This book presents a detailed commentary on ‘search, seizure, summons and arrest proceedings under Goods and Services Tax Law’. This book covers the following Section(s) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) and corresponding Rules made there under: · Section 67 · Section 69 · Section 70 · Section 83 · Sections 132-138 This book dedicatedly serves tax officials who are handling anti-evasion activities & other tax professionals. The Present Publication is the 1st Edition & it is updated till 4th September 2020, authored by Aprit Haldia & Prateek Gattani, with the following noteworthy features: · This book discusses most essential concepts and basic established procedures with the help of various judgements of Supreme Court & High Courts · This book also discusses basic and practical aspects of search, seizure, summons and arrest proceedings under the GST Law · Contents of the book are as follows: o Inspection, Search and Seizure under GST o Litmus Test of Section 67(2) of the CGST Act in the Constitutional Framework o Reason to Believe – A Mysterious Term o Applicability of Provisions of Code of Criminal Procedure, 1973 o Summons Proceedings under GST o Section 83 – Provisional Attachment to Protect Revenue in Certain Cases o Prosecution and Arrest under GST o Jail or Bail – Analysis of Provisions of Bail for Offences Committed under GST | Bail is Rule, Jail is Exception o Sanction of Commissioner Prior to Initiation of Prosecution o Presumption of Culpable Mental State o Compounding of Offences o Offences Committed by Companies & Non-Individuals under GST

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3. Preface
The present book is a detailed commentary for search, seizure,
summon and arrest proceedings under Goods and Services Tax law.
This book cover sections 67, 69, 70, 83, 132 to 138 of the Central Goods
and Services Tax Act, 2017 and corresponding rules made thereunder.
The authors have endeavoured to distill the most essential concepts
and basic established procedures under the search, seizure, summon
and arrest proceedings with the help of various judgments of the
Hon’ble Supreme Court and various High Courts. Authors have also
discussed basic and practical aspects of search, seizure, summon and
arrest proceedings under the GST law.
In last few months there is phenomenal increase in search, seizure
and arrest proceedings and interestingly there is no book presently
in the market which dedicatedly serves the purpose of professionals.
This book is exclusively for search, seizure, summon and arrest
proceedings under the GST Law. It is helpful for tax officials
who are handlings anti-evasion activities like search, seizure and
arrest proceedings. Similarly, on other side it would be immensely
helpful for Chartered Accountants, Advocates, Cost Accountants
and Company Secretaries who are dealing under the GST law and
handlings such proceedings. This book is also helpful for beginners
who either handling/handled very few matters of search, seizure and
arrest proceedings.
Suggestions and feedback from readers are most welcome, and we
will make best efforts to improve the book in the coming editions.
I-7

4. PAGE
About the Authors I-5
Preface I-7
Acknowledgement I-9
Chapter-heads I-11
List of Cases I-21
1
INSPECTION, SEARCH AND SEIZURE UNDER GST
1.1 Difference between Inspection and Search 1
1.2 Provisions regarding initiation of ‘Inspection’ under
GST
2
1.3 Provisionsregardinginitiationof‘SearchandSeizure’
proceedings in GST
4
1.4 Meaning of Reason to believe 5
1.5 Term ‘Secreted Place’ under section 67(2) is really
secreted?
8
1.6 ‘Goods liable to Confiscation’ - Situation based test 13
1.7 Meaning of ‘book’ 18
1.8 Power of Proper Officer to break/seal any premise/
almirah/electronic device, etc.
20
1.9 Power to get copies of documents/books, etc. seized
by the Proper Officer
22
Contents
I-13

5. PAGE
1.10 Release of Goods Seized 24
1.11 Seizure of Perishable/hazardous Goods 26
1.12 Seizureofbooksofaccount/registers/documentsby
Proper Officer without Search Proceedings
27
1.13 Purchase of goods or availment of service or both
by Commissioner or Proper Officer in order to check
sanctity of transactions of the taxpayers
29
1.14 Practical Case Studies 30
2
LITMUS TEST OF SECTION 67(2) OF THE CGST ACT IN
THE CONSTITUTIONAL FRAMEWORK
2.1 Introduction 34
2.2 Constitutional test of Section 67(2) vis-à-vis Article
14 of the Constitution of India
35
2.3 Examination of search and seizure proceedings in
the light of Doctrine of Manifest Arbitrariness
40
2.4 Doctrine of Manifest Arbitrariness 40
3
‘REASON TO BELIEVE’ - A MYSTERIOUS TERM
3.1 Reasontobelievemustbebasedonreasonablebelief 44
3.2 Power of Court while examining the Reason to
believe - Court cannot sit as appellate forum
47
3.3 Recording of ‘Reason to believe’ 49
3.4 Reason to believe must be reasonable based on
credible material
54
3.5 Formationof‘Reasontobelieve’subsequenttosearch
and seizure proceedings
55
CONTENTS I-14

6. PAGE
3.6 Judicial Review of ‘Reason to believe’ 58
3.7 Practical Case Studies 58
4
APPLICABILITY OF PROVISIONS OF CODE OF
CRIMINAL PROCEDURE, 1973
4.1 Application of Special legislation vis-à-vis General
legislation
63
4.2 Applicability of safeguards as provided under Code
of Criminal Procedure
66
4.3 Panchnama - Critical Document 69
5
SUMMON PROCEEDINGS UNDER GST
5.1 Introduction 72
5.2 Meaning of Judicial Proceedings 73
5.3 Right of the silence of summoned person during the
summon proceedings vis-a-vis article 20(3) of the
Constitution of India
79
5.4 Is statement given under Summon proceedings hav-
ing an evidentiary value?
83
5.5 ‘Refreshing the memories’ during judicial proceed-
ings/recording of statement
93
5.6 Can an Advocate or Chartered Accountants present
at the time of recording of statement
95
5.7 Issuance of summon in the name of Company/
Partnership Firm - Is it necessary for only managing
partner/managing director to appear before the
authorities
100
5.8 Judicial Review of Summon Proceedings 102
5.9 Practical Case Studies 106
I-15 CONTENTS

7. PAGE
6
SECTION 83 - PROVISIONAL ATTACHMENT TO
PROTECT REVENUE IN CERTAIN CASES
6.0 Introduction 110
6.1 Provision for provisional attachment in Pre GST
regime
111
6.2 Procedure prescribed for provisional attachment of
propertyincludingbankaccountofthetaxableperson
112
6.3 Can Bank account be attached where only summon
have been issued under Section 70 of the CGST Act/
SGST Act
114
6.4 Can Objections in terms of Rule 159(5) of the CGST
Rules file after expiry of Seven (7) days?
117
6.5 Meaning of ‘Commissioner Opinion’ 119
6.6 Canmereinitiationofsearchandseizureproceedings
under Section 67 of empower the Commissioner to
invoke Section 83 of the CGST Act and accordingly
empower to attach property including bank account
of the taxable person
122
6.7 Supply of reason to believe/commissioner’s opinion,
regarding for invoking provisions of provisional
attachment under Section 83 of the CGST Act
123
6.8 Delegation of Power by the Commissioner to its
subordinate regarding provisional attachment of
properties of taxable person under the provisions
of Section 83
124
6.9 Can Cash Credit (CC) Account or Overdraft (OD)
account be provisionally attached by the depart-
mental authorities
132
6.10 Conclusion 136
7
PROSECUTION AND ARREST UNDER GST
7.1 Introduction 138
CONTENTS I-16

