INSPECTION OF GOODS IN MOVEMENT IN GST LAW

[Dr. Sanjiv Agarwal]

Inspection of goods in movement (Section 68)

(1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.

(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed.

(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.

Gist of Section 68: Inspection in movement

1. Any inter-state consignment, value of which is exceeding Rs. 50,000/-, may be stopped at any place for verification of the documents / devices prescribed for movement of such consignment (monetary limits for intra-state consignments are different as fixed by State Governments).
2. If on verification of the consignment, during transit, it is found that the goods were removed without prescribed document or the same are being supplied in contravention of any provisions of the Act then the same can be detained or seized and may be subjected to penalties as prescribed.
3. To ensure transparency and minimize hardships to the trade, the law provides that if during verification, in transit, a consignment is held up beyond 30 minutes the transporter can feed details on the portal. This will ensure accountability and transparency for all such verifications. Moreover, for verification during movement of consignment will also be done through a Digital interface and therefore the physical intervention will be minimum and as has already been mentioned that in case of a delay beyond 30 minutes the transporter can feed the details on the portal.

Section 68 of CGST Act, 2017 deals with inspection of goods in movement. For this section, following terms are important:

• Inspection
• Goods
• Movement

Whenever there is any short coming or deficiency in the documents, it would result in consequences as stipulated in Section 129 of the CGST Act, 2017 which provides for detention, seizure and release of goods and conveyance in transit.. Section 130 of the CGST Act, 2017 provides for confiscation of goods and conveyance along with imposition of penalty.

What is meant by ‘inspection’?

The term ‘inspection’ has not been defined in the Act but in common parlance, ‘Inspection’ is a softer provision than search which enables officers to access any place of business or of a person engaged in transporting goods or who is an owner or an operator of a warehouse or godown.

The inspection can be carried out by an officer of CGST/SGST only upon a written authorization given by an officer of the rank of Joint Commissioner or above. A Joint Commissioner or an officer higher in rank can give such authorization only if he has reasons to believe that the person concerned has done one of the following actions:

1. Suppression of any transaction relating to supply of goods or services or stock in hand
2. Claimed excess input tax credit
3. Contravention of any provisions of the Act or the Rules to evade tax
4. Transporting or keeping goods which escaped payment of tax or manipulating accounts or stocks which may cause evasion of tax

Inspection can also be done of the conveyance, carrying a consignment of value exceeding specified limit. The person in charge of the conveyance has to produce documents/devices for verification and allow inspection. Inspection during transit can be done even without authorization of Joint Commissioner.

Thus, inspection can be done of a:

• Business premises
• Conveyance
• Goods
• Inspection in movement (in transit)

When we talk of inspection of goods in movement, the following events happen:

1. Inspection takes place
2. The subject matter of inspection is goods
3. The subject goods should be in movement i.e. in transit
4. Goods are in a conveyance

What is meant by ‘goods’?

In the CGST Act, 2017, ‘goods’, as per section 2(52), means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply.

It may be noted that movable property will not include intangible property.

‘Goods’ would include –

      (i)   Movable property

     (ii)   Actionable claims

    (iii)   Growing crops/grass

    (iv)   Things attached to/forming part of land

     (v)   Materials

    (vi)   Commodities

   (vii)   Articles

‘Goods’ would exclude –

      (i)   Money

     (ii)   Securities

    (iii)   Intangible property (e.g. brand, patent copy right)

    (iv)   Immovable property

     (v)   Land

Access to business premises

Section 71 of the CGST Act, 2017, provides for allowing for access to the business premises of a taxable person. While ‘business premises’ has not been defined in the GST law, the terms business [section 2(17)], place of business [section 2(85) and principal place of business [section 2(89)] have been defined in the CGST Act, 2017.

The term ‘access’ has not been defined in the GST law. However, ‘access’ does not mean inspection or search. ‘Access’ literally means approach or the means or power of approaching. According to section 2(1)(9) of Information Technology Act, 2000, ‘access’ with its grammatical variations and cognate expressions means gaining entry into, instructing or communicating with the logical, arithmetical, or memory function resources of a computer, computer system or computer network.

As per section 71 of the CGST Act, 2017 any proper officer duly authorized by the Joint Commissioner of GST is empowered to have access to any business premises. Such authorization shall be in writing and shall be restricted to business premises of the taxable person.

What is meant by ‘movement’?

Since goods are tangible, they need to be carried or transported from one place to other by any means of transport in a vehicle. Such movement of goods from a place of origin to place of destination is called transportation which has to be done through a conveyance (generally called vehicle). Depending upon mode of transportation viz, surface, air or water, the conveyance vehicle could be trains, road transport vehicles, cargo ships or air cargo planes etc. Whenever the goods are transported, the vehicle/person in charge of the conveyance carrying goods is required to carry or accompany certain prescribed documents containing the requisite information about the goods, conveyance, consignor or consignee and origin and destination etc.

Section 68 prescribes that the person in charge of a conveyance carrying any consignment of goods of value exceeding a specified amount to carry with him such documents and devices as may be prescribed by the Government. On interception of the conveyance, the person in charge shall produce the prescribed documents and devices for verification and allow inspection of goods by the proper officer.

If such conveyance is intercepted by the proper officer at any place, the person in charge of the conveyance shall have to produce the documents and devices for verification and also allow the inspection of goods.

Essential conditions for inspection of goods in movement

Following are the important conditions for inspection of goods in movement:

1. Person in charge of conveyance is required to carry a prescribed document and/or devices while carrying any consignment of goods of prescribed value. It may be noted that Rules 138 to 138E of CGST Rules, 2017 prescribed for monetary limits and documents called e-way bill (sub-section 1)
2. The person in charge of a conveyance shall carry the documents, the details of which are validated in a prescribed manner (sub-section 2)
3. The conveyance or vehicle is subject to interception by the proper officer during transit.

In case of such interception, person in-charge shall:

1. Produce the documents and devices for verification
2. Allow inspection of goods
3. Liable for consequences as per section 129 and 130 of CGST Act, 2017 (confiscation and penalty) in the event of any deficiency in the documents (sub-section 3).