios, officer or the one whom she / he authorised can search and seize the goods and documents.
Note: GST law has not defined the term ‘seizure’. However, it implies taking possession forcibly against the wishes of the owner on a legal basis.
The seized goods can be released only after paying tax, Interest and penalty.
(Please note that penalty amounts are different if the goods under the subject matter are exempted goods)
Hence, if the owner does not come forward, he has to pay a higher amount as penalty.
Further, the terms ‘seizure’ and ‘detention’ are not the same. Detention is not allowing the owner any access to seized documents or goods by a legal notice or legal order. Here, the ownership and possession of goods lie with the owner. On the other hand, Seizure is taking over or actual possession of the goods by the department. A seizure can take place only after an investigation which concludes that the goods are liable to confiscation.
To summarise, restriction to access the suspected goods is detention and possession of suspected goods is a seizure.
The legal difference is mentioned below:
The process of detention is explained in the following steps
Note: Though both terms are legally not the same (considering ownership of goods), the process of seizure and detention is almost identical.
In accordance with section 130 of CGST / SGST Act, goods become liable to confiscation when any person does the following:
Confiscation takes out ownership and possession of goods from the owner and gives it into the hands of government authority.
In the case of confiscation also, the penalty is applicable. Before confiscating the goods, the tax officer shall give an option to the owner to pay fine instead of confiscation. The amount of fine shall not exceed the market value of the goods less the tax charged thereon.
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