SEARCH - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

3. SEARCH 3.1. Legal Framework for Search in GST: (I) Section 67(2) of the CGST Act, 2017 empowers the proper officer, not below the rank of Joint Commissioner, to authorise in writing any other Central Tax Officer to search any place where any goods liable to confiscation or any documents or books or things relevant to the proceedings under this Act are suspected to be secreted and seize such goods, documents, books or things. (II) Section 67(4) of the CGST Act, 2017, empowers the officer so authorized to seal or break open the door of any premises or to break open any storage space to access any goods, accounts, registers or documents, suspected to be concealed. (III) Section 67 (10) of the CGST Act, 2017, makes the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure, applicable to search and seizure under this section. (IV) Rule139(1) of the CGST Rules, 2017, provides that the said proper officer shall issue an authorization in FORM GST INS-01 authorizing any other officer subordinate to him to conduct the search. 3.2. Officer of Central Tax competent to authorize Search: As per Section 67(2) of the CGST Act, 2017, the Proper Officer should not be below the rank of Joint Commissioner of Central Tax. The Central Board of Indirect Taxes Customs, vide Circular No. 3/3/2017 GST dated 5th July 2017, has assigned the functions of Proper Officer for authorizing Search to the Additional Commissioner or the Joint Commissioner of Central Tax. 3.3. Officer of Central Tax competent to carry out Search: According to Section 67 (2) of the CGST Act, 2017, the Proper Officer can authorize any other officer of Central Tax to carry out the Search. However, according to Rule 139(1) of the CGST Rules, 2017, the officer so authorized by the Proper Officer has to be subordinate to the Proper Officer. This means that even though the officer so authorized can be any other officer, he should not be equal in rank or senior in rank to the Proper Officer. 3.4 Manner in which the Proper officer can authorize any other officer to conduct Search: (I) The Proper officer can authorize a subordinate officer to carry out Search by issuing a Search Authorization in FORM GST INS-01. (II) The Search Authorization is generated online by the Proper Officer on the CBIC DIN Portal and interalia contains the following important details: (a) Document Identification Number (DIN) of the Search Authorization; (b) Name and designation of the officer authorized for Search; (c) Address of the premises to be searched; (d) Period of validity of the Search Authorization. 3.5. Forming reasons to believe for authorizing search of the Premises: According to Section 67 (2) of the CGST Act, 2017, the Proper Officer for arriving at reasons to believe for the search, is required to take the following into consideration- (i) Goods liable to confiscation are secreted in the place to be searched; (ii) Documents or books or things, which in the opinion of the Proper officer shall be useful for or relevant to any proceedings under the CGST Act, 2017, are secreted in the place to be searched. 3.6. Places which can be searched: There is no restriction on the places which can be searched. Even places other than places of business can also be searched. 3.7. Stage at which search can be carried out: There are two stages at which Search can be carried out- Stage 1: Search can be carried out based on the inputs gathered during an Inspection, which reveal that incriminating goods, documents, books or things may be secreted in a place. Stage 2: Search can be carried out independently, based on Intelligence developed or Information received that incriminating goods, documents, books or things may be secreted in a place. 3.8. Powers of the Central Tax officer authorized to conduct Search: (I) The officer authorized by the Proper Officer to conduct Search has been vested with vast powers as per Section 67(4) of the CGST Act, 2017. (II) In case of non-cooperation from the person whose premises is being searched, the authorized officer has the powers to- (a) Seal the premises; (b) Break open the doors of premises; (c) Break open the almirahs, electronic devices, boxes, receptacles in which any goods, accounts, registers or documents are suspected to be concealed. (III) Since vast powers have been placed at the disposal of the authorized officer during Search, certain safeguards have to be followed by the officers during the Search. (IV) These safeguards ensure that the Search is carried out in a transparent manner and the rights of the individuals are not violated. 3.9. Legal Framework of safeguards to be observed during Search: (I) As per Section 67(10) of the CGST Act, 2017, the provisions of the Code of Criminal Procedure, 1973 have been made applicable to Search. The safeguards to be observed during Search and the powers of the officers conducting the Search are contained in- (a) Section 47 of Code of Criminal Procedure, 1973 - Search of place entered by person sought to be arrested; (b) Section 100 of Code of Criminal Procedure, 1973 Persons incharge of closed place to allow search; (c) Section 165 of Code of Criminal Procedure, 1973 Search by Police Officer; (d) Section 187 of Indian Penal Code, 1860 Omission to assist public servant when bound by law to give assistance. (II) The above provisions of Code of Criminal Procedure, 1973 have to be read in the context of CGST Act, 2017 to draw a harmonious meaning. 3.10. Preparation for the Search: After an actionable intelligence has been prepared in the form of an Information Report or AE-I Report and approval of the competent authority has been obtained, necessary preparation for executing the same is required to be carried out depending upon the nature of the intelligence. An Operation Chart should be prepared soon after the Search Authorizations have been signed by the Proper officer. This will enable adequate supervision over actual search work at individual premises. 3.11. Salient features of safeguards to be observed during Search: The freedom to carry out trade or business is a fundamental right guaranteed under the Constitution of India. Therefore, the power to search a person s residence/business premises and to seize/detain his goods and property is an extraordinary power given to the CGST Officers under the CGST Act, 2017. This power cannot be exercised injudiciously or without proper application of mind. Therefore, while carrying out search operations, the following basic parameters need to be borne in mind: (i) Search should be carried out only under a valid Search Authorization issued by the Proper officer. All searches should be made in accordance with the provisions relating to search contained in the Cr. P.C, 1973. (ii) The premises of a person cannot be searched on the authority of a Search Authorization issued for the premises of some other person. (iii) The officers conducting the Search and the accompanying Panchas should offer themselves for personal search before as well as after the Search. (iv) The officers conducting the search should identify themselves by showing their identity cards to the person in-charge of the premises. (v) A lady officer should invariably be a part of the Search team, especially if a residence is being searched. (vi) The Search Authorization should be executed before the start of the search and should be served on the person in charge of the premises to be searched by showing the same to him and his signature should be taken on the body of the Search Authorization. The signatures of the witnesses should also be taken on the body of the Search Authorization. (vii) The search should be made in the presence of two or more independent and respectable inhabitants of the locality, and if no such inhabitants are available or willing, the inhabitants of any other locality should be asked to be witness to the search. The officer conducting the search may issue an order in writing to the inhabitants to witness the search (Section 100 (4) of Cr. P.C, 1973). The witnesses should be told about the purpose of the search. (viii) The complete Search proceedings should be recorded by the Panchas under a Panchnama. The Panchnama and the list of goods/documents/things should be signed by the witnesses, the owner of the premises and also by the officer duly authorized for conducting the search. (ix) A copy of the Panchnama should be given to the person in charge/owner of the premises which has been searched. (x) After the search is over, the duly executed Search Authorization should be returned to the Proper officer who had issued the said Search Authorization with a report regarding the outcome of the search. The names of the officers who had participated in the search should be written on the reverse of the Search Authorization. 3.12. During search proceeding, Instruction No. 01/2020-21 (GST-Investigation) dated 02.02.2021 issued by CBIC and any other instruction issued from time to time by CBIC should be followed.