Inspection, Search, Seizure and Arrest under GST

Inspection, Search, Seizure & Arrest under GST

Legislature enacts various laws for maintaining law and order in the country. Similarly, the Goods and Services Tax Act, 2017 was enacted. In addition, various duties impose on the GST dealers to abide by the provisions of this law. If these dealers fail to abide by law, then the role of administration comes into role. The administration can conduct inspection, search, seizure and can even arrest the person. These powers provide to the administration to protect the interest of genuine tax payers. They include the tax evaders, by evading the tax, get an unfair advantage over the genuine tax payers and as a deterrent for tax evasion. These provisions are also require to safeguard Government’s legitimate dues.

Who can conduct Inspection, Search, Seizure & Arrest under GST?

Inspection, Search or Seizure under the goods and services laws can only carry out when an officer, of the rank of Joint Commissioner or above. Moreover, he has reasons to believe the existence of any exceptional circumstances. In such cases the Joint Commissioner may authorise, in writing, any other officer to cause inspection, search and seizure.

However, in case of arrests the same can carry out only where the person is accused of offences specify for this purpose. The tax amount involved is more than specific limit. Furthermore, the arrests under GST Act can be made only under authorisation from the Commissioner.

What is Inspection?

Inspection is a provision that enables officers to inspect any place of business or of a person. This person is engage in transporting goods or who is an owner or an operator of a warehouse or godown.

When can inspection be conducted?

The authorization of conducting inspection can given in writing in FORM GST INS-01 by officer of the rank of Joint Commissioner or above. He has reasons to believe that the person concern has done one of the following actions:
(a) Suppression of any transaction relating to supply of goods or services or stock in hand
(b) Claim excess input tax credit
(c) Contravention of any provisions of the Act or the Rules to evade tax
(d) Transporting or keeping goods which escape payment of tax or manipulating accounts or stocks which may cause evasion of tax

Also Read: Rules related to setting off of Input Tax Credit

Inspection can also be done of the conveyance, carrying a consignment of value exceeding the specific limit. The person in charge of the conveyance has to produce documents/devices for verification and allow inspection. Even more, inspection during transit can be done even without authorisation of Joint Commissioner.

inspection in movement
What is Search?

Under the goods and services law, search is an action of a government official authorise to go. Also, look through or examine carefully a place, person, object etc. in order to find something conceal or to discover evidence of a crime.

When can Search be carried?

Search can carry out only under authorisation in writing in FORM GST INS-01, from an officer not below the rank of Joint Commissioner. Also, if he has a reason to believe that:
– The person concerned has concealed /secreted the goods liable to confiscation, or
– Any documents/books/record/things, which may be useful for or relevant to any proceedings are secreted.

What is Seizure?

Seizure, as the name suggests is to seize i.e., taking away the possession of a thing. It is the act of taking over person or property by force through legal process. This legal process is such as the seizure of evidence found at the scene of a crime. Moreover, it generally implies taking possession forcibly against the wishes of the owner.

Where can the Seizure be done?

The seizure can also be done only under authorisation in writing FORM GST INS-02,  from an officer not below the rank of Joint Commissioner and if he has a reason to believe that:
The person concern on whose premise the search conduct to seize goods. These are liable to confiscation and documents, books or things. They are relevant for any proceedings under CGST/SGST Act from the premises.

Also Read: Do You Know About GST Refunds?

What is Arrest?

An arrest is using legal authority to deprive a person of his or her freedom of movement.

When can a person be arrested under Goods and services laws?

Arrest under the GST laws can be done if the Commissioner of CGST/SGST believes a person commit an offence. This offence is under Section 132 of the GST Act. Such offences are:
– if he has committed specified offences (not any offence) and
– The tax amount is exceeding rupees 100 lakhs.

Specified offences are:

– A taxable person supplies any goods/services without any invoice or issues a false invoice.
– He issues any invoice or bill without supply of goods/services in violation of the provisions of GST.
– He collects any goods and services but does not submit it to the government within 3 months.
– Even if he collects any goods and services in contravention of provisions, he still has to deposit it to the government within 3 months. In addition, failure to do so will be an offense under GST
– Falsifies documents to evade payment of tax.
– Obstructs or prevents any officer in the discharge of his duties
– Tampers with or destroys any material evidence or documents
– He has already been convicted earlier under Section 132 i.e., this is his second offence.

Tenure of Arrest for evading tax or wrongly claiming Input tax credit

GST Amount


Up to Rs. 50 lacs

Jail term of 1 years + Penalty

Rs. 50 lacs – Rs. 1 crore

Jail term of 3 years + Penalty

Above Rs. 1 crore

Jail term of 5 years + Penalty

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