SEARCH AND SEIZURE UNDER GST LAW (PART-3) (Inventory and Seizure)

[Dr. Sanjiv Agarwal]

Inventory of items seized

As per section 67(9), where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorised by him he shall prepare an inventory of such goods in such manner as may be prescribed.

Panchnama for Seizure

The inventory of goods seized is prepared in a document which is popularly called ‘panchnama’, though such term is not defined in CrPC, 1973 or CGST Act, 2017. It is a document prepared by the investigating agency after conclusion of search and seizure. A Panchnama generally contains the following information:

1. Dates of commencement and conclusion of search and seizure proceedings
2. Name and address of the person searched
3. Name and address of the premises searched
4. Inventory of goods, articles, things, books, documents, records, files, equipments etc. seized – description, identification, quantitative and other details.
5. Signature of investigating officers with date, time and place.
6. Signature of persons searched with date, time, place and designation.
7. Particulars and signature of two independent witnesses  (Panch’s).

For a valid Panchnama, following points are relevant:

1. Panchnama should record everything that take place during the course of search
2. Panchnama should contain all and full particulars as listed in the aforesaid para
3. Panchnama should mention clearly that it has been prepared with utmost fairness, transparency and free mind without any threat and coercion.
4. Copy of Panchnama shall be delivered or served to the searched person immediately on conclusion of search.
5. A defective, incomplete and incorrect Panchnama has no evidentry value and may be held as non-sustainable.

Power to seal or break

The officer authorised shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied.

Power of Government to dispose off seized material

In terms of section 67(8), the Central or a State Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under section 60(2), be disposed off by the proper officer in such manner as the central or a state government may prescribe.

The Central or a State Government may, having regard to the:

• perishable or hazardous nature of goods, or
• depreciation in the value of the goods with the passage of time, or
• constraints of storage space for the goods, or
• due to any other relevant considerations

may specify the goods or class of goods by Notification, which shall after its seizure as soon as may be, disposed off by the proper officer in such manner as determined by the Central or a State Government.

Purchase of goods by officer

In terms of section 67(12) of CGST Act, 2017, the Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.

Manner of seizing goods

As per rule 130 (1 and 2) of CGST Rules, 2017, where any goods, documents, books or things are liable for seizure under sub-section (2) of section 67, the proper officer or an authorised officer shall make an order of seizure in FORM GST INS-02. The proper officer or an authorised officer may entrust upon the owner or the custodian of goods, from whose custody such goods or things are seized, the custody of such goods or things for safe upkeep and the said person shall not remove, part with, or otherwise deal with the goods or things except with the previous permission of such officer. The officer seizing the goods, documents, books or things shall prepare an inventory of such goods or documents or books or things containing, inter alia, description, quantity or unit, make, mark or model, where applicable, and get it signed by the person from whom such goods or documents or books or things are seized.

Where it is not practicable to seize any such goods, the proper officer or the authorised officer may serve on the owner or the custodian of the goods, an order of prohibition in FORM GST INS-03 that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.

Seizure of perishable / hazardous nature of goods

In terms of Rule 141 of CGST Rules, 2017, where the goods or things seized are of perishable or hazardous nature, and if the taxable person pays an amount equivalent to the market price of such goods or things or the amount of tax, interest and penalty that is or may become payable by the taxable person, whichever is lower, such goods or, as the case may be, things shall be released forthwith, by an order in FORM GST INS-05, on proof of payment.

Where the taxable person fails to pay the amount in respect of the said goods or things, the proper officer may dispose of such goods or things and the amount realized thereby shall be adjusted against the tax, interest, penalty, or any other amount payable in respect of such goods or things.