Table of Contents
- Gst Issues At The Time Of Inspection:
- Gst Officers May Asked For An Details Explanation Points,
- What Happened Next After Above Steps ?
- Inspection Of The Goods
- What's The Distinction Between A Search & inspection?
- Seizure Procedures
- How Long Will The Officer Keep The Books And Documents?
- Release Goods
- Penalty Repayment
- Penalty Accrual
- What Happens After seizure?
- Is The Code Of Criminal Procedure Applicable In These Situations?
- Other Ways To Inspect/check
- Arrest Made Under The Gst
- Gst officer Will Give "reasonable Time" To Explain The gst mismatch Between Returns
- No Auto Cancellation Of Gst Registration Of Buyer For Fraud Committed By Selling
GST issues at the time of inspection:
GST officers found various issues at the time of inspection:
- The GST Registration Certificate number was not displayed at a prominent place inside the office premises.
- There was a discrepancy between the stock register entry and the actual quantity of stock.
- The Aadhar number was not updated on the GST portal.
GST officers may asked for an details explanation points,
1. GST stock registration was out of date, resulting in a present discrepancy.
2. Company has followed a procedure in which they update stock in the stock register as soon as the invoice is received, even if the goods are in the godown of the transporter.
3. They also had the model of selling things to clients before they arrived at their workplace. Even before the products arrive at the customer's workplace, the commodities are transferred to them. The vendor creates an invoice in this procedure, but the corporation does not update the stock because neither the invoice nor the items have been received. The corporation, on the other hand, adjusts the stock, decreasing the quantity to the amount specified in the invoice they created.
Hearing this, the officers suspected tax evasion and began preparing a Summary Assessment under section 64 of the CGST Act, as well as a demand.
What happened next after above steps ?
The officer was convinced that the scenario was not a case of tax avoidance due to the combined effect of our initiative and actions, Mr. XXX's commitments, and the proof and correction of the errors.
Mr. XXX was instructed by an officer that his organisation needed to adjust its working methods and comprehend the necessary GST protocols. He must comprehend the significance of keeping a stock register and keeping it accurate and up to date.
After reviewing all of the documentation, the officer agreed to take no action, but warned Mr. XXX that the situation would not be the same next time. In the future, a circumstance like this would result in departmental penalties and a slew of punitive actions.
Officer was correct, and it was a good day for Mr. XXX because, in most cases, a situation like this would result in the seizure of books and documents, as well as demands for tax, penalty, and interest, among other issues.
Inspection of the Goods
In the event that the transporter fails to produce the documentation requested by the inspector or if there is a mismatch, the officer can record a statement from the person in charge of the conveyance in FORM GST MOV-01 to start the inspection procedure.
- Prepare and submit a report in Part A of FORM GST EWB-03 to the common portal. – Within the next 24 hours.
- Within 3 working days, conclude the inspection operations and write a report in Form GST MOV04, as well as complete Part B of the GST EWB-03 on the E-way Bill Portal.
- If the inspector is unable to complete the inspection within three days, he or she must request an extension on Form GST MOV03.
Make a search for GST.
What's the distinction between a search & inspection?
Search
The term'search' refers to an attempt to find something. In tax/legal jargon, a search is an action taken by a government official (either a tax officer or a police officer, depending on the situation) to go through or closely inspect a place, person, object, or other object in order to find anything hidden or to discover evidence of a crime. Only the proper and lawful authority of law can be used to conduct the search.
inspection
The act of examining anything, present predominantly, is referred to as 'inspection.' It is a gentler provision than search in tax/legal terms. It allows officers to enter any taxable person's place of business, as well as the place of business of anybody involved in the transportation of goods or who owns or manages a warehouse or godown.
Seizure procedures
The proper officer will issue a seizure order in the form GST INS-02.
What are powers of GST officer authorized to search under GST?
The officer authorised to search will have the authority to close the premises' door. If access is denied, he can also bust open any establishments' door. He can also break open any cupboard or box where commodities, books, documents, or other valuables are thought to be hidden.
What is happens if it is not possible to seize the goods under the gst?
If it is not possible to take the commodities, the proper officer will instruct the owner not to remove them without the officer's authorization. The officer will issue a prohibition order in the form GST INS-03.
How long will the officer keep the books and documents?
