What is Inspection and Search under GST
The details about Inspection and Search under GST are explained here
Inspection
The Indian GST is structured for efficient tax collection, reduction in corruption, easy inter-state movement of goods etc.
Keeping in mind the government’s anti-tax evasion scheme, GST also has strict provisions to inspect and search places of business for suspected tax evaders.
Inspection and Search under GST
‘Search’ involves an attempt to find something. Search, in tax/legal parlance, is an action of a government official (a tax officer or a police officer, depending on the case) to go and look through or examine carefully a place, person, object etc. in order to find something concealed or to discover evidence of a crime. The search can only be done under the proper and valid authority of law.
‘Inspection’ is the act of examining something, often closely. In tax/legal language, it is a softer provision than search. It enables 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/operator of a warehouse or godown.
Inspection under GST
If Joint Commissioner of SGST/CGST (or an officer of higher rank) “has reasons to believe” that –
In order to evade tax, any person has-
- Suppressed any transaction of supply
- Suppressed any transaction of stock in hand
- Claimed input tax credit in excess
- Violated of any of the provisions
- Any transporter or owner/operator of a warehouse has kept goods which have escaped tax payment or has kept accounts and/or goods in such a way as to evade tax
—-then he can authorize any other officer of CGST/SGST (in writing) to inspect places of businesses of:
- the taxable person or
- the transporter or
- owner/operator of warehouse
‘Reasons to believe’
Reason to believe is to have knowledge of facts (although not amounting to direct knowledge), which would cause any reasonable person, knowing the same facts, to reasonably conclude the same thing.
As per the Indian Penal Code, 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 is a determination based on intelligent examination and evaluation. It is different from a purely subjective consideration, i.e., an opinion. It is based on facts rather than an interpretation of facts.
‘Reasons to believe’ in writing, before issuing order for Inspection/Search/Seizure
GST revised Model Law does not mention recording the reasons to believe. In fact, Finance Act 2017 has amended Sec 132(1) & (1A) of Income Tax Act retrospectively stating, that reason to believe, shall not be disclosed to any person or any authority or the Appellate Tribunal.
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