When Can Authority Inspect For Goods In Transit - Provisions & Rules

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Date: 22 Sep 2022


When Can Authorities Search Goods In Transit?

The goods in transit should be attended to with relevant documents, without which they will be detained and confiscated. 

Inspection of Goods in transit

An e-way bill must accompany any transportation of goods over Rs 50,000. The proper officer has the power to intercept goods in transit. The person in charge of a vehicle carrying goods exceeding Rs. 50,000 must carry the prescribed documents. On the interception, the authorised officer can inspect the documents and goods.  

What distinguishes a seizure from detention?

Detention is when the owner is denied access to the confiscated property due to a court order or notice. However, the owner of the items retains ownership and custody of the goods. It is issued when the goods are subject to confiscation. A seizure is when the department takes possession of the goods. The owner retains ownership. A seizure may be made only after determining the goods are subject to confiscation.

Confiscation

The final step after the evaluation is product confiscation. Following confiscation, ownership shifts from the original owner to the government authority, along with possession.

The provisions for review, search, seizure and arrest are included in every tax administration to protect the interests of actual taxpayers (because tax evaders gain an unfair advantage over honest taxpayers by dodging the tax) and to deter evasion.

Additionally, these clauses are necessary to protect the government's legitimate dues. These regulations, therefore, serve as a deterrent and level the playing field for legitimate taxpayers by preventing evasion.

It should be mentioned that to protect government revenue, the methods of examination, search, seizure and arrest are only used under extreme circumstances and as a last resort.

Penal provisions for seized goods

When someone transfers products violating the GST Act, the goods, relevant documentation, and the vehicle carrying them will be seized.

The merchandise will only be released if the required tax has been paid and all penal rules followed. There are two possible outcomes in this situation:

  1. If the product's owner steps forward, a 100% penalty (equivalent to the amount of tax) will be assessed.

  2. If the owner doesn't come forward, the owner will be responsible for paying any applicable taxes and a penalty equal to 50% of the value of the products, excluding any taxes that have already been paid.

What is the procedure for Seizure?

The appropriate authority will issue a seizure order in Form GST INS-02.

The door of the premises may be sealed by the officer who has been permitted to search. He may also break open any premise's door if entry is prohibited. Additionally, he can open any cabinet or box containing goods, books, documents, etc.

The appropriate officer will instruct the owner not to remove the commodities without the officer's prior consent if it is not practical to seize them. The officer will issue an order of ban in the form of GST INS-03.

Cases under which goods can be Confiscated

All supplies and means of transportation are seized if:

  1. With the intent to avoid paying tax, supplies or obtaining an item in violation of GST regulations

  2. The existence of the confiscated material can not be taken into account

  3. Supplies any commodity without registration (even if it is responsible for registration)

  4. Breaches tax evasion laws

  5. Transports the item via a conveyance or vehicle in violation of GST

The burden of evidence rests with the owner; if they can show that the car was used without evidence, the car won't be seized. The fine would be imposed in each of the circumstances mentioned above. The tax officer must give the option of paying a fee rather than confiscating the goods before doing so.

Imposing a Fine instead of Confiscating the goods

The minimum penalty will be 100% tax if the owner steps forward and 50% of the value of the products before tax if they don't. The maximum fine will equal the pre-tax market worth of the goods. The vehicle owner will have the option of paying a fee equal to the tax due on the confiscated vehicle. The other applicable penalties are not suspended if a fine is paid instead of confiscation. After paying a fine, additional taxes, fees, and penalties will still need to be paid.

Products won't be seized without a show-cause notice and a chance to be heard. They will become government property after they have been seized. The commodities will be sold after a three-month grace period, during which the confiscation fine must be paid. The GST's other penalties, such as fines and prosecutions, will not be affected.