Purpose:

• To ensure compliance with GST regulations by verifying the accuracy of information on goods being transported (description, value, tax liability).
• To deter tax evasion and other GST-related offenses.

Key Provisions:

• Goods Threshold:The government specifies a minimum value threshold for goods (currently ₹50,000) beyond which inspection provisions apply.
• Required Documents:If the goods’ value exceeds the threshold, the person in charge of the conveyance (driver, transporter, etc.) must carry:
  • E-way bill (EWB):Generated online on the GST portal, containing details about the goods, their value, tax liability, and movement.
  • Bill of supply or delivery challan:Supporting documents providing further information about the transaction.
  • Prescribed devices (if applicable):As mandated by the government for specific goods or routes.

Inspection Process:

• Interception:A “proper officer” (authorized GST official) can stop any conveyance carrying goods above the value threshold at any location.
• Document Verification:The officer may request to see the required documents (EWB, bill of supply, etc.) and devices for validation.
• Physical Inspection:If discrepancies are found or further verification is needed, the officer may order a physical inspection of the goods and the conveyance. This must be done at a designated place within 24 hours of the order.
• Detention:If there’s reasonable suspicion of tax evasion or non-compliance, the officer can detain the goods and conveyance for up to 30 minutes. This period can be extended with due authorization.
• Reporting:The officer must prepare detailed reports of the inspection and any actions taken:
  • Part A of Form GST EWB-03 uploaded to the GST portal within 24 hours after the inspection begins.
  • Part B of Form GST EWB-03 uploaded within 3 days after the inspection is completed.
  • Form GST MOV-04 served to the person in charge of the goods and conveyance, summarizing the inspection findings.

Compliance and Penalties:

• The person in charge of the conveyance must cooperate with the proper officer during the inspection process.
• Failing to carry the required documents or devices, obstructing the inspection, or providing false information can attract penalties.
• The specific penalties depend on the nature and severity of the violation.

EXAMPLE

Section 67 of the CGST Act:

• Empowers authorized officers to intercept and inspect goods in movement anywhere in India.
• Aims to prevent the evasion of GST by ensuring that goods are being transported with proper documentation and that the declared value and description of the goods are accurate.

Inspection Process:

1. :The authorized officer may stop any vehicle carrying goods for inspection. They must identify themselves and show their identity card.
2. The officer will ask for the following documents:
   • E-way bill or delivery challan
   • Tax invoice or bill of supply
   • Other relevant documents, such as permits or licenses
3. Physical Verification:The officer may physically examine the goods to verify their description, quantity, and value.
4. Further Action:If any discrepancies are found, the officer may:
   • Seize the goods
   • Impose a penalty
   • Detain the goods for further investigation

Specific State Rules:

Each state in India has its own rules and procedures for inspections under Section 67. These rules may specify:

• The documents that must be carried by the transporter
• The powers of the authorized officers
• The procedures for seizing goods and imposing penalties

Recommendation:

To get specific information about the inspection process in your state, you should consult the website of the Commercial Taxes Department of your state government. You can also find relevant information on the website of the Central Board of Indirect Taxes and Customs (CBIC).

                                                FAQ  QUESTION

Q: Who can authorize an inspection of goods in movement under Section 67?

• Only an officer of Central GST (CGST) or State GST (SGST) of the rank of Joint Commissioner or above can authorize such an inspection.

Q: Under what circumstances can an inspection be authorized?

• The officer must have reason to believe that:
  • Taxable transactions have been suppressed.
  • Goods liable to confiscation are present.
  • Documents or things relevant to GST proceedings are hidden.
  • Accounts or goods are kept in a way that facilitates tax evasion.

Q: Where can the inspection be conducted?

• The inspection can be carried out at:
  • Places of business of taxable persons.
  • Premises of transporters, warehouse owners, or godown operators.
  • Any other place where the officer suspects goods or documents are concealed.

Q: What powers do the officers have during the inspection?

• They can:
  • Examine goods and documents.
  • Take copies of documents or seize them for further examination.
  • Seal or break open doors, containers, or electronic devices if access is denied.
  • Question any person present regarding the goods or documents.

Q: What if the goods cannot be seized?

• The officer can issue an order prohibiting the owner or custodian from removing, using, or dealing with the goods without permission.

Q: How long can the documents be retained?

• Documents can be retained only for as long as necessary for examination and any inquiries or proceedings under the Act.

Q: What are my rights if my goods are being inspected?

• You have the right to:
  • Be informed of the reasons for the inspection.
  • Be present during the inspection.
  • Seek clarification or provide explanations.
  • Obtain a copy of the inspection report.

CASE LAWS

Several case laws have interpreted and applied Section 67 of the GST Act, 2017, which deals with the power of inspection, search, and seizure of goods in movement. Here are some key cases:

1. M/s. High Ground Enterprises Ltd. Vs. UOI (2020):

• This case involved the seizure of documents by GST authorities during an inspection. The High Court held that seized documents not relied upon for issuing notices must be returned within 30 days of the notice issuance.

2. Harshvadan Rajnikant Trivedi Vs. UOI (2020):

• Similar to the above case, the court reiterated the 30-day deadline for returning unused seized documents.

3. Manish Lalit Kumar Bavishi Vs. Additional Director General GST Authorities (2020):

• This case emphasized the availability of copies of seized documents to the person from whom they were taken, except in specific situations where it could hamper the investigation.

4. M/s. R.J. Exports Pvt. Ltd. Vs. Commissioner, C.G.S.T. & C.E. (2021):

• The court clarified that seizure of goods under Section 67(2) can be challenged if the proper officer doesn’t have valid reasons to believe tax evasion or concealed goods.

5. M/s. Vimal Steels India Pvt. Ltd. Vs. CCE, Panipat (2020):

• This case highlighted the importance of a proper authorization order for inspection under Section 67(1). Without a valid order, the inspection might be deemed illegal.