Can search and seizure under S 67 be conducted on a person whose registration has recently been cancelled (on application by the taxpayer himself), Goods and Services Tax - GST

[Gautam Godhwani]

The relevant section for search and seizure is as follows -

67. Power of inspection, search and seizure.—

(1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that––

(a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or

(b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act,

My query is, given the fact that the meaning of "taxable person" is someone who is registered or liable to be registered under the CGST Act, 2017 - would someone whose registration that has been cancelled (by the application of the taxpayer himself) be a "taxable person" ?

Can the authorities conduct search and seizure proceedings at the premises of the currently de facto unregistered person whose registration has been cancelled (by the application of the taxpayer himself) ?

Posts / Replies

[KASTURI SETHI]

Sh.Gautam Godhwani Ji,

What is the date of registration ?

What is the effective date of cancellation of registration ?

What is the date of search ?

Pl. intimate.

[Gautam Godhwani]

Respected Sir,

The date of registration : 01.07.2017

Cancellation of registration effective from : 31.03.2019

Date of search and seizure operations : 09.05.2019

[KASTURI SETHI]

Sh.Gautam Godhwani Ji,

Cancellation of registration by the department does not mean a clean chit. The past liability (if any) cannot be avoided. The department can go backward for 54 months from the date of annual return. See Section 74 (10) and Section 74 (11) of the CGST Act.

The party cannot get any legal benefit on the ground that they were unregistered on the date of seizure. Time-factor does not reduce the degree of gravity, if offence committed.

[Amit Agrawal]

Just because registered person voluntarily sought cancellation of his registration & same is granted by Dept., it does not preclude Dept. from taking action under Section 67 when facts / circumstances otherwise demand such action.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Padmanathan Kollengode]

What is the "reason to believe" for search and seizure has to be ascertained first.

[KASTURI SETHI]

The department does not conduct searches without any basis. Search warrants are issued by the Senior Officer (Joint Commissioner) of the department under Section 67 of CGST Act after doing their 'home work'.

If the registered person/tax payer is honest and sincere, he can take the shelter of the following judgement of the Supreme Court :-

2023 (3) TMI 251 - SC ORDER - UNION OF INDIA Versus MAGNUM STEEL LTD.

[Gautam Godhwani]

Thank you for your responses.