Power of Inspection, Search and Seizure

• These powers lie with officers now below the rank of Joint Commissioner (JC)
• There should be a reason to believe of either suppressing supply, inflating input or transporting or warehousing a good without payment of taxes leading to inspection
• During the inspection or otherwise, where the proper officer has reasons to believe that a good is liable for confiscation may conduct search and seizure based upon the reasons recorded in writing and also after taking written approval from an officer of the rank of JC or above.
• If seizure is not possible, the owner may be made the custodian of goods and a bar on removal may be put, subject to approval from the proper officer
• Documents may also be retained for verification, for as long as necessary for such examination

• Documents and books on which reliance is NOT placed for issue of notice shall be returned within 30 days of issue of notice
• The officer authorised to conduct search have the powers to seal, break open the doors, safe, locks and almirah, electronic devices etc., in suspicion of concealment.
• The person from whose custody the documents are seized is allowed to take copies and extracts thereof.
• Seized goods may be released provisionally on furnishing of bonds and on payment of tax, interest or penalty as the case may be.
• Where no notice is issued within 6 months of seizure, the seized materials shall be released to the person from whom it was originally seized. However, this period of 6 months may be extended to a further period of 6 months by the proper officer.
• Good of perishable or hazardous nature, as notified, my be disposed of as per the notification of the government.
• The proper officer shall prepare an inventory of all seized material
• Code of Criminal Procedure, 1973 relating to search and seizure shall apply and the Commissioner shall have the powers of a Magistrate in this regards
• The officer authorised, may also purchase a goods/services to check the authenticity of the invoices and transaction before or during these proceedings and the same will have to be cancelled and the amount refunded to such officer on cancellation of such a transaction.

Inspection of Goods in Movement

(1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.

(2) The details of documents required to be carried shall be validated in such manner as may be prescribed.

(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.

Power to Arrest

Section 69 – Power to Arrest

• The commissioner, based upon the reasons to believe of an offence, may authorise an officer to arrest the person
• The officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours
• The procedure of Code of Civil Procedure, 1973, shall apply in such cases

Section 70 – Speaks about Power to summon persons to give evidence and produce documents

Section 71 – Speaks about Powers of access to business premises

Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful misstatement or suppression of facts. (Sec. 73)

• Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon
• Time limit for this is 3 years from the due date of filing of annual return of the year under consideration
• Notice under this section should be issued at least 3 months in advance before the end of the aforesaid due date
• Principle of natural justice shall be followed at this stage

• Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for reason of fraud or any wilful misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon”
• Time limit for this is 5 years from the due date of filing of annual return of the year under consideration
• Notice under this section should be issued at least 6 months in advance before the end of the aforesaid due date
• Principle of natural justice shall be followed at this stage
• Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for reason of fraud or any wilful misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon
• Time limit for this is 5 years from the due date of filing of annual return of the year under consideration
• Notice under this section should be issued at least 6 months in advance before the end of the aforesaid due date
• Principle of natural justice shall be followed at this stage

OFFENCES AND PENALTIES

Section – 122 –

A penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted or short deducted or deducted but not paid to the Government or tax not collected  or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher shall be imposed on the following things:

• Supply of goods and or services without issue of invoice
• Issue of Invoice without supply of goods and or services
• Collect tax but fails to pay to the government
• Collects tax in contravention of the provisions of this act
• Failure to deduct or collect taxes
• Wrong utilisation of input credits
• fraud, misstatement, tampering of goods
• Failure to furnish details or information
• Transportation of goods without the prescribed covering documents
• Other items as specified (Total 21 specified instances)

   

  Section – 123

  Penalty for failure to furnish Information Return

  If a person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish such return continues:

  Provided that the penalty imposed under this section shall not exceed five thousand rupees.

  Section – 124

  Penalty for failure to furnish Statistics

  A fine which may extend to ten thousand rupees and in case of a continuing offence to a further fine which may extend to one hundred rupees for each day after the first day during which the offence continues subject to a maximum limit of twenty-five thousand rupees

Section – 125 General Penalty

Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty-five thousand rupees

Section 126 – General disciplines related to penalty

(1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in the documentation which is easily rectifiable and made without fraudulent intent or gross negligence.

Explanation – For the purpose of this sub-section,––

(a) a breach shall be considered a ‘minor breach’ if the amount of tax involved is less than five thousand rupees;

(b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of the record.

COMPOUNDING OF OFFENCES

(1) Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case be, of such compounding amount in such manner as may be prescribed:

Provided that nothing contained in this section shall apply to—

(a) a person who has been allowed to compound once in respect of any of the offences

(b) a person who has been allowed to compound once in respect of any offence, other than those in clause (a), under this Act or under the provisions of any State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act or the Integrated Goods and Services Tax Act in respect of supplies of value exceeding one crore rupees;

(c) a person who has been accused of committing an offence under this Act which is also an offence under any other law for the time being in force;

(d) a person who has been convicted for an offence under this Act by a court;

(f) any other class of persons or offences as may be prescribed

Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law

Provided also that compounding shall be allowed only after making payment of all tax, interest and penalty involved in such offences.

(2) The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than ten thousand rupees or fifty per cent of the tax involved, whichever is higher, and the maximum amount not being less than thirty thousand rupees or one hundred and fifty per cent. of the tax, whichever is higher.

(3) On payment of such compounding amount as may be determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated.

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