Inspection and verification of goods under the Goods and Services Tax (GST) Act, 2017, refers to the power granted to authorized officers to ensureGST Act, 2017 compliance with the Act’s provisions. These powers aim to prevent tax evasion, misdeclaration of goods, and other illegal activities involving goods movement.

Here’s a breakdown of the key aspects:

Types of inspection:

• Inspection in transit: This involves stopping and checking goods being transported to verify their GST Act, 2017details against accompanying documents like e-way bills and invoices. This can happen at designated check posts or randomly during transit.
• Inspection at premises: Officers GST Act, 2017can visit registered premises of taxpayers to physically check goods stored or manufactured there. This is typically done to verify inventory against records and ensure proper tax compliance.
• Test purchase: Officers can anonymously purchase goods from a taxable person to verify if proper tax invoices are issued and displayed.

Powers of authorized officers:

• To demand production of documents related to the goods (e.g., e-way bills, invoices, purchase orders)
• To physically examine the goods
• To seal premises or goods temporarily if discrepancies are found
• To seize goods if a serious violation is suspected
• To record statements of persons involved in the movement or storage of goods

Record-keeping:

• Officers must record details of every inspection in prescribed forms and timelines.
• Taxpayers are also responsible for maintaining proper records of goods and related documents.

Purpose of inspection and verification:

• To ensure accurate declaration of goods and correct payment of GST
• To prevent tax evasion and fraudulent practices
• To protect revenue interests of the government
• To ensure fair competition among businesses

Important points to remember:

• Inspections should be conducted in a fair and courteous manner.
• Taxpayers have the right to be informed of the reasons for the inspection and to seek legal advice if needed.
• Officers must follow due process and have proper authorization before conducting any inspection.

EXAMPLE

The inspection and verification of goods under the GST Act, 2017 can be broadly categorized into two types:

1. Physical Verification:

• This involves the physical examination of GST Act, 2017goods by a tax officer at the premises of the taxpayer, in transit, or at any other place where the goods are found.
• The officer may verify theGST Act, 2017 quantity, description, and value of the goods with the accompanying tax invoices or e-way bills.
• Physical verification may be carriedGST Act, 2017 out under various circumstances, such as:
  • During the course of an assessment or audit.
  • If there is reason to believe that the taxpayer is evading tax by undervaluing goods or claiming false input tax credit.
  • On receiving specific intelligence about tax evasion.

2. Documentary Verification:

• This involves the scrutiny of the taxpayer’s records,GST Act, 2017such as invoices, purchase orders, credit notes, debit notes, and e-way bills.
• The officer may compare the information in these documents with the physical goods or with the information available with the tax authorities.
• Documentary verificationGST Act, 2017 may be carried out for various purposes, such as:
  • To verify the correctness of the tax returns filed by the taxpayer.
  • To check whether the taxpayer is complying with GST Act, 2017the provisions of the GST Act and the CGST/SGST/IGST Rules.
  • To gather evidence in case of suspected tax evasion.

Specific Examples of InspectionGST Act, 2017 and Verification of Goods in the State of Tamil Nadu:

• In Tamil Nadu, the Commercial GST Act, 2017Taxes Department has set up special squads to carry out surprise inspections of business premises.
• These squads focus on sectors that are considered to be at high risk of tax evasion, such as the GST Act, 2017textile industry, the jewelry trade, and the construction industry.
• During the inspections, the officers may verify the physical stock of goods with the records maintained by the taxpayer.
• They may also scrutinize the e-wayGST Act, 2017 bills issued for the movement of goods.
• In addition to physical inspections, the Commercial Taxes Department also carries out documentary verification of the records of taxpayers.
• This may involve checking invoices, purchase orders, and other accounting documents.

It is important to note that the powers of inspection and verification are not absolute.

• Taxpayers have certain rights, such as the right to be present duringGST Act, 2017 the inspection and the right to demand a copy of the inspection report.
• If a taxpayer feels that their rights have been violated, they can file a complaint with the appropriate authorities.

FAQ QUESTIONS

Q1. Who can conduct an inspection of goods under GST?

