{"id":16368,"date":"2020-09-15T14:42:10","date_gmt":"2020-09-15T09:12:10","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=16368"},"modified":"2020-09-15T14:43:50","modified_gmt":"2020-09-15T09:13:50","slug":"know-about-inspection-under-gst","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/know-about-inspection-under-gst\/","title":{"rendered":"All you need to Know about Inspection under GST"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Goods and Services Tax (GST) is an indirect tax which has replaced the various indirect taxes which were being levied upon the citizens. The GST Law was passed on 29<sup>th<\/sup> Match, 2017 in the parliament and came into effect on 1<sup>st<\/sup> July, 2017. There are three taxes applicable under this system- IGST, CGST, SGST, UTGST. Under the <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST Registration<\/strong><\/a> Process businesses with an aggregate turnover of more than 40 or 20 lakhs in case of supply of goods and 20 or 10 lacs for supply of services are bound under the act to register under GST as a normal taxable person. Let us first understand the meaning of Inspection under GST:-<\/p>\n\n\n\n<p>The term \u201cInspection\u201d in common terms means careful scrutiny. Under the CGST Act, there are various provisions which deal with inspection, search and seizure of records of taxpayers for proper analysis of tax payment as well as to prevent evasion of tax. Moreover, Section 67 to 72 of the CGST Act deals with the provisions of inspection enabling the procedure, thereby, the reason and outcomes of conducting an inspection and the same are explained below:-<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/apply-for-gst-registration-certificate-online\/\">How to apply for GST registration certificate online?<\/a><\/mark><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"621\" height=\"227\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-60.png\" alt=\"Inspection under GST\" class=\"wp-image-16369\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-60.png 621w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-60-300x110.png 300w\" sizes=\"(max-width: 621px) 100vw, 621px\" \/><\/figure><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/know-about-inspection-under-gst\/#Conditions_Where_Inspection_under_GST_Can_Be_Conducted\" >Conditions Where Inspection under GST Can Be Conducted<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/know-about-inspection-under-gst\/#Places_and_People_who_can_Inspected_under_GST\" >Places and People who can Inspected under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/know-about-inspection-under-gst\/#Reasons_to_Believe_for_Inspection_under_GST\" >Reasons to Believe for Inspection under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/know-about-inspection-under-gst\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_Where_Inspection_under_GST_Can_Be_Conducted\"><\/span>Conditions Where Inspection under GST Can Be Conducted<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under the CGST Act, a joint\ncommissioner or an officer of a higher rank can carry out an\ninspection if has sufficient cause to believe that the tax payer has done\neither of the following to evade taxes:-<\/p>\n\n\n\n<ul><li>Any transaction of supply is hidden by the tax payer.<\/li><li>Any stock is hand is hidden.<\/li><li>The Input Tax credit (ITC) has been availed in excess.<\/li><li>Has done something that is in contravention with the\nprovisions of GST.<\/li><li>The accounts book have been maintained in a manner to\nevade taxes.<\/li><li>Any transporter or warehouse operator is found to be\nhiding goods without the payment of GST on them.<\/li><\/ul>\n\n\n\n<p>In any of these\ncases mentioned above, the Joint Commissioner or any person higher in rank can\nissue authorization for any person subordinate to him allowing him to conduct\nan inspection of the books of that particular tax payer. The authorization in\nthis case is issued in FORM GST INS-01.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Places_and_People_who_can_Inspected_under_GST\"><\/span>Places and People who can Inspected under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under the CGST Act\nthe joint commissioner or any other person of a higher rank can issue an\nauthorization to any person to conduct an inspection of any place of business\nrelated to the following persons. Those are as follows:-<\/p>\n\n\n\n<ul><li>The person who pays the taxes<\/li><li>The operator of the warehouse<\/li><li>The transporter<\/li><\/ul>\n\n\n\n<p>The power to\ninspect only extends till inspection of any place of business. The place of\nbusiness has been explained in the CGST Act under Section 2(85) and are those\nplaces where the taxpayer conducts business, or keeps his books of accounts.\nNow, if the said books are kept at the residential address of the taxpayer or\nany other person who is key-managerial personnel then the inspection can be\nconducted at these residential places.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reasons_to_Believe_for_Inspection_under_GST\"><\/span>Reasons to Believe for Inspection under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under Section 67 of the <strong><em>CGST Act<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/CGST\"><strong><em>[1]<\/em><\/strong><\/a><\/sup>, the power to conduct an inspection is granted to an officer if he has sufficient \u201creason to believe\u201d that the taxpayer is fraudulent. Reasons to believe here means that having factual knowledge of some malpractice through which a reasonable person can conclude that there is something fraudulent being done by the taxpayer.<\/p>\n\n\n\n<p>The law does not explain in writing sufficient grounds for \u201creason to believe\u201d however, there are similar provisions under Section 132 of the Income Tax Act which were relied upon by the Honorable Supreme Court in the case of \u201cITO vs Lakhmani Mewal Das\u201d. The SC observed that the reasons for conducting inspection must not be merely on pretense and should be conducted in good faith.<\/p>\n\n\n\n<p><strong><em>The basic\nprinciples for ascertaining the grounds for \u201creason to believe\u201d are:<\/em><\/strong><\/p>\n\n\n\n<ul><li>There must be some information in possession of the\nauthority according to which an opinion for \u201creason to believe\u201d can be formed.<\/li><li>The opinion that is formed should rely on some\nmaterial information and not irrelevant facts.<\/li><li>The court should form a rational connection between\nthe material relied upon and the opinion formed.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Difference between Search\nand Inspection under GST<\/h3>\n\n\n\n<p>These two words\nare used as synonyms more often, but under the CGST Act these two words have\ndifferent meanings and are to be conducted in different conditions after\nfulfilling a different set of conditions. <\/p>\n\n\n\n<p>Search is an\naction conducted by a tax official or a police official, depending upon the\ncase at hand; to scrutiny a person, place or object to find any sort of\nevidence which support any crime which was committed. Under the CGST Act only a\nvalid authority can conduct a search proceeding. Inspection on the other hand this\nprovision allows any fit authority to inspect any place of business of a\nfraudulent tax payer.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>These provisions are laid down to ensure the smooth functioning of the tax system in the country and punishing those who tend to disrupt this ongoing flow. If the commissioner finds reasons to believe for Inspection under GST and the provisions under Section 132 of the CGST Act are satisfied then the fraudulent taxpayer can be arrested. It is vital to have stringent provisions for punishing those who do not comply with the required provisions and make the tax flow system a rusty one.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/cbic-directs-to-clear-pending-gst-registration-under-special-drive\/\">CBIC directs to clear pending GST registration under special drive<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Goods and Services Tax (GST) is an indirect tax which has replaced the various indirect taxes which were being levied upon the citizens. The GST Law was passed on 29th Match, 2017 in the parliament and came into effect on 1st July, 2017. There are three taxes applicable under this system- IGST, CGST, SGST, [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":16382,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[663],"acf":{"service_id":"334"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":6120,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16368"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=16368"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16368\/revisions"}],"predecessor-version":[{"id":16381,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16368\/revisions\/16381"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/16382"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=16368"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=16368"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=16368"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}