8. PAGE
7.2 Definition of Arrest 140
7.3 Power of Arrest for classified offences 141
7.4 Attempt to commit or abets the commission of any
specified offence - Is this for bringing professionals
under lens
148
7.5 Power of Arrest is linked with Reason to believe 153
7.6 Filing of First Information Report (FIR) by the
Commissioner of Central Tax/State Tax under the
provisions of the Indian Penal Code, 1860 with Police
for offences committed under GST
161
7.7 Arrest of Person prior to completion of Assessment
- A Great Conundrum
168
7.8 Applicability of provisions of Sections 41 and 41A of
the Code of Criminal Procedure, 1973 while arrest
of person for an offence committed under Section
132 of the Central Goods and Services Tax Act, 2017
179
8
JAIL OR BAIL - ANALYSIS OF PROVISIONS OF BAIL
FOR OFFENCES COMMITTED UNDER GST - BAIL
IS RULE, JAIL IS EXCEPTION
8.1 Introduction 184
8.2/3 Provisions regarding grant of Bail under Code of
Criminal Procedure, 1973
186
8.4 Grant of Bail under Bailable offences 187
8.5 Are authorities/courts posses power to refuse to
grant bail even for bailable offence
188
8.6 Grant of Bail for Non-Bailable offence 189
8.7 Bail under Economic Offence Matters 193
8.8 Completion of investigation would be a ground to
grant bail
199
8.9 Default Bail 201
I-17 CONTENTS

9. PAGE
8.10 Bail in case where there are two or more Co-accused 209
8.11 Consideration of Flight Risk while grant of Bail 209
8.12 Provisions regarding Cancellation of Bail 211
8.13 Anticipatory Bail 214
8.14 Power to grant Anticipatory Bail should be used
objectively not arbitrarily
218
8.15 Anticipatory Bail in Economic Offence matter 223
8.16 Anticipatory Bail for offences committed under GST 224
8.17 Arrest Memo and right of accused person 229
9
SANCTION OF COMMISSIONER PRIOR TO
INITIATION OF PROSECUTION
9.1 Introduction 233
9.2 Necessity of prior sanction of commissioner prior to
initiator of Prosecution
236
9.3 Issue notice prior to sanction for initiation of Prose-
cution - Principles of Natural Justice to followed in
Letter Spirit
239
9.4 Period of Limitation for launching Prosecution 240
9.5 Order for sanction of initiation of Prosecution is not
an Appealable Order
241
10
PRESUMPTION OF CULPABLE MENTAL STATE
10.1 Brief Summary of provision and its necessity 243
10.2 Presumption to culpable mental state and discharge
application under Section 245 of the Criminal Pro-
cedure Code, 1973
247
CONTENTS I-18

10. PAGE
11
COMPOUNDING OF OFFENCES
11.1 Meaning of term ‘Compounding’ 253
11.2 Key issues under Section 138 of the CGST Act read
with Rule 162 of the CGST Rules regarding com-
pounding of offences can be summarised as follows
256
11.3 Compounding of Offence - Is it a ground to avoid
arrest for offence committed under Section 69 read
withSection132oftheCGSTActorgroundtosecure
bail for offence committed under GST?
258
11.4 Court’s power to deny/reject plea regarding Com-
pounding of Offence
259
11.5 Power of High Court for allowing Compounding for
Non-Compoundable Offences
260
11.6 Effect of Compounding of Offences 263
12
OFFENCES COMMITTED BY COMPANIES
NON-INDIVIDUALS UNDER GST
12.1 Introduction 264
12.2 Offences Committed by Companies under GST 265
12.3 Liability of an Individual 268
12.4 Offences by the Companies - Company should be
arraigned as an accused along with director/respon-
sible person
269
12.5 Corporate Criminal Liability and Mens rea 270
12.6 Criminal Liability for non-individual juristic person
other than Company
275
12.7 Applicability of provisions of Section 137 on Hindu
Undivided Family (HUF)
277
I-19 CONTENTS

11. INSPECTION, SEARCH AND SEIZURE
I n a n y t a x a d m i n i s t r a t i o n t h e p r o v i s i o n s f o r I n s p e c t i o n , S e a r c h a n d
S e i z u r e a r e p r o v i d e d t o p r o t e c t t h e i n t e r e s t o f g e n u i n e t a x p a y e r s a s
t h e T a x e v a d e r s b y e v a d i n g t h e t a x g e t a n u n f a i r a d v a n t a g e o v e r t h e
g e n u i n e t a x p a y e r s . T h e s e p r o v i s i o n s a r e a l s o r e q u i r e d t o s a f e g u a r d a n d
p r o t e c t i n t e r e s t o f r e v e n u e . I t m a y b e m e n t i o n e d t h a t t h e o p t i o n s o f
I n s p e c t i o n , S e a r c h a n d S e i z u r e s h o u l d b e e x e r c i s e d o n l y i n e x c e p t i o n a l
c i r c u m s t a n c e s a n d a s a l a s t r e s o r t .
T h u s , t o e n s u r e t h a t t h e s e p r o v i s i o n s a r e u s e d p r o p e r l y , e f f e c t i v e l y a n d
t h e r i g h t s o f t a x p a y e r s a r e a l s o p r o t e c t e d , i t i s s t i p u l a t e d t h a t I n s p e c t i o n ,
S e a r c h o r S e i z u r e c a n o n l y b e c a r r i e d o u t b y a p r o p e r o f f i c e r a s e n v i s a g e d
b y l e g i s l a t u r e s (
i.e. rank of Joint Commissioner or above in GST law
) ,
o n l y w h e n s u c h p r o p e r o f f i c e r h a s ‘
reasons to believe’
r e g a r d i n g t h e
e x i s t e n c e o f s u c h e x c e p t i o n a l c i r c u m s t a n c e s .
I t i s w e l l s e t t l e d l a w t h a t s e a r c h a n d s e i z u r e b e i n g a n i n r o a d o n
f u n d a m e n t a l r i g h t o f c i t i z e n w h i c h a d v e r s e l y a f f e c t s h i s r e p u t a t i o n
a n d p a r a l y z e h i s b u s i n e s s . T h e r e f o r e , w h i l e e x e r c i s i n g s u c h p o w e r s , t h e
a u t h o r i t i e s s h o u l d b e r a t h e r c a r e f u l a n d c a u t i o u s a n d m u s t e x e r c i s e i t
s t r i c t l y u n d e r a n a u t h o r i t y o f t h e l a w 1 .
1.1 DIFFERENCE BETWEEN INSPECTION AND SEARCH
‘Inspection’
i s a s o f t e r p r o v i s i o n t h a n s e a r c h w h i c h e n a b l e s o f f i c e r s t o
a c c e s s a n y p l a c e o f b u s i n e s s o f a t a x a b l e p e r s o n o r o f a p e r s o n e n g a g e d
i n t r a n s p o r t i n g g o o d s o r w h o i s a n o w n e r o r a n o p e r a t o r o f a w a r e h o u s e
o r g o d o w n , w h e r e a s ‘
Search
’ , i n s i m p l e l a n g u a g e , d e n o t e s a n a c t i o n o f
a g o v e r n m e n t m a c h i n e r y t o g o , l o o k t h r o u g h o r e x a m i n e c a r e f u l l y a
1 INSPECTION, SEARCH AND
SEIZURE UNDER GSTC H A P T E R
1
1 .
Bawa Gopal Das Bedi Sons
v .
Union of India
1 9 8 2 ( 1 0 ) E L T 3 5 1 ( P a t n a ) .
SAMPLE CHAPTER

12. p l a c e , a r e a , p e r s o n , o b j e c t e t c . i n o r d e r t o f i n d s o m e t h i n g c o n c e a l e d o r
f o r t h e p u r p o s e o f d i s c o v e r i n g e v i d e n c e o f a c r i m e .
U n d e r G S T , i n s p e c t i o n a s w e l l a s s e a r c h c a n b e c a r r i e d o u t o n l y a f t e r
a u t h o r i z a t i o n b y p r o p e r o f f i c e r n o t b e l o w r a n k o f J o i n t C o m m i s s i o n e r
a n d s u c h p r o p e r o f f i c e r m u s t h a v e r e a s o n t o b e l i e v e f o r e x i s t e n c e o f
e x c e p t i o n a l c i r c u m s t a n c e s t o j u s t i f y i n v o k i n g p r o v i s i o n s o f S e a r c h a n d
S e i z u r e . S e c t i o n s 6 7 t o 7 2 o f t h e C G S T A c t r e a d w i t h r u l e s 1 3 9 t o 1 4 1
o f C G S T R u l e s d e a l w i t h p o w e r s a n d p r o c e d u r e o f I n s p e c t i o n , S e a r c h
S e i z u r e .
I t i s i m p e r a t i v e t o m e n t i o n h e r e t h a t a p p l i c a t i o n o f t h e p r o v i s i o n s o f t h e
C o d e o f C r i m i n a l P r o c e d u r e a r i s e s o n l y w h e n t h e p r e m i s e s i s s e a r c h e d
a n d n o t i n s p e c t e d 2 .
1.2 PROVISIONS REGARDING INITIATION OF ‘INSPECTION’
UNDER GST
S u b - s e c t i o n ( 1 ) o f s e c t i o n 6 7 o f t h e C G S T A c t e m p o w e r s p r o p e r o f f i c e r
t o c o n d u c t i n s p e c t i o n a t b u s i n e s s p l a c e o f t a x p a y e r .
Section 67(1)
r e a d s
a s b e l o w :
“ W h e r e t h e p r o p e r o f f i c e r , n o t b e l o w t h e r a n k o f J o i n t C o m m i s s i o n e r ,
h a s r e a s o n s t o b e l i e v e t h a t :
(
a
)
a t a x a b l e p e r s o n h a s s u p p r e s s e d a n y t r a n s a c t i o n r e l a t i n g t o s u p p l y
o f g o o d s o r s e r v i c e s o r b o t h o r t h e s t o c k o f g o o d s i n h a n d , o r h a s
c l a i m e d i n p u t t a x c r e d i t i n e x c e s s o f h i s e n t i t l e m e n t u n d e r t h i s A c t
o r h a s i n d u l g e d i n c o n t r a v e n t i o n o f a n y o f t h e p r o v i s i o n s o f t h i s
A c t o r t h e r u l e s m a d e t h e r e u n d e r t o e v a d e t a x u n d e r t h i s A c t ; o r
(
b
)
a n y p e r s o n e n g a g e d i n t h e b u s i n e s s o f t r a n s p o r t i n g g o o d s o r a n
o w n e r o r o p e r a t o r o f a w a r e h o u s e o r a g o d o w n o r a n y o t h e r
p l a c e i s k e e p i n g g o o d s w h i c h h a v e e s c a p e d p a y m e n t o f t a x o r h a s
k e p t h i s a c c o u n t s o r g o o d s i n s u c h a m a n n e r a s i s l i k e l y t o c a u s e
e v a s i o n o f t a x p a y a b l e u n d e r t h i s A c t ,
h e m a y a u t h o r i s e i n w r i t i n g a n y o t h e r o f f i c e r o f c e n t r a l t a x t o
inspecta n y p l a c e s o f b u s i n e s s o f t h e t a x a b l e p e r s o n o r t h e p e r s o n s e n g a g e d
i n t h e b u s i n e s s o f t r a n s p o r t i n g g o o d s o r t h e o w n e r o r t h e o p e r a t o r o f
w a r e h o u s e o r g o d o w n o r a n y o t h e r p l a c e . ”
S o m e o f k e y a s p e c t s o f a b o v e p r o v i s i o n s a r e a s u n d e r :
(
a
)
A u t h o r i s a t i o n o f I n s p e c t i o n h a s t o b e g i v e n b y t h e o f fi c e r o f t h e
r a n k o f J o i n t C o m m i s s i o n e r a n d a b o v e .
2 .
S.Y. Modagekar Sons
v .
CTO
1 9 7 8 4 1 S T C 2 9 8 ( K a r . ) .
Para 1.2
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
2

13. (
b
)
A u t h o r i s i n g o f fi c e r m u s t h a v e r e a s o n t o b e l i e v e a b o u t T a x a b l e
p e r s o n t h a t —
(
i
)
S u p p r e s s i n g o f a n y t r a n s a c t i o n r e l a t i n g t o s u p p l y o f g o o d s
o r s e r v i c e s o r b o t h ; o r
(
ii
)
S u p p r e s s i n g S t o c k i n h a n d ; o r
(
iii
)
C l a i m i n g o f e x c e s s I n p u t T a x C r e d i t ; o r
(
iv
)
I n d u l g i n g i n c o n t r a v e n t i o n o f a n y o f t h e p r o v i s i o n s o f t h e
l a w t o e v a d e t a x ; o r
(
c
)
A u t h o r i s i n g o f fi c e r m u s t h a v e r e a s o n t o b e l i e v e t h a t , t r a n s p o r t e r
i s k e e p i n g t h e g o o d s w h i c h h a s e s c a p e d t a x o r h a s k e p t h i s a c
-c o u n t s o r g o o d s i n s u c h a m a n n e r a s i s l i k e l y t o c a u s e e v a s i o n
o f t a x ; o r
(
d
)
A u t h o r i s i n g o f fi c e r m u s t h a v e r e a s o n t o b e l i e v e t h a t o w n e r o r
o p e r a t o r o f w a r e h o u s e o r g o d o w n o r a n y o t h e r p l a c e i s k e e p i n g
t h e g o o d s w h i c h h a s e s c a p e d t a x o r h a s k e p t h i s a c c o u n t s o r
g o o d s i n s u c h a m a n n e r a s i s l i k e l y t o c a u s e e v a s i o n o f t a x .
I t i s n e e d t o b e n o t e d h e r e t h a t , A u t h o r i s a t i o n f o r t h e p u r p o s e o f
I n s p e c t i o n u n d e r s e c t i o n 6 7 ( 1 ) o f t h e C G S T A c t , s h o u l d b e i n w r i t i n g a n d
i n p r e s c r i b e d f o r m 3 . R u l e 1 3 9 o f t h e C G S T R u l e s e n v i s a g e p r o c e d u r a l
a s p e c t s o f I n s p e c t i o n , S e a r c h a n d S e i z u r e .
Rule 139 of the CGST Rulesr e a d a s f o l l o w s :
“ ( 1 ) W h e r e t h e p r o p e r o f f i c e r n o t b e l o w t h e r a n k o f a J o i n t C o m m i s s i o n e r
h a s r e a s o n s t o b e l i e v e t h a t a p l a c e o f b u s i n e s s o r a n y o t h e r p l a c e i s t o
b e v i s i t e d f o r t h e p u r p o s e s o f i n s p e c t i o n o r s e a r c h o r , a s t h e c a s e m a y
b e , s e i z u r e i n a c c o r d a n c e w i t h t h e p r o v i s i o n s o f s e c t i o n 6 7 , h e s h a l l i s s u e
a n a u t h o r i s a t i o n i n
FORM GST INS-01
a u t h o r i s i n g a n y o t h e r o f f i c e r
s u b o r d i n a t e t o h i m t o c o n d u c t t h e i n s p e c t i o n o r s e a r c h o r , a s t h e c a s e m a y
b e , s e i z u r e o f g o o d s , d o c u m e n t s , b o o k s o r t h i n g s l i a b l e t o c o n f i s c a t i o n .
( 2 ) W h e r e a n y g o o d s , d o c u m e n t s , b o o k s o r t h i n g s a r e l i a b l e f o r s e i z u r e
u n d e r s u b - s e c t i o n ( 2 ) o f s e c t i o n 6 7 , t h e p r o p e r o f f i c e r o r a n a u t h o r i s e d
o f f i c e r s h a l l m a k e a n o r d e r o f s e i z u r e i n
FORM GST INS-02
.
( 3 ) T h e p r o p e r o f f i c e r o r a n a u t h o r i s e d o f f i c e r m a y e n t r u s t u p o n t h e
o w n e r o r t h e c u s t o d i a n o f g o o d s , f r o m w h o s e c u s t o d y s u c h g o o d s o r
t h i n g s a r e s e i z e d , t h e c u s t o d y o f s u c h g o o d s o r t h i n g s f o r s a f e u p k e e p
a n d t h e s a i d p e r s o n s h a l l n o t r e m o v e , p a r t w i t h , o r o t h e r w i s e d e a l w i t h
t h e g o o d s o r t h i n g s e x c e p t w i t h t h e p r e v i o u s p e r m i s s i o n o f s u c h o f f i c e r .
( 4 ) W h e r e i t i s n o t p r a c t i c a b l e t o s e i z e a n y s u c h g o o d s , t h e p r o p e r o f f i c e r
o r t h e a u t h o r i s e d o f f i c e r m a y s e r v e o n t h e o w n e r o r t h e c u s t o d i a n o f
3 .
F o r m N o . G S T I N S - 0 1 [ R u l e 1 3 9 ( 1 ) ] .
3
P R O V I S I O N S O F ‘ I N S P E C T I O N ’ U N D E R G S T
Para 1.2

14. t h e g o o d s , a n o r d e r o f p r o h i b i t i o n i n
FORM GST INS-03
t h a t h e s h a l l
n o t r e m o v e , p a r t w i t h , o r o t h e r w i s e d e a l w i t h t h e g o o d s e x c e p t w i t h t h e
p r e v i o u s p e r m i s s i o n o f s u c h o f f i c e r .
( 5 ) T h e o f f i c e r s e i z i n g t h e g o o d s , d o c u m e n t s , b o o k s o r t h i n g s s h a l l p r e p a r e
a n i n v e n t o r y o f s u c h g o o d s o r d o c u m e n t s o r b o o k s o r t h i n g s c o n t a i n i n g ,
inter alia,
d e s c r i p t i o n , q u a n t i t y o r u n i t , m a k e , m a r k o r m o d e l , w h e r e
a p p l i c a b l e , a n d g e t i t s i g n e d b y t h e p e r s o n f r o m w h o m s u c h g o o d s o r
d o c u m e n t s o r b o o k s o r t h i n g s a r e s e i z e d . ”
I t i s p e r t i n e n t t o n o t e t h a t , s e c t i o n 6 7 ( 1 ) c a t e g o r i c a l l y p r o v i d e s t h a t
I n s p e c t i o n c a n b e a t p l a c e o f b u s i n e s s o f t h e a s s e s s e e . I t i s f u r t h e r n e e d
t o b e n o t e d h e r e t h a t s e c t i o n 2 (
85
) o f t h e C G S T A c t d e f i n e s t h e p h r a s e
‘ p l a c e o f b u s i n e s s ’ w h i c h r e a d s a s f o l l o w s :
‘
“ p l a c e o f b u s i n e s s ”
includes
—
(
a
)
a p l a c e f r o m w h e r e t h e b u s i n e s s i s o r d i n a r i l y c a r r i e d o n , a n d i n
-c l u d e s a w a r e h o u s e , a g o d o w n o r a n y o t h e r p l a c e w h e r e a t a x a b l e
p e r s o n s t o r e s h i s g o o d s , s u p p l i e s o r r e c e i v e s g o o d s o r s e r v i c e s o r
b o t h ; o r
(
b
)
a p l a c e w h e r e a t a x a b l e p e r s o n m a i n t a i n s h i s b o o k s o f a c c o u n t ;
o r
(
c
)
a p l a c e w h e r e a t a x a b l e p e r s o n i s e n g a g e d i n b u s i n e s s t h r o u g h a n
a g e n t , b y w h a t e v e r n a m e c a l l e d ; ’
D e f i n i t i o n o f p l a c e o f b u s i n e s s i s i n c l u s i v e w h i c h i n c l u d e s g o d o w n o r
a n y o t h e r p l a c e w h e r e a t a x a b l e p e r s o n s t o r e s h i s g o o d s o r m a i n t a i n s h i s
b o o k s o f a c c o u n t s o r p l a c e o f a g e n t . A c c o r d i n g l y , i f b o o k s o f a c c o u n t s
a r e b e i n g m a i n t a i n e d o r k e p t a t r e s i d e n c e o f d i r e c t o r o r a n y o t h e r k e y
m a n a g e r i a l p e r s o n t h e s a m e m a y b e t r e a t e d a s p l a c e o f b u s i n e s s a n d
i n s p e c t i o n c a n b e c a r r i e d o u t t h e r e a s w e l l .
1.3 PROVISIONS REGARDING INITIATION OF ‘SEARCH AND SEI-
ZURE’ PROCEEDINGS IN GST
S u b - s e c t i o n ( 2 ) o f s e c t i o n 6 7 o f t h e C G S T A c t e m p o w e r s p r o p e r o f f i c e r
n o t b e l o w r a n k o f J o i n t C o m m i s s i o n e r t o c a r r y o u t s e a r c h p r o c e e d i n g ,
p r o v i d e d t h a t J o i n t C o m m i s s i o n e r h a s r e a s o n t o b e l i e v e t h a t a n y g o o d s
l i a b l e t o b e c o n f i s c a t i o n o r a n y d o c u m e n t s / b o o k s w h i c h i n o p i n i o n a r e
r e l e v a n t f o r t h e p r o c e e d i n g s u n d e r t h e A c t b u t s u c h d o c u m e n t s / b o o k s /
t h i n g s / g o o d s a r e s e c r e t e d a t a n y p l a c e .
Section 67(2) and 67(3) of the
CGST Act
r e a d s a s f o l l o w s :
“ ( 2 ) W h e r e t h e p r o p e r o f f i c e r , n o t b e l o w t h e r a n k o f J o i n t C o m m i s s i o n e r ,
e i t h e r p u r s u a n t t o a n i n s p e c t i o n c a r r i e d o u t u n d e r s u b - s e c t i o n ( 1 ) o r
o t h e r w i s e , h a s
reasons to believe
t h a t a n y g o o d s l i a b l e t o c o n f i s c a t i o n o r
Para 1.3
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
4

15. a n y d o c u m e n t s o r b o o k s o r t h i n g s , w h i c h i n h i s o p i n i o n s h a l l b e u s e f u l
f o r o r r e l e v a n t t o a n y p r o c e e d i n g s u n d e r t h i s A c t
, are secreted in any
place
, h e m a y a u t h o r i s e i n w r i t i n g a n y o t h e r o f f i c e r o f c e n t r a l t a x t o
s e a r c h a n d s e i z e o r m a y h i m s e l f s e a r c h a n d s e i z e s u c h g o o d s , d o c u m e n t s
o r b o o k s o r t h i n g s :
Provided
t h a t w h e r e i t i s n o t p r a c t i c a b l e t o s e i z e a n y s u c h g o o d s , t h e
p r o p e r o f f i c e r , o r a n y o f f i c e r a u t h o r i s e d b y h i m , m a y s e r v e o n t h e
o w n e r o r t h e c u s t o d i a n o f t h e g o o d s a n o r d e r t h a t h e s h a l l n o t r e m o v e ,
p a r t w i t h , o r o t h e r w i s e d e a l w i t h t h e g o o d s e x c e p t w i t h t h e p r e v i o u s
p e r m i s s i o n o f s u c h o f f i c e r :
Provided further
t h a t t h e d o c u m e n t s o r b o o k s o r t h i n g s s o s e i z e d s h a l l
b e r e t a i n e d b y s u c h o f f i c e r o n l y f o r s o l o n g a s m a y b e n e c e s s a r y f o r
t h e i r e x a m i n a t i o n a n d f o r a n y i n q u i r y o r p r o c e e d i n g s u n d e r t h i s A c t .
( 3 ) T h e d o c u m e n t s , b o o k s o r t h i n g s r e f e r r e d t o i n s u b - s e c t i o n ( 2 ) o r a n y
o t h e r d o c u m e n t s , b o o k s o r t h i n g s p r o d u c e d b y a t a x a b l e p e r s o n o r a n y
o t h e r p e r s o n , w h i c h h a v e n o t b e e n r e l i e d u p o n f o r t h e i s s u e o f n o t i c e
u n d e r t h i s A c t o r t h e r u l e s m a d e t h e r e u n d e r , s h a l l b e r e t u r n e d t o s u c h
p e r s o n w i t h i n a p e r i o d n o t e x c e e d i n g t h i r t y d a y s o f t h e i s s u e o f t h e s a i d
n o t i c e . ”
S o m e o f k e y a s p e c t s o f a b o v e p r o v i s i o n s a r e a s u n d e r :
-
A u t h o r i s a t i o n o f S e a r c h a n d S e i z u r e h a s t o b e g i v e n b y t h e o f fi c e r
o f t h e r a n k o f J o i n t C o m m i s s i o n e r a n d a b o v e .
-
A u t h o r i s i n g o f fi c e r m u s t h a v e r e a s o n t o b e l i e v e a b o u t :
(
a
)
G o o d s l i a b l e f o r c o n fi s c a t i o n a r e s e c r e t e d i n a n y p l a c e ;
(
b
)
b o o k s , d o c u m e n t s o r s o m e t h i n g , w h i c h i s u s e f u l o r r e l e v a n t
f o r p r o c e e d i n g u n d e r G S T l a w , a r e s e c r e t e d i n a n y p l a c e .
-
A u t h o r i s a t i o n s h o u l d b e i n w r i t i n g i n F o r m G S T I N S - 0 1 f o r
S e a r c h .
-
I n c a s e o f S e i z u r e , O r d e r o f S e i z u r e i s t o b e i s s u e d i n F o r m G S T
I N S - 0 2 .
1.4 MEANING OF REASON TO BELIEVE
I t i s m o s t h u m b l y s u b m i t t e d h e r e t h a t m e a n i n g o f ‘ R e a s o n t o b e l i e v e ’
i s n o t d e f i n e d u n d e r t h e C G S T A c t / S G S T A c t . I t i s n e e d t o b e n o t e d
h e r e t h a t t h e s a i d t e r m i s d e f i n e d u n d e r s e c t i o n 2 6 o f t h e I n d i a n P e n a l
C o d e , w h i c h r e a d s a s f o l l o w s :
‘
Reason to believe
— A p e r s o n i s s a i d t o h a v e “ r e a s o n t o b e l i e v e ” a t h i n g ,
if he has sufficient cause to believe
t h a t t h i n g b u t n o t o t h e r w i s e . ’
I t i s s e t t l e d l e g a l p o s i t i o n t h a t b e l i e f s h o u l d b e h o n e s t a n d r e a s o n a b l e
b e l i e f . H o n ’ b l e S u p r e m e C o u r t i n t h e c a s e o f
Barium Chemicals Ltd.
v .
5
M E A N I N G O F R E A S O N T O B E L I E V E
Para 1.4

16. Company Law Board
A I R 1 9 6 7 S C 2 9 5 / [ 1 9 6 6 ] 3 6 C o m p . C a s e 6 3 9 ( S C ) ,
t h e S u p r e m e C o u r t p o i n t e d o u t , o n c o n s i d e r a t i o n o f s e v e r a l E n g l i s h a n d
I n d i a n a u t h o r i t i e s t h a t t h e e x p r e s s i o n s “ i s s a t i s f i e d ” , “ i s o f t h e o p i n i o n ”
a n d “ h a s r e a s o n t o b e l i e v e ” a r e i n d i c a t i v e o f s u b j e c t i v e s a t i s f a c t i o n ,
t h o u g h i t i s t r u e t h a t t h e n a t u r e o f t h e p o w e r h a s t o b e d e t e r m i n e d o n a
t o t a l i t y o f c o n s i d e r a t i o n o f a l l t h e r e l e v a n t p r o v i s i o n s . F u r t h e r ,
Hon’ble
Supreme Court
i n t h e c a s e o f
ITO
v .
Lakhmani Mewal Das
[ 1 9 7 6 ] 1 0 3
I T R 4 3 7 ( S C ) / A I R 1 9 7 6 S C 1 7 5 3 , t h e S u p r e m e C o u r t c o n s t r u e d t h e
e x p r e s s i o n “ r e a s o n t o b e l i e v e ” e m p l o y e d i n s e c t i o n 1 4 7 o f t h e I n c o m e -
t a x A c t , 1 9 6 1 a n d o b s e r v e d t h a t t h e r e a s o n s f o r t h e f o r m a t i o n o f t h e
b e l i e f m u s t h a v e a r a t i o n a l c o n n e c t i o n w i t h o r r e l e v a n t b e a r i n g o n t h e
f o r m a t i o n o f t h e b e l i e f . R a t i o n a l c o n n e c t i o n p o s t u l a t e s t h a t t h e r e m u s t
b e a d i r e c t n e x u s o r l i v e l i n k b e t w e e n t h e m a t e r i a l c o m i n g t o t h e n o t i c e
o f t h e I n c o m e - t a x O f f i c e r a n d t h e f o r m a t i o n o f h i s b e l i e f t h a t t h e r e h a s
b e e n e s c a p e m e n t o f t h e i n c o m e o f t h e a s s e s s e e f r o m a s s e s s m e n t i n t h e
p a r t i c u l a r y e a r b e c a u s e o f h i s f a i l u r e t o d i s c l o s e f u l l y o r t r u l y a l l m a t e r i a l
f a c t s . I t i s n o t a n y o r e v e r y m a t e r i a l , h o w s o e v e r v a g u e a n d i n d e f i n i t e
o r d i s t a n t w h i c h w o u l d w a r r a n t t h e f o r m a t i o n o f t h e b e l i e f r e l a t i n g t o
t h e e s c a p e m e n t o f t h e i n c o m e o f t h e a s s e s s e e f r o m a s s e s s m e n t . T h e
r e a s o n f o r t h e f o r m a t i o n o f t h e b e l i e f m u s t b e h e l d i n g o o d f a i t h a n d
s h o u l d n o t b e a m e r e p r e t e n c e .
T h e w o r d s “ w h e r e t h e p r o p e r o f f i c e r h a s r e a s o n s t o b e l i e v e ” i n s e c t i o n
6 7 o f t h e A c t s u g g e s t t h a t t h e b e l i e f m u s t b e t h a t o f a n h o n e s t a n d
r e a s o n a b l e p e r s o n b a s e d u p o n t h e r e l e v a n t m a t e r i a l s a n d c i r c u m s t a n c e s .
T h e s a t i s f a c t i o n h a s t o b e o f t h e P r o p e r O f f i c e r n o t b e l o w t h e r a n k o f
J o i n t C o m m i s s i o n e r . T h e P r o p e r O f f i c e r s h o u l d h a v e r e a s o n s t o b e l i e v e
t h a t a t a x a b l e p e r s o n h a s s u p p r e s s e d a n y t r a n s a c t i o n r e l a t i n g t o s u p p l y
o f g o o d s o r s e r v i c e s o r b o t h . F u r t h e r ,
Hon’ble Supreme Court
i n t h e
c a s e o f
Pukhraj
v .
D. R. Kohli
A I R 1 9 6 2 S C 1 5 5 9 , t h e S u p r e m e C o u r t
o b s e r v e d a s f o l l o w s :
“ A f t e r a l l , w h e n w e a r e d e a l i n g w i t h a q u e s t i o n a s t o w h e t h e r t h e b e l i e f i n
t h e m i n d o f t h e o f f i c e r w h o e f f e c t e d t h e s e i z u r e w a s r e a s o n a b l e o r n o t ,
w e a r e n o t s i t t i n g i n a p p e a l o v e r t h e d e c i s i o n o f t h e s a i d o f f i c e r . A l l t h a t
w e c a n c o n s i d e r i s , w h e t h e r t h e r e i s g r o u n d w h i c h
prima facie
j u s t i f i e s
t h e s a i d r e a s o n a b l e b e l i e f . ” ( p . 1 5 6 3 )
T e r m ‘
Reason to believe’
h a v e b e e n d i s c u s s e d i n d e t a i l a t t h e e n d o f
C h a p t e r .
H e n c e , i f t h e i n f o r m a t i o n i s s u c h a s l e a d s t h e P r o p e r O f f i c e r t o b e l i e v e
t h a t t h e a r t i c l e s o f s e a r c h a r e s e c r e t e d i n a p l a c e , h e m a y t h e r e b y h a v e
‘ r e a s o n s t o b e l i e v e ’ a s c o n t e m p l a t e d u n d e r s e c t i o n 6 7 o f t h e A c t a n d
a u t h o r i s e i n w r i t i n g a n y o t h e r o f f i c e r t o s e a r c h a n d s e i z e s u c h g o o d s .
Para 1.4
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
6

17. A l l t h a t t h e C o u r t c a n c o n s i d e r i s , w h e t h e r t h e r e i s g r o u n d w h i c h
prima
facie
j u s t i f i e s t h e r e a s o n a b l e b e l i e f . F u r t h e r , t h e s t a t u t o r y r e q u i r e m e n t o f
r e a s o n a b l e b e l i e f , r o o t e d i n t h e i n f o r m a t i o n i n p o s s e s s i o n o f P r o p e r O f f i c e r
u n d e r t h e A c t , i s t o s a f e g u a r d t h e c i t i z e n f r o m v e x a t i o u s p r o c e e d i n g s .
‘ B e l i e f ’ i s a m e n t a l o p e r a t i o n o f a c c e p t i n g a f a c t a s t r u e , s o , w i t h o u t
a n y f a c t , n o b e l i e f c a n b e f o r m e d . I t i s t r u e t h a t i t i s n o t n e c e s s a r y f o r
t h e P r o p e r O f f i c e r u n d e r t h e A c t t o s t a t e r e a s o n s f o r h i s b e l i e f . B u t i f
i t i s c h a l l e n g e d t h a t h e h a d n o r e a s o n s t o b e l i e v e , i n t h a t c a s e , h e m u s t
d i s c l o s e t h e m a t e r i a l s u p o n w h i c h h i s b e l i e f w a s f o r m e d , a s i t h a s b e e n
h e l d b y t h e
Hon’ble Supreme Court in Sheo Nath Singh
v .
Appellate
Asstt. CIT
A I R 1 9 7 1 S C 2 4 5 1
,
t h a t t h e C o u r t c a n e x a m i n e t h e m a t e r i a l s
t o f i n d o u t w h e t h e r a n h o n e s t a n d r e a s o n a b l e p e r s o n c a n b a s e h i s
r e a s o n a b l e b e l i e f u p o n s u c h m a t e r i a l s a l t h o u g h t h e s u f f i c i e n c y o f t h e
r e a s o n s f o r t h e b e l i e f c a n n o t b e i n v e s t i g a t e d b y t h e C o u r t .
I t i s f u r t h e r s u b m i t t e d h e r e t h a t t h e
Hon’bleGujaratHighCourtPatran
Steel Rolling Mill
v .
Assistant Commissioner of State Tax
[ 2 0 1 9 ] 1 0 1
t a x m a n n . c o m 8 0 ( G u j . ) h e l d t h a t p r o v i s i o n o f s e c t i o n 6 7 , s h o u l d n o t b e
e x e r c i s e d a s a m a t t e r o f c o u r s e , b u t o n l y a f t e r d u e a p p l i c a t i o n o f m i n d
t o t h e r e l e v a n t f a c t o r s .
I t i s f u r t h e r n e e d t o b e n o t e d h e r e t h a t , i n F o r m G S T I N S - 0 2 p r e s c r i b e d
u n d e r r u l e 1 3 9 ( 2 ) o f t h e C G S T R u l e s . R u l e 1 3 9 o f t h e C G S T R u l e s r e l a t e s t o
i n s p e c t i o n , s e a r c h a n d s e i z u r e . S u b - r u l e ( 1 ) t h e r e o f p r o v i d e s f o r i s s u a n c e
o f a u t h o r i s a t i o n i n F o r m G S T I N S - 0 1 b y t h e p r o p e r o f f i c e r n o t b e l o w
t h e r a n k o f J o i n t C o m m i s s i o n e r a u t h o r i s i n g a n y o f f i c e r s u b o r d i n a t e t o
h i m t o c o n d u c t t h e i n s p e c t i o n o r s e a r c h o r , a s t h e c a s e m a y b e , s e i z u r e
o f g o o d s , d o c u m e n t s o r t h i n g s l i a b l e t o c o n f i s c a t i o n . S u b - r u l e ( 2 ) t h e r e o f
p r o v i d e s t h a t a n y g o o d s , d o c u m e n t s , b o o k s o r t h i n g s a r e l i a b l e t o s e i z u r e
u n d e r s u b - s e c t i o n ( 2 ) o f s e c t i o n 6 7 , t h e p r o p e r o f f i c e r o r a n a u t h o r i s e d
o f f i c e r s h a l l m a k e a n o r d e r o f s e i z u r e i n F o r m G S T - I N S - 0 2 . S u b - r u l e ( 5 )
t h e r e o f p r o v i d e s t h a t t h e o f f i c e r s e i z i n g t h e g o o d s , d o c u m e n t s , b o o k s o r
t h i n g s s h a l l p r e p a r e a n i n v e n t o r y o f s u c h g o o d s o r d o c u m e n t s o r b o o k s
o r t h i n g s c o n t a i n i n g
inter alia,
d e s c r i p t i o n , q u a n t i t y o r u n i t , m a k e , m a r k
o r m o d e l w h e r e a p p l i c a b l e , a n d g e t i t s i g n e d b y t h e p e r s o n f r o m w h o m
s u c h g o o d s o r d o c u m e n t s o r b o o k s o r t h i n g s a r e s e i z e d .
I t i s n e e d t o b e n o t e d h e r e t h a t s e c t i o n 6 7 r e a d w i t h r u l e 1 3 9 o f t h e
C G S T R u l e s m a n d a t e t h a t , s e i z u r e p r o c e e d i n g s s h a l l b e a u t h o r i s e d b y
p r o p e r o f f i c e r n o t b e l o w t h e r a n k o f t h e J o i n t C o m m i s s i o n e r . H e n c e ,
e v e r y s e a r c h a n d s e i z u r e s h a l l b e a u t h o r i s e d b y p r o p e r o f f i c e r . F u r t h e r ,
a t t h i s j u n c t u r e i t i s g e r m a n e t o r e f e r s e c t i o n 1 5 7 o f t h e C G S T A c t /
S G S T A c t w h i c h p r o v i d e s p r o t e c t i o n / i m m u n i t y t o o f f i c e r s o f C G S T /
7
M E A N I N G O F R E A S O N T O B E L I E V E
Para 1.4

18. S G S T o f f i c e r f o r a c t i o n t a k e n b y h i m i n g o o d f a i t h . S e c t i o n 1 5 7 o f t h e
C G S T A c t / S G S T A c t r e a d s a s u n d e r :
“ 1 5 7 .
Protection of action taken under this Act.—
( 1 ) N o s u i t , p r o s e c u t i o n
o r o t h e r l e g a l p r o c e e d i n g s s h a l l l i e a g a i n s t t h e P r e s i d e n t , S t a t e P r e s i d e n t ,
M e m b e r s , o f f i c e r s o r o t h e r e m p l o y e e s o f t h e A p p e l l a t e T r i b u n a l o r a n y
o t h e r p e r s o n a u t h o r i s e d b y t h e s a i d A p p e l l a t e T r i b u n a l f o r a n y t h i n g
w h i c h i s i n g o o d f a i t h d o n e o r i n t e n d e d t o b e d o n e u n d e r t h i s A c t o r t h e
r u l e s m a d e t h e r e u n d e r .
( 2 ) N o s u i t , p r o s e c u t i o n o r o t h e r l e g a l p r o c e e d i n g s s h a l l l i e a g a i n s t a n y
o f f i c e r a p p o i n t e d o r a u t h o r i s e d u n d e r t h i s A c t f o r a n y t h i n g w h i c h i s
d o n e o r i n t e n d e d t o b e d o n e i n g o o d f a i t h u n d e r t h i s A c t o r t h e r u l e s
m a d e t h e r e u n d e r . ”
T h u s , b a r e p e r u s a l o f s u b - s e c t i o n ( 2 ) o f s e c t i o n 1 5 7 o f t h e C G S T A c t
g i v e s i m m u n i t y t o a n o f f i c e r a p p o i n t e d o r a u t h o r i s e d u n d e r t h a t A c t
f o r a n y t h i n g w h i c h i s d o n e o r i n t e n d e d t o b e d o n e i n g o o d f a i t h u n d e r
t h a t A c t o r t h e r u l e s m a d e t h e r e u n d e r . T h u s , a n o f f i c e r i s p r o t e c t e d
p r o v i d e d h e i s a u t h o r i s e d t o d o s o m e t h i n g u n d e r t h e C G S T A c t a n d
p r o v i d e d s u c h a c t h a s b e e n d o n e i n g o o d f a i t h . H e n c e , a n y s e a r c h a n d
s e i z u r e p r o c e e d i n g s c o n d u c t e d b y p r o p e r o f f i c e r w i t h o u t a n y p r o p e r
a u t h o r i s i n g s h a l l n o t g e t i m m u n i t y u n d e r s e c t i o n 1 5 7 o f t h e C G S T A c t
a n d t h e r e f o r e l i a b l e f o r e x e m p l a r y c o s t . A t t h i s j u n c t u r e i t i s n e e d t o b e
n o t e d h e r e t h a t w h e n a n o f f i c e r f u n c t i o n i n g u n d e r t h e C G S T A c t , a c t s i n
a h i g h h a n d e d a n d a r b i t r a r y m a n n e r i n e x c e s s o f t h e a u t h o r i t y v e s t e d i n
h i m t h e s a m e i s r e q u i r e d t o b e v i e w e d v e r y s e r i o u s l y . J u s t i c e d e m a n d s
t h a t s u c h c i t i z e n b e c o m p e n s a t e d f o r t h e u n d u e h a r a s s m e n t f a c e d b y
h i m o n a c c o u n t o f t h e u n a u t h o r i s e d a c t i o n o f t h e c o n c e r n e d o f f i c e r 4 .
1.5 TERM ‘SECRETED PLACE’ UNDER SECTION 67(2) IS REALLY
SECRETED?
S u b - s e c t i o n ( 2 ) o f s e c t i o n 6 7 o f t h e C G S T A c t e m p o w e r s p r o p e r o f f i c e r
n o t b e l o w r a n k o f J o i n t C o m m i s s i o n e r t o c a r r y o u t s e a r c h p r o c e e d i n g ,
p r o v i d e d t h a t J o i n t C o m m i s s i o n e r h a s r e a s o n t o b e l i e v e t h a t a n y g o o d s
l i a b l e t o b e c o n f i s c a t i o n o r a n y d o c u m e n t s / b o o k s w h i c h i n o p i n i o n o f
t h e p r o p e r o f f i c e r i s r e l e v a n t f o r t h e p r o c e e d i n g s u n d e r t h e A c t b u t s u c h
d o c u m e n t s / b o o k s / t h i n g s / g o o d s a r e s e c r e t e d a t a n y p l a c e .
I t i s i m p e r a t i v e t o m e n t i o n h e r e t h a t s i n c e i t i s s e t t l e d p o s i t i o n t h a t t a x
l a w s a r e a l w a y s i n t e r p r e t e d i n s t r i c t m a n n e r t h e r e f o r e o n e m a y t a k e
a v i e w t h a t s e a r c h a n d s e i z u r e p r o c e e d i n g s c a n b e i n i t i a t e d b y p r o p e r
4 .
Prakashsinh Hathisinh Udavat
v .
State of Gujarat
[ 2 0 1 9 ] 1 1 2 t a x m a n n . c o m 1 2 4 ( G u j . ) .
Para 1.5
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
8

19. o f f i c e r o n l y w h e n s u c h p r o p e r o f f i c e r h a v e a n o p i n i o n t h a t a n y g o o d s /
b o o k s / d o c u m e n t s / t h i n g s w h i c h a r e r e l e v a n t / u s e f u l t o a n y p r o c e e d i n g s
u n d e r t h e C G S T A c t a n d / o r r u l e s m a d e t h e r e u n d e r , a r e s e c r e t e d a t a n y
p l a c e . H o w e v e r , h e r e i t i s p e r t i n e n t t o n o t e t h a t , w h e r e a l l g o o d s a r e
d u l y r e c o r d e d i n t h e b o o k s o r w h e r e a l l r e l e v a n t b o o k s / d o c u m e n t s /
t h i n g s a r e f o u n d a t b u s i n e s s p l a c e o f t a x p a y e r s e v e n i n t h e n t h e w o r d
‘ s e c r e t e d ’ h a v e s i g n i f i c a n t r o l e .
T h e w o r d s e c r e t e d h a s n o t b e e n d e f i n e d u n d e r t h e A c t . I t i s a l s o s e t t l e d
p r i n c i p l e t h a t a w o r d u s e d i n l e g i s l a t i o n m a y b e g i v e n t h e m e a n i n g i n
t h e c o n t e x t i n w h i c h i t h a s b e e n u s e d .
I t i s i m p o r t a n t t o n o t e t h a t , s e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t / S G S T A c t i s
pari materia
t o s e c t i o n 1 0 5 o f t h e C u s t o m s A c t , 1 9 6 2 .
“ 1 0 5 .
Power to search premises.
— ( 1 ) I f t h e A s s i s t a n t C o l l e c t o r o f
C u s t o m s , o r i n a n y a r e a a d j o i n i n g t h e l a n d f r o n t i e r o r t h e c o a s t o f I n d i a
a n o f f i c e r o f c u s t o m s s p e c i a l l y e m p o w e r e d b y n a m e i n t h i s b e h a l f b y
t h e B o a r d ,
has reason to believe that any goods liable to confiscation,
or any documents or things which in his opinion will be useful for or
relevant to any proceeding under this Act, are secreted in any place, he
may authorise any officer of customs to search or may himself search
for such goods, documents or things.
( 2 ) T h e p r o v i s i o n s o f t h e C o d e o f C r i m i n a l P r o c e d u r e , 1 8 9 8 , r e l a t i n g t o
s e a r c h e s s h a l l , s o f a r a s m a y b e , a p p l y t o s e a r c h e s u n d e r t h i s s e c t i o n
S u b j e c t t o t h e m o d i f i c a t i o n t h a t s u b - s e c t i o n ( 5 ) o f s e c t i o n 1 6 5 o f t h e
s a i d C o d e s h a l l h a v e e f f e c t a s i f f o r t h e w o r d ‘ M a g i s t r a t e ’ , w h e r e v e r i t
o c c u r s , t h e w o r d s “ C o l l e c t o r o f C u s t o m s ” w e r e s u b s t i t u t e d . ”
T h e S u p r e m e C o u r t i n t h e c a s e o f G
ian Chand
v .
State of Punjab
[ 1 9 6 1 ]
1 9 6 1 t a x m a n n . c o m 8 / 1 9 8 3 ( 1 3 ) E L T 1 3 6 5 ( S C ) h a d a n o c c a s i o n t o c o n s i d e r
t h e m e a n i n g o f t h e w o r d “ s e c r e t e d ” w i t h i n t h e m e a n i n g o f s e c t i o n 1 0 5
o f t h e C u s t o m s A c t . T h e S u p r e m e C o u r t i n t h e a f o r e s a i d d e c i s i o n h a s
o b s e r v e d a n d h e l d a s u n d e r :
“ . . . I t c a n n o t b e s a i d t h a t t h e d o c u m e n t s h a v e n o t b e e n ‘ s e c r e t e d w i t h i n
t h e m e a n i n g o f s e c t i o n 1 0 5 o f t h e C u s t o m s A c t u n l e s s t h e y a r e h i d d e n
o r c o n c e a l e d .
In the context of the section the word means documents
which are not kept in the normal or usual place’ or it may even mean
‘documents or things which are likely to be secreted’; in other words
documents or things which a person is likely to keep out of the way or
to put in a place where the officer of the law cannot find it.
T h e p o w e r t o s e a r c h g r a n t e d u n d e r s e c t i o n 1 0 5 o f t h e C u s t o m s A c t i s a
p o w e r o f g e n e r a l s e a r c h a n d i t i s n o t n e c e s s a r y f o r i t s e x e r c i s e t h a t t h e
a u t h o r i s a t i o n s h o u l d s p e c i f y t h e d o c u m e n t s f o r w h i c h s e a r c h i s t o b e
m a d e . B u t i t i s e s s e n t i a l t h a t b e f o r e t h i s p o w e r i s e x e r c i s e d t h e p r e l i m i n a r y
9
T E R M ‘ S E C R E T E D P L A C E ’ U / S 6 7 ( 2 )
Para 1.5

