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 MGL. 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 warehouse or godown.
Q 3. Who can order for carrying out “Inspection” and under
what circumstances?
Ans. As per Section 60 of MGL, Inspection can be carried out
by an officer of CGST/SGST only upon a written authorization given by an
officer of the rank of Joint Commissioner or above. A Joint Commissioner or an
officer higher in rank can give such authorization only if he has reasons to
believe that the person concerned has done one of the following:
i. suppressed any transaction of supply;
ii. suppressed stock of goods in hand;
iii. claimed excess input tax credit;
iv. contravened any provision of the CGST/SGST Act to evade
tax;
v. a transporter or warehouse owner has kept goods which
have escaped payment of tax or has kept his accounts or goods in a manner that is
likely to cause evasion of tax.
Q 4. 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
to carry out inspection of any of the following:
i. any place of business of a taxable person;
ii. any place of business of a person engaged in the business
of transporting goods whether or not he is a registered taxable person;
iii. any place of business of an owner or an operator of a
warehouse or godown.
Q 5. Who can order for Search and Seizure under the
provisions of MGL?
Ans. An officer of the rank of Joint Commissioner or above can
authorize an officer in writing to carry out search and seize goods, documents,
books or things. Such authorization can be given only where the Joint
Commissioner has reasons to believe that any goods liable to confiscation or
any documents or books or things relevant for any proceedings are hidden in any
place.
Q 6. What is meant by ‘reasons to believe’?
Ans. Reason to believe is to have knowledge of facts which,
although not amounting to direct knowledge, would cause a reasonable person,
knowing the same facts, to reasonably conclude the same thing. As per Section
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 7. 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 8. What is a Search Warrant and what are its contents?
Ans. The written authority to conduct search is generally called
search warrant. The competent authority to issue search warrant is an officer
of the rank of Joint Commissioner or above. A search warrant must indicate the
existence of a reasonable belief leading to the search. Search Warrant should contain
the following details:
i. the violation under the Act,
ii. the premise to be searched,
iii. the name and designation of the person authorized for
search,
iv. the name of the issuing officer with full designation
along with his round seal,
v. date and place of issue,
vi. serial number of the search warrant,
vii. period of validity i.e. a day or two days etc.
Q 9. When does goods become liable to confiscation under the
provisions of MGL?
Ans. As per section 70 of Model GST Law, goods become liable
to confiscation when any person does the following:
(i) supplies any goods in contravention of any of the provisions
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 10. 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 MGL) 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 documents are suspected to be concealed. He can also seal the premises
if access to it denied.
Q 11. What is the procedure for conducting search?
Ans. Section 60(8) of MGL prescribes that searches must be
carried out in accordance with the provisions of Code of Criminal Procedure,
1973. Section 100 of the Code of Criminal Procedure describes the procedure for
search.
Q 12. What are the basic requirements to be observed during
Search operations?
Ans. The following principles should be observed during Search:
• No search of premises should be carried out without a
valid search warrant issued by the proper officer.
• There should invariably be a lady officer accompanying the
search team to residence.
• The officers before starting the search should disclose
their identity by showing their identity cards to the person in-charge of the
premises.
• The search warrant should be executed before the start of
the search by showing the same to the person in-charge of the premises 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
recovered and seized/detained should be prepared and annexed to the
Panchnama/Mahazar. The Panchnama / Mahazar and the list of goods/ documents
seized/detained should invariably be signed by the witnesses, the in-charge/ owner
of the premises before whom the search is conducted and also by the officer(s)
duly authorized for conducting the search.
• After the search is over, the search warrant duly executed
should be returned in original to the issuing officer with a report regarding
the outcome of the search. The names of the officers who participated in the
search may also be written on the reverse of the search warrant.
• The issuing authority of search warrant should maintain
register of records of search warrant issued and returned and used search
warrants should be kept in records.
• A copy of the Panchnama / Mahazar along with its annexure
should be given to the person incharge/ owner of the premises being searched under
acknowledgement.
Q 13. Can a CGST/SGST officer access business premises under
any other circumstances?
Ans. Yes. Access can also be obtained in terms of Section 64
of MGL. 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
50 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 Additional/Joint 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 14. When is search said to be illegal? Is evidence collected
in the course of an illegal search admissible in trial proceedings?
Ans. Search without a valid search warrant (i.e. issued by
other than a competent authority or without a search warrant) results in an
illegal search without authority of law. However, due to this reason, the
accused cannot get benefit. Accordingly, evidence collected even during an illegal
search and seizure is considered admissible in trial and adjudication
proceedings.
