Section 67 of the Goods and Services Tax (GST) Act, 2017 empowers certain officers with the authority to conduct inspections, searches, and seizures in specific situations related to potential tax evasion. Here’s a breakdown of the key points:

Who can exercise these powers?

• Proper Officer:An officer not below the rank of Joint Commissioner, designated by the Government.
• Authorized Officer:Any other officer of the Central Tax department, authorized in writing by the Proper Officer.

When can these powers be used?

• Suspicion of tax evasion:If the officer has reason to believe that a person:
  • is carrying goods exceeding a specified value without proper documents.
  • is engaged in transporting, warehousing, or owning goods that have escaped tax payment.
  • is keeping accounts or goods in a manner that could facilitate tax evasion GST Act 2017.

What powers do they have?

• Inspection:Access any place of business to examine books of accounts, documents, computers, and other relevant items GST Act 2017.
• Search:Conduct a search of the premises for evidence of tax evasion, including breaking open doors or receptacles if necessary (with certain limitations).
• Seizure:Seize goods, documents, or other things relevant to the investigation.

Important safeguards:

• Search Warrant:For conducting a search, a search warrant issued by the Joint Commissioner is generally required.
• Seizure Order :When seizing goods, the officer may serve an order prohibiting their removal or dealing with them without permission GST Act 2017.
• Time Limits:Seized goods should be returned within 6 months if no notice is issued within that period. Exceptions and extensions apply.
• Documentation:The officer must follow prescribed procedures and document the entire process GST Act 2017.

EXAMPLE

General Powers under Section 67:

• Inspection:Authorized officers can access any place of business of a registered person to inspect books, accounts, documents, computers, and other relevant items for audit, scrutiny, verification, and safeguarding revenue interests GST Act 2017.
• Search:If the officer has reason to believe tax evasion is occurring, they can search premises, break open doors or containers, and seize relevant documents or goods.
• Seizure:Officers can seize documents, books, or goods suspected of being linked to tax evasion. However, they must provide a receipt and return them within 30 days if not needed for proceedings.

Finding State-Specific Information:

To understand the specific application of Section 67 in your state, you can explore these resources:

• State-specific GST Act 2017:Many states have adopted their own GST Acts with slight variations from the central Act. You can find your state’s GST Act on the official website of the state’s commercial tax department.
• State GST Department Websites:Most state GST departments have dedicated sections on their websites explaining inspection, search, and seizure procedures under their respective Acts.
• ClearTax or GSTZen:These websites offer detailed explanations of Section 67 with state-specific nuances.

FAQ QUESTION

Q: What are the powers of officers under Section 67 of the GST Act?

• Inspection:Officers can visit any place of business of a registered person to inspect accounts, documents, computers, and other things relevant to GST compliance.
• Search:They can search any place where they suspect evidence of tax evasion, like unregistered businesses or concealed goods.
• Seizure:They can seize goods, documents, and other things believed to be related to tax evasion.

Q: Who can exercise these powers?

• Only officers authorized by the proper officer, not below the rank of Joint Commissioner, can exercise these powers.
• In some cases, they can delegate the authority to other officers in writing.

Q: When can these powers be used?

• When there is reason to believe that a person has evaded or attempted to evade tax.
• When necessary to safeguard the interest of revenue.
• When a person fails to comply with their obligations under the GST Act 2017.

Q: What are the safeguards for taxpayers?

• Officers must have a search warrant issued by a magistrate for most searches.
• They must follow specific procedures during inspection and seizure.
• Seized goods and documents must be returned within a specified time if no notice is issued.

Q: What are the consequences of non-compliance?

• Taxpayers who obstruct or resist these powers can be penalized.
• Goods and documents seized can be confiscated if tax evasion is proven.

CASE LAWS

Section 67 of the GST Act empowers officers to conduct inspections, searches, and seizures in specific situations related to suspected tax evasion. Here are some key case laws interpreting this section:

1. Requirement for “Reason to Believe”:

• High Ground Enterprises Ltd. Vs. UOI:The Bombay High Court held that officers cannot exercise powers under Section 67 unless they have “reason to believe” that a taxable person has evaded tax. Mere suspicion is insufficient.

2. Scope of “Place of Business”:

• Harshvadan Rajnikant Trivedi Vs. UOI:The Gujarat High Court clarified that “place of business” doesn’t solely refer to registered premises. It can encompass residences or other locations used for business activities.

3. Power to Break Open Premises:

• Manish Lalit Kumar Bavishi Vs. Additional Director General GST:The Gujarat High Court upheld the officer’s authority to break open premises under Section 67(4) if access is denied and “reason to believe” exists. However, due process must be followed.

4. Seizure and Release of Goods:

• Section 67(6):Goods seized can be released provisionally upon furnishing security or paying applicable tax, interest, and penalty.
• Section 67(7):Seized goods must be returned within 6 months (extendable by another 6 months with justification) if no notice is issued within 6 months.

5. Return of Seized Documents:

• Section 67(3):Documents not relied upon for issuing notices must be returned within 30 days of issuing such notices.
• M/s. V.K. Enterprises Vs. Commissioner of Central Tax:The Gujarat High Court directed authorities to provide copies of seized documents upon request, subject to certain conditions.
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