The books and papers shall be kept by the officer for as long as they are required for examination and investigation. Other books that are unrelated to the notice will be returned within 30 days of the notice's date.
The seized goods can be released on a provisional basis in exchange for a bond in FORM GST INS-04 for the value of the goods.
Additionally, the owner must provide security in the form of a bank guarantee for the amount owed (applicable tax, interest and penalty payable). The security will be encashed and applied against the amount payable if the owner fails to provide the conditionally released goods at the scheduled date and location.
Release Goods
If there are no discrepancies after the inspection and fulfilment of the following stages, the inspector can issue a release order in Form GST MOV05. If the inspector believes the items should be held following inspection, he or she can issue a detention order in Form GST MOV06 and a notice in Form GST MOV07, together with the tax and penalty that must be paid. The person in charge of the conveyance will be served with GST MOV06 and GST MOV07.
Penalty Repayment
The owner of the goods or any person authorised by can pay the tax and penalty after receiving a notice in Form GST MOV07. If the tax and penalty are paid, the Officer will issue an order to release the goods in Form GST MOV05.
Any demand for tax, penalty, fine, or other charges will be recorded in the person's electronic responsibility ledger. If an unregistered person does not have access to an electronic liability ledger, the proper official will generate a temporary ID on the common portal and the liability will be created. By debiting the concerned person's electronic cash ledger, the payments made towards such tax, penalty, or fine demands, as well as other costs, can be credited.
Penalty Accrual
If the owner of the goods does not come forward to pay the tax and penalty, the amount of tax and penalty must be added in FORM GST MOV-09. The authorised official must also upload the tax demand and penalty to the common portal, where they will be added to the electronic liability register.
What happens after seizure?
- Only in the presence of an officer can the individual whose documents have been seized make copies.
- The goods will be returned if no notice is issued within six months (extendable for another six months) of its seizure.
- Govt has the authority to create a list of hazardous or perishable products that can be disposed of as soon as they are seized.
- The officer will properly list all seized goods.
Is the Code of Criminal Procedure applicable in these situations?
Search and seizure will be governed by the rules of the Code of Criminal Procedure.
Other ways to inspect/check
- A taxable person's goods and/or services can be purchased by the Commissioner or an authorised officer.
- This will be done to make sure that tax invoices are issued appropriately, that they are kept up to date, and that the GST amount is clearly indicated. When the products are returned, the taxable person must repay the sum and the sales invoice must be cancelled.
Arrest made under the GST
- The offender can be arrested under GST if the Commissioner believes he or she has committed an infraction under section 132. To learn more about GST arrests, read our article. Interception and inspection of items in transit are also regulated by the GST.
GST Officer will Give "Reasonable Time" to explain the GST Mismatch between returns
Details about Guidance on GST recovery Preceding CGST Act
- The government has stated that before initiating recovery action for short payment or non-payment of taxes, GST officers will give firms "reasonable time" to explain any discrepancies between GSTR 1 and GSTR 3B.
- But, if the said businessman fails to respond within the time limit or fails to explain to the satisfaction of the Officer the reasons for the short payment or non-payment of tax, then proceedings under Section 79 of the CGST Act 2017 would be initiated.
- We presume that this Instruction was issued to officers in response to concerns expressed by the business community, as u/s 75 of the CGST Act was amended on January 1st, allowing GST officers to initiate direct recovery action where the monthly payment of GSTR 1 Return shows more sales than GSTR-3B.
No Auto Cancellation of GST Registration of Buyer for fraud committed by selling
Buyer’s registration cannot be cancelled for fraud committed by seller : Honorable Orissa High Court rules that “for fraud committed by the selling, which resulted in cancellation of a selling GST registration, It is to be noted that GST registration cannot be an automatic cancellation of the registration of the purchasing dealer.
Honorable High Court noted, to attribute fraud to the buyer, the onus is on GST Dept to show that somehow the buyer & seller acted in connivance to defraud the revenue and with a high threshold of transactions.
This Honorable Orissa High Court decision can be cited in scenarios where the authorities are initiating proceedings against bonafide ‘buyers’ if ‘sellers’ are found non-compliant.
Case Laws can be refer from above Honorable Orissa High Court:
- Apex Court in Commissioner of Trade and Taxes Delhi Vs Arise India Limited
- Madras HC in M/S. D.Y. Beathel Enterprises versus The State Tax Officer (Data Cell), (Investigation wing)