Q 15. What is meant by the term ‘Seizure’?
Ans. The term ‘seizure’ has not been specifically defined in
the Model GST Law. In Law Lexicon Dictionary, ‘seizure’ is defined as the act
of taking possession of property by an officer under legal process. It
generally implies taking possession forcibly contrary to the wishes of the
owner of the property or who has the possession and who was unwilling to part
with the possession.
Q 16. Does MGL have any power of detention of goods and
conveyances?
Ans. Yes, under Section 69 of MGL, an officer has power to detain
goods along with the conveyance (like a truck or other types of vehicle)
transporting the goods. This can be done for such goods which are being
transported or are stored in transit in violation of the provisions of MGL.
Goods which are stored or are kept in stock but not accounted for can also be
detained. Such goods and conveyance can be released after payment of applicable
tax or upon furnishing security of equivalent amount.
Q 17. What is the distinction in law between ‘Seizure’ and
‘Detention’?
Ans. Denial of access 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 18. What are the safeguards provided in MGL in respect of
Search or Seizure?
Ans. Certain safeguards are provided in section 60 of Model
CGST/SGST Law 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 sixty
days of its seizure, goods shall be returned to the person from whose
possession it was seized. This period of sixty days can be extended on
justified grounds up to a maximum period of six months;
iv. An inventory of seized goods shall be made by the
seizing officer;
v. Certain categories of goods to be specified under Model
GST Rules (such as perishable, hazardous etc.) can be disposed of immediately
after seizure;
vi. Provisions of Code of Criminal Procedure 1973 relating
to search and seizure shall apply.
However, one important modification is in relation to
sub-section (5) of section 165 of Code of Criminal Procedure – instead of
sending copies of any record made in course of search to the nearest Magistrate
empowered to take cognizance of the offence, it has to be sent to the Principal
Commissioner/ Commissioner of CGST/ Commissioner of SGST .
Q 19. Is there any special document required to be carried
during transport of taxable goods?
Ans. Under section 61 of MGL, a person in charge of a transport
vehicle may be required to carry a prescribed document in respect of such
consignments whose value is more than fifty thousand rupees.
Q 20. What is meant by the term “arrest”?
Ans. The term ‘arrest’ has not been defined in the Model GST
Law. 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 21. When can the proper officer authorize ‘arrest’ of any
person under MGL?
Ans. The Commissioner of CGST/SGST can authorize a CGST/SGST
officer to arrest a person if he has reasons to believe that the person has
committed an offence attracting a punishment prescribed under section 73
(1)(i), 73 (1)(ii) and 73 (2) of the CGST/SGST Act. This essentially means that
a person can be arrested only where the tax evasion is more than fifty lakhs
rupees or where a person has earlier been convicted for an offence under
section 73 of the Model CGST/SGST Act.
Q 22. What are the safeguards provided under MGL for a
person who is placed under arrest?
Ans. There are certain safeguards provided under section 62
for a person who is placed under arrest. These are:
i. 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;
ii. 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
incharge of a police station under section 436 of the Code of Criminal
Procedure, 1973;
iii. All arrest must be in accordance with the provisions of
the Code of Criminal Procedure, 1973 relating to arrest.
Q 23. 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
provision to be taken note of is section 57 of Cr.P.C., 1973 which provides
that a person arrested without warrant shall not be detained for a longer
period than, under the circumstances of the case, is reasonable but this shall
not exceed twenty four hours (excluding the journey time from place of arrest
to the Magistrate’s court). Within this period, as provided under section 56 of
Cr.P.C., the person making the arrest shall send the person arrested without
warrant before a Magistrate having jurisdiction in the case.
In a landmark judgment in the case of D.K. Basu v. State of
West Bengal reported in 1997 (1) SCC 416, the Hon’ble Supreme Court has laid
down specific guidelines required to be followed while making arrests. While
this is in relation to police, it needs to be followed by all departments
having power of arrest. These are as under:
i. The police personnel carrying out the arrest and handling
the interrogation of the arrestee should bear 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 himself such a friend or a relative
of the arrestee.
iv. The time, place of arrest and venue of custody of an
arrestee must be notified by the police where the next friend or relative of
the arrestee lives outside the district or town through the Legal Aid
Organization in the District and the police station of the area concerned
telegraphically within a period of 8 to 12 hours after the arrest.
v. An entry must be made in the diary at the place of
detention regarding the arrest of the person which shall also disclose the name
of the next friend of the person who has been informed of the arrest and the
names and particulars of the police officials in whose custody the arrestee is.
vi. The arrestee should, where he so requests, be also
examined at the time of his arrest and major and minor injuries, if any present
on his/her body, must be recorded at that time. The ‘Inspection Memo’ must be
signed both by the arrestee and the police officer effecting the arrest and its
copy provided to 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 24. What are the broad guidelines for arrest followed in
CBEC?
Ans. Decision to arrest needs to be taken on case-tocase basis
considering various factors, such as, nature and gravity of offence, quantum of
duty evaded or credit wrongfully availed, nature and quality of evidence, possibility
of evidences being tampered with or witnesses being influenced, cooperation
with the investigation, etc. Power to arrest has to be exercised after careful consideration
of the facts of the case which may include:
i. to ensure proper investigation of the offence;
ii. to prevent such person from absconding;
iii. cases involving organized smuggling of goods or evasion
of customs duty by way of concealment;
iv. master minds or key operators effecting proxy/ benami
imports/exports in the name of dummy or non-existent persons/IECs, etc;
v. where the intent to evade duty is evident and element of
mensrea/guilty mind is palpable;
vi. prevention of the possibility of tampering with evidence;
vii. intimidating or influencing witnesses; and
viii. large amounts of evasion of duty or service tax at
least exceeding one crore rupees.
Q 25. What is a cognizable offence?
Ans. Generally, 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.
Q 26. 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.
Q 27. What are cognizable and non-cognizable offences under
MGL?
Ans. In section 73 (4) of MGL, it is provided that the offences
relating to taxable goods and /or services where the amount of tax evaded
exceeds Rs. 2.5 crores, shall be cognizable and non-bailable. Other offences
under the act are non-cognizable and bailable.
Q 28. When can the proper officer issue summons under MGL?
Ans. Section 63 of MGL gives powers to a duly authorized CGST/SGST
officer to call upon a person by issuing a summon to present himself before the
officer issuing the summon to either give evidence or produce a document or any
other thing in any inquiry which an officer is making. A summons to produce
documents or other things may be for the production of certain specified
documents or things or for the production of all documents or things of a
certain description in the possession or under the control of the person
summoned.
Q 29. What are the responsibilities of the person so summoned?
Ans. A person who is issued summon is legally bound to
attend either in person 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 30. What can be the consequences of nonappearance to summons?
A. 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 summon, he is liable
to a penalty upto twenty five thousand rupees under section 66(3)(d) of MGL.
Q 31. What are the guidelines for issue of summons?
Ans. The Central Board of Excise and Customs (CBEC) in the
Department of Revenue, Ministry of Finance has issued guidelines from time to
time to ensure that summons provisions are not misused in the field. Some of
the important highlights of these guidelines are given below:
i. summons are to be issued as a last resort where assesses
are not co-operating and this section should not be used for the top
management;
ii. the language of the summons should not be harsh and
legal which causes unnecessary mental stress and embarrassment to the receiver;
iii. summons by Superintendents should be issued after
obtaining prior written permission from an officer not below the rank of
Assistant Commissioner with the reasons for issuance of summons to be recorded
in writing;
iv. where for operational reasons, it is not possible to
obtain such prior 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 32. 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 is
not justified. The power to summon can be exercised only when there is an
inquiry being undertaken and the attendance of the person is considered
necessary.
(ii) Normally, summons should not be issued repeatedly. As
far as practicable, the statement of the accused or witness should be recorded
in minimum number of appearances.
(iii) Respect the time of appearance given in the summons.
No person should be made to wait for long hours before his statement is
recorded except when it has been decided very consciously as a matter of
strategy.
(iv) Preferably, statements should be recorded during office
hours; however an exception could be made regarding time and place of recording
statement having regard to the facts in the case.
Q 33. Are there any class of officers who are required to
assist CGST/SGST officers?
Ans. Under section 65 of MGL, the following officers have been
empowered and are required to assist CGST/SGST officers in the execution of
MGL. The categories specified in MGL are as follows:
i. Police;
ii. Customs;
iii. Officers of State/Central Government engaged in
collection of GST;
iv. Officers of State/Central Government engaged in collection
of land revenue;
v. All village officers;
vi. Any other class of officers as may be notified by the
Central/State Government.