Inspection, Search, Seizure and Arrest
GST FAQ 3rd Edition – December, 2018 – GST Frequently Asked Questions (FAQs)
GST
18. Inspection, Search, Seizure and Arrest
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 wareho
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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. (Section 67(4) of the Act).
Q 5. Whether the person from whose custody any documents are seized is entitled to get the copies thereof?
Ans. Yes, the person from whose custody documents are seized is entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such office may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper office, prejudicially affect the investigation. (Section 67(5) of the Act.)
Q 6. Can the proper officer authorize Inspection of any assets/premises of any person under this Section?
Ans. No. Authorization can be given to an officer of CGST/ SGST Act. to carry out inspecti
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ection 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.
Q 9. Is it mandatory that such 'reasons to believe' has to be recorded in writing by the proper officer, before issuing authorization for Inspection or Search and Seizure?
Ans. Although the officer is not required to state the reasons for such belief before issuing an authorization for search, he has to disclose the material on which his belief was formed. 'Reason to believe' need not be recorded invariably in each case. However, it would be better if the materials / information etc. are recorded before issue of search warrant or before conducting search.
Q 10. What is
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 this Act;
(iii) supplies any goods liable to tax under this Act without having applied for the registration;
(iv) contravenes any of the provisions of the CGST/ SGST Act or rules made thereunder with intent to evade payment of tax.
Q 12. What powers can be exercised by an officer during valid search?
Ans. 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 doc
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ses 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 taken on the body of the search warrant.
* The search should be made in the presence of at least two independent witnesses of the locality. If no such inhabitants are available/willing, the inhabitants of any other locality should be asked to be witness to the search. The witnesses should be briefed about the purpose of the search.
* Before the start of the search proceedings, the team of officers conducting the search and the accompanying witnesses should offer themselves for their personal search to the person in-charge of the premises being searched. Similarly, after the completion of search all the officers and the witnesses should again offer themselves for their personal search.
* A Panchnama / Mahazar of the proceedings of the search should necessarily be prepared on the spot. A list of all goods, documents recove
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
iness 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/SGST or C&AG or a cost accountant or chartered accountant nominated under section 66 of CGST/SGST Act, access to any business premises without issuance of a search warrant for the purposes of carrying out any audit, scrutiny, verification and checks as may be necessary to safeguard the interest of revenue. However, a written authorization is to be issued by an officer of the rank of Commissioner of CGST or SGST. This provision facilitates access to a business premise which is not registered by a taxable person as a principal or additional place of business but has books of accounts, documents, computers etc. which are required for audit or verification of accounts of a taxable person.
Q 16. What is meant by the term 'Seizure'?
Ans. The term 'seizure' has not been specifically defined in the GST Law
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
s 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.
Q 19. What are the safeguards provided in GST Act(s) in respect of Search or Seizure?
Ans. Certain safeguards are provided in section 67 of CGST/SGST Act in respect of the power of search or seizure. These are as follows:
i. Seized goods or documents should not be retained beyond the period necessary for their examination;
ii. Photocopies of the documents can be taken by the person from whose custody documents are seized;
iii. For seized goods, if a notice is not issued within six months of its seizure, goods shall be returned to the p
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
otherwise the goods shall be returned to the person from whose possession they were seized. However, the period of six months, on sufficient cause being shown can be extended by the proper officer for a further period not exceeding six months. (Section 67(7) of the Act.)
Q 21. Can the goods be sold by the department after seizure?
Ans. Yes. 17 types of goods have been prescribed in the Notification No. 27/2018-Central Tax dated 13th June, 2018 which can be disposed of, after seizure, by the proper officer, having regard to the perishable or hazardous nature, depreciation in value with the passage of time, constraints of storage space or any other relevant considerations. The list is as under:
(i) Salt and hygroscopic substances
(ii) Raw (wet and salted) hides and skins
(iii) Newspapers and periodicals
(iv) Menthol, Camphor, Saffron
(v) Re-fills for ball-point pens
(vi) Lighter fuel, including lighters with gas, not having arrangement for refilling
(vii) Cells, batteries and r
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ny 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. Chapter XVI of CGST Rules contains provisions relating to documents required to be carried.
Q 23. What is meant by the term “arrest”?
Ans. 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 by power or colour of lawful warrant.
Q 24. When can the proper officer authorize 'arrest' of any person under CGST / SGST Act?
Ans. The Commissioner of CGST/SGST can authorize a CGST/SGST officer to arrest a person if he has reasons to believe that the pers
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
for a person who 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;
b) 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;
c) All arrest must be in accordance with the provisions of the Code of Criminal Procedure, 1973 relating to arrest.
Q 26. 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
accurate, visible and clear identification and name tags with 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
o the arrestee.
vii. The arrestee should be subjected to medical examination 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 27. What are the broad guidelines
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ses; and
viii. large amounts of evasion of duty or service tax at least exceeding one crore rupees.
Q 28. 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 29. 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 30. 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 ser
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
on or by an authorized representative and he is bound to state the truth before the officer 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 33. 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
written permission, oral/ telephonic permission from such officer must be obtained and the same should be 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 35. 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
egories specified are as follows:
i. Police;
ii. Railways
iii. Customs;
iv. Officers of State/UT/ Central Government engaged in collection of GST;
v. Officers of State/UT/ Central Government engaged in collection of land revenue;
vi. All village officers;
vii. Any other class of officers as may be notified by the Central/State Government.
Q 37. Is there any prescribed format for arrest memo under the CGST Act, 2017?
Ans. There is no prescribed format for arrest memo but an arrest memo must be in compliance with the directions in the judgments of the Hon'ble Supreme Court in the case of D.K. Basu v/s. State of West Bengal reported in 1997 (1) SCC 416 =1996 (12) TMI 350 – SUPREME COURT. The arrest memo should include: –
* Brief Facts of the case;
* Details of the person arrested;
* Gist of evidence against the person;
* Relevant section(s) of the CGST/SGST Law or other laws attracted to the case and to the arrested person;
* The grounds of the arrest must be explaine
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =