FAQs Regarding Inspection, Search and Seizure

Inspection, searching, and seizure under GST often leave individuals and businesses with many questions. Common concerns include the circumstances that allow such practices and the process and procedure that must be followed during an inspection or search. It is also important to understand what non-compliance can lead to, such as penalties or the seizure of goods. Knowing the answers to these FAQs helps ensure compliance and safeguards against rights violations.

When a proper officer has a reason to believe that the taxable person has suppressed any transaction relating to supply of goods and services or both with an intent to evade tax. The proper officer may initiate search or investigation at the place of business of taxpayer.

Any officer of CGST or SGST can conduct investigation or search provided he/she possess written authorization given by an officer of rank of Joint Commissioner or above.

The term ‘seizure’ has not been specifically defined in GST. In legal parlance, seizure is the act of taking over something or someone by force through legal process, such as the seizure of evidence found at the scene of a crime. It generally implies taking possession forcibly against the wishes of the owner.

The proper officer will give an order of seizure in FORM GST INS-02.

In case the proper officer is not able to practically seize the goods then he shall issue form GST INS-03 i.e., order of prohibition. The proper officer may serve this form to order the owner of goods or custodian of goods not to remove the goods or deal with the goods except with prior of approval of such officer.

A bond is required to be executed for provisional release of such goods seized. Such bond is required to be furnished via form GST INS-04.

In security of such goods released on provisional basis, a bank guarantee equivalent to amount of applicable tax, interest and penalty payable shall be furnished along with the bond.

Yes, if the seized goods are of perishable and hazardous nature. The taxpayer is required to pay lower of below

(a) An amount equivalent to market price of such seized goods.

(b) An amount of tax, interest and penalty payable by such taxable person.

The goods shall be released by showing the proof of payment by passing the order in form GST INS-05.

Yes, the Code of Criminal Procedure will apply to search and seizure.

The officer authorized to search will have the power to seal the door of the premises. He can also break open the door of any premises if access is denied. He can also break open any cupboard or box in which goods, books, documents etc. are suspected to be concealed. However above actions will be necessitated if there is gross non cooperation by the taxpayer.

Yes, if the Commissioner believes a person has committed an offence under Section 132 of CGST Act, 2017 then the offender can be arrested under GST.