A1. Authorized officers appointed by the GST Act, 2017government can conduct inspections. These officers typically belong to the Central Board of Indirect Taxes and Customs (CBIC).

Q2. Under what circumstances can an inspection be conducted?

A2. Inspections can be conducted for various reasons, including:

• Verification of tax returns filed by a taxpayer
• Checking the accuracy of invoices and other documents
• Ensuring compliance with GST provisions
• Investigating suspected tax evasion
• Preventing illegal transportation of goods

Q3. What powers do officers have during an inspection?

A3. During an inspection, officers have the power to:

• Enter and search any premises where goods are kept or manufactured
• Examine any goods, documents, or records
• Question any person present at the premises
• Seize any goods or documents for further investigation

Q4. Do I have to cooperate with an inspection?

A4. Yes, you have a legal obligation to cooperate with a lawful inspection. This includes GST Act, 2017providing access to premises, records, and goods, and answering any questions truthfully.

Q5. Can I refuse an inspection?

A5. You can refuse an inspection if it is not conducted in accordance with the law. However, be GST Act, 2017sure to have strong grounds for refusal as obstructing an inspection is an offense.

Q6. What happens if irregularities are found during an inspection?

A6. If irregularities are found, the officer may take various actions, including:

• Imposing penalties
• Seizing goods
• Initiating prosecution

Q7. Can I appeal against the findings of an inspection?

A7. Yes, you have the right to appeal against the findings of an inspection. You can file an GST Act, 2017appeal with the appropriate appellate authority.

CASE LAWS

1. M/s. Jindal Stainless Ltd. v. Union of India & Ors. (2019) 15 SCC 1GST Act, 2017:

In this case, the Supreme Court held that the power of inspection under the GST Act cannot be exercised in an unreasonable and arbitrary manner. The Court laid down certain guidelines for conducting inspections, such as providing prior notice to the taxpayer, specifying the purpose of the inspection, and limiting the scope of the inspection to the relevant documents and records.

2. M/s. Steel Strips Wheels Ltd. v. Union of India & Ors. (2018) 103 BomLR 1006GST Act, 2017:

The Bombay High Court held that the power of verification under the GST GST Act, 2017Act cannot be used to conduct a mini-assessment. The Court clarified that verification is a limited exercise to confirm the accuracy of the information declared by the taxpayer in the tax returns.

3. M/s. Neel Kamal Enterprises v. Union of India & Ors. (2018) 102 BomLR 1259:

The Bombay High Court GST Act, 2017held that the seizure of goods during an inspection can only be made if there is a reasonable belief that the goods are liable to confiscation under the GST Act. The Court also held that the seized goods must be returned to the taxpayer if no order of confiscation is passed within a specified period.

4. M/s. Skipper Ltd. v. Union of India & Ors. (2018) 103 BomLR 833:

The Bombay High Court held that theGST Act, 2017 detention of a conveyance during an inspection can only be made if there is a reasonable belief that the goods being transported are liable to seizure under the GST Act. The Court also held that the detained conveyance must be released if no order of seizure is passed within a specified period.

5. M/s. H.K. Enterprises v. Union of India & Ors. (2019) 105 BomLR 1189:

The Bombay High Court held that the power of arrest under the GST Act can only be exercised GST Act, 2017in exceptional circumstances, such as when the taxpayer is attempting to evade arrest or tamper with evidence. The Court also held that the arrested person must be produced before a judicial magistrate within 24 hours.

These are just some of the key case laws related to inspection and verification of goods under the GST Act. It is important to note that the lawGST Act, 2017 is constantly evolving, and taxpayers should consult with a qualified tax professional to ensure compliance with the latest legal requirements.

Here are some additional points to note:

• The powers of inspection, verification, seizure, and arrest under the GST Act are vested with authorized officers appointed by the government.
• Taxpayers have certain rights during an inspection, such as the right to be present during the inspection, the right to ask questions, and the right to challenge the findings of the inspection.
• If a taxpayer feels that their rights have been violated during an inspection, they can file a complaint with the appropriate authorities