PROCESS OF ARREST, INSPECTION, AND SEIZURE UNDER THE CGST ACT

INTRODUCTION

Taxes are one of the most important sources of revenue for the government. Our government must perform various functions for the welfare of the people of India. The tax authority is derived from the Indian Constitution which gives effect to the various taxes between Central and the State. An important limitation of this power is Article 265 of the Constitution which states “No tax shall be levied or collected except by law”. Therefore, each tax levied or collected must be supported by related legislation, passed by Parliament or the State Legislature. There is no other small, tax evasion that is a big problem in India. There are many ways people avoid tax evasion in India ranging from returning false taxes to fake documents. From a previous survey report, tax refugees have been growing. Tax evaders, by tax evasion, receive unfair profits over real taxpayers. The government has taken various legal measures to reduce the consequences of tax evasion and to keep corruption without India. To protect real taxpayers, the concept of Inspection, search, seizure, and arrest has been introduced.

In India, the power to search and seize to prevent and investigate cases was first introduced under the Criminal Procedure Code and since the search and seizure of the process is an extremely uncontrolled humanitarian process, strict legal restrictions were placed on the exercise of legal powers.

Inspection, Search, Seizure, and Arrest options are used, only in exceptional cases and as a last resort, to protect Government Funds. Therefore, to ensure that these provisions are used efficiently, effectively and that taxpayers' rights are also protected, the CGST Act stipulates that Inspection, Search or Arrest may only be done when an official, at the level of the Joint Commission or above, has reason to believe in such exceptions. However, in the event of a similar arrest, it can only be made when the person is accused of the charges laid out for this purpose and the amount of tax involved is beyond the prescribed limit.

INSPECTION UNDER GST

A Joint Commissioner (or an officer of better rank) may also have “motives to believe” that in an effort to avoid tax, any character has performed the following-

•    Suppressed any transaction of supply

•    Suppressed inventory in hand

•    Claimed input tax credit  in excess

•    Violated of any of the provisions

•    Any transporter or owner/operator of a warehouse has stored items that have escaped tax price or has stored money owed and/or items in one of this manner as to avoid tax -Then he can authorize any officer  in FORM GST INS-01 to investigate locations of business:

•     the taxable person 

•    the transporter or 

•    owner/operator of warehouse

INSPECTION IN MOVEMENT:

•    Any consignment, the amount of which exceeds INR 50,000, may be suspended at any time to ensure the documents/devices are prescribed for delivering such consignment. 

•    If on verification of the consignment, during transit, it is found that the goods have been removed without the prescribed documents or similar is provided in contravention of any provision of the Act, the same may be retained or confiscated and may be fined as prescribed. , the load is held for more than 30 minutes the carrier can feed the information to the portal. 

•    This will ensure accountability and transparency in all those guarantees. In addition, verification during delivery will be done via a Digital interface so physical intervention will be minimal, and as mentioned earlier in the event of a delay of more than 30 minutes the carrier can submit information to the portal.

SEARCH AND SEIZURE UNDER GST

The search and seizure provisions also provide adequate protection and the GST Act stipulates that searches of any business premises etc can only be conducted under the authority of an officer who is not at the level of the Joint Commissioner and if we have reason to believe that the person concerned has done at least one of the following:

•    Assets to be confiscated any documents/books/records/objects, which may be useful or in accordance with any procedures, are hidden in any place and all such places may be searched. 

•    All goods/documents/books / records / such items may be confiscated, but, if it is not possible such goods may be bound by the same. A disqualified person may have the right to retrieve copies/extracts of records. 

• Documents/books/archives may be retained only for the same period of examination/inquiry/proceedings and if this is unreliable in that case they may be returned within 30 days of notice of the reason for the exhibition. 

•    Under obligation and provide security or payment of applicable taxes, interest, and penalties. In the event of a seizure, a notice is to be issued within six months, if no notice has been issued within six months all such items may be returned. However, this period of six months may be extended by the Commissioner for an additional period of six months on reasonable grounds. 

•    A list of seized goods/documents/records is required to be made by an officer and that person, from whom the same is seized, must ensure that the search and seizure arrangements are properly and transparent.

•     That searches and seizures must be conducted in accordance with the provisions of the Criminal Procedure Code, 1973. 

•    Ensuring that any search or seizure must be conducted in the presence of two or more independent witnesses, a record of all proceedings is made and forwarded to the Commission immediately.

ARREST UNDER GST

In tax administration, incarceration provisions are designed to deal with conditions created by some unscrupulous taxpayers. To some, this may seem harsh but this is necessary for effective tax administration and it serves as a deterrent and instills a sense of morality. The provisions of the arrest under the GST Act have adequate built-in protections to ensure that this is only used under the authorization of the Commissioner. Apart from this, the GST Act also stipulates that arrests may be made only in those cases where a person is involved in the charges for the purpose of arrest and the amount of tax involved in that case exceeds the prescribed limit. 

If the Commissioner believes someone has committed an offense u/s 132, the offender may be arrested under GST. Section 132 of the CGST Act lists offenses under the CGST Act that could lead to arrest:

•    If a person provides any goods or services or both without the issuance of any invoice, in contravention of the provisions of this Act for the purpose of tax evasion; 

•    When a person issues any invoice or debt without the provision of goods or services or both violates the provisions of this Act, which result in the improper use or misappropriation of levies or rebates;

•     If a person attempts to obtain an input tax debt using the above invoice or debt; If a person collects any amount as tax but fails to pay the same amount to the Government within three months from the date of payment;

•    Tax evasion, tax evasion or counterfeit money can lead to imprisonment. produce counterfeit accounts or documents or provide any false information for the purpose of tax evasion under this Act; 

•    If a person obstructs or hinders any official from performing his or her duties in terms of this Act; 

•    If a person acquires control, or in any way that affects the transfer, removal, installation, storage, concealment, provision, or purchase or in any other way in which he or she deals, any assets that they know or have reason to believe are liable to be taken under this Act; 

•    If a person acquires or is affected in any way by a provision, or in any other way that governs any provision of services that they are aware of or have reason to believe in contravention of any provision of this Act; 

•    If a person distorts or destroys any evidence or documents; 

•    If a person fails to provide any information that is required to be provided under this Act or to provide incorrect information.

COMPOUNDING OF OFFENCES

Section 138 of the CGST Act provides for the consolidation of cases. Consolidation usually refers to the process by which an individual/business entity commits an offense by making a mistake so that the same can be forgiven. Under the provisions of the CGST, the defendant may be exempt from paying a consolidation fee not exceeding the maximum penalty charged under the relevant provisions. Consolidation will only be allowed after payment of all taxes, interest, and penalties. The amount payable for consolidation of cases must be at least 50% of the tax involved in at least INR 10,000 and the maximum consolidation amount is set to be 150% tax or INR 30,000, whichever is higher.

Upon payment of the consolidated amount, no action may be taken against the accused person in the same case and any criminal case, once it has been taken, will be reduced. Compounding will not be available-

•    A person permitted to be consolidated together in respect of any of the offenses described in Section 132 (1) of clauses (a) to (f) of the CGST Act.

•     A person who commits a crime before CGST A law that includes the provision of the above INR 1 crore and is permitted to Compound 

•    A person who is accused of committing an offense under this Act which is a criminal offense committed under any other law. 

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Author:

Damini Nagar
Indore
B.A LLB from Indore institution of Law