20. c o n d i t i o n s r e q u i r e d b y t h e s e c t i o n m u s t b e s t r i c t l y s a t i s f i e d t h a t i s , t h e
o f f i c e r c o n c e r n e d m u s t h a v e r e a s o n t o b e l i e v e t h a t a n y d o c u m e n t s o r
t h i n g s w h i c h - i n h i s o p i n i o n a r e r e l e v a n t f o r a n y p r o c e e d i n g u n d e r t h e
A c t a r e s e c r e t e d i n t h e p l a c e s e a r c h e d . ”
I n v i e w o f t h e a b o v e , e v e n i f t h e a u t h o r i t y h a s r e a s o n t o b e l i e v e t h a t t h e
g o o d s l i a b l e t o b e c o n f i s c a t e d a r e l i k e l y t o b e s e c r e t e d t h e a u t h o r i t y w i l l
h a v e t h e p o w e r t o p a s s a n o r d e r o f p r o h i b i t i o n p u r s u a n t t o t h e o r d e r
o f s e i z u r e .
I n
Pukhraj
v .
D. R. Kohli
1 9 6 2 t a x m a n n . c o m 6 / 1 9 8 3 ( 1 3 ) E L T 1 3 6 0 ( S C )
t h e H o n ’ b l e S u p r e m e C o u r t o b s e r v e d a s f o l l o w s :
“ A f t e r a l l , w h e n w e a r e d e a l i n g w i t h a q u e s t i o n a s t o w h e t h e r t h e b e l i e f i n
t h e m i n d o f t h e o f f i c e r w h o e f f e c t e d t h e s e i z u r e w a s r e a s o n a b l e o r n o t ,
w e a r e n o t s i t t i n g i n a p p e a l o v e r t h e d e c i s i o n o f t h e s a i d o f f i c e r . A l l t h a t
w e c a n c o n s i d e r i s , w h e t h e r t h e r e i s g r o u n d w h i c h
prima facie
j u s t i f i e s
t h e s a i d r e a s o n a b l e b e l i e f . ”
I f t h e i n f o r m a t i o n i s s u c h a s l e a d s t h e P r o p e r O f f i c e r t o b e l i e v e t h a t t h e
a r t i c l e s o f s e a r c h a r e s e c r e t e d i n a p l a c e , h e m a y t h e r e b y h a v e
‘reasons
to believe
’ a s c o n t e m p l a t e d u n d e r s e c t i o n 6 7 o f t h e A c t a n d a u t h o r i s e
i n w r i t i n g a n y o t h e r o f f i c e r t o s e a r c h a n d s e i z e s u c h g o o d s . A l l t h a t
t h e C o u r t c a n c o n s i d e r i s , w h e t h e r t h e r e i s g r o u n d w h i c h
prima faciej u s t i f i e s t h e r e a s o n a b l e b e l i e f .
F u r t h e r , r e f e r e n c e i s i n v i t e d t o
Durga Prasad
v .
H.R. Gomes,
Superintendent (Prevention) Central Excise
1 9 8 3 ( 1 3 ) E L T 1 5 0 1 ( S C ) , i t
w a s a r g u e d b e f o r e t h e S u p r e m e C o u r t t h a t i n c o n t e x t o f s e c t i o n 1 0 5 o f
t h e C u s t o m s A c t t h a t t h e a u t h o r i s a t i o n i n t h e s a i d c a s e w a s n o t l e g a l l y
v a l i d s i n c e t h e r e w a s n o a v e r m e n t b y t h e A s s i s t a n t C o l l e c t o r t h a t t h e
d o c u m e n t s w e r e “ s e c r e t e d ” . H o n ’ b l e S u p r e m e C o u r t i n t h e s a i d m a t t e r
o b s e r v e d a s f o l l o w s :
‘ A c c o r d i n g t o t h e a p p e l l a n t t h e p o w e r o f s e i z u r e u n d e r s e c t i o n 1 0 5 o f
t h e C u s t o m s A c t c a n n o t b e e x e r c i s e d u n l e s s t h e A s s i s t a n t C o l l e c t o r h a d
r e a s o n t o b e l i e v e t h a t t h e d o c u m e n t s w e r e s e c r e t e d . I t w a s a r g u e d t h a t
t h e w o r d ‘ s e c r e t e d ’ i s u s e d i n s e c t i o n 1 0 5 i n t h e s e n s e o f b e i n g h i d d e n o r
c o n c e a l e d a n d u n l e s s t h e o f f i c e r h a d r e a s o n t o b e l i e v e t h a t a n y d o c u m e n t
w a s s o c o n c e a l e d o r h i d d e n , a s e a r c h c o u l d n o t b e m a d e f o r s u c h a
d o c u m e n t . W e a r e u n a b l e t o a c c e p t t h e s u b m i s s i o n o f t h e a p p e l l a n t a s
c o r r e c t . I n o u r o p i n i o n , t h e w o r d ‘ s e c r e t e d ’ m u s t b e u n d e r s t o o d i n t h e
c o n t e x t i n w h i c h t h e w o r d i s u s e i n t h e s e c t i o n .
In that context, it means
“documents which are kept not in the normal or usual place with a view
to conceal them” or it may even mean “documents or things which are
likelytobesecreted”;inotherwords,documentsorthingswhichaperson
is likely to keep out of the way or to put in a place where the officer of
Para 1.5
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
10

21. law cannot find it.
I t i s i n t h i s s e n s e t h a t t h e w o r d ‘ s e c r e t e d ’ m u s t b e
u n d e r s t o o d a s i t i s u s e d i n s e c t i o n 1 0 5 o f t h e C u s t o m s A c t .
I n t h i s c o n n e c t i o n r e f e r e n c e w a s m a d e b y t h e S o l i c i t o r - G e n e r a l t o t h e
a f f i d a v i t s o f t h e S u p e r i n t e n d e n t o f C e n t r a l E x c i s e d a t e d O c t o b e r 2 8 ,
1 9 6 3 . P a r a 6 s t a t e s t h a t
“some of the documents were recovered from the
living apartments and safe of the petitioner and also from the drawers
of the tables and cabinets utilised by his sons and a search was made
for documents which may have been secreted in the premises”.
F u r t h e r , H o n ’ b l e S u p r e m e C o u r t i n t h e c a s e o f
R.S. Seth
v .
R.N. Sen[ 1 9 6 7 ] 1 9 6 7 t a x m a n n . c o m 1 / [ 1 9 8 3 ] 1 3 E L T 1 4 3 4 w i t h r e g a r d t o p o w e r
g i v e n u n d e r s e c t i o n 1 0 5 o f t h e C u s t o m s A c t o b s e r v e d a s f o l l o w s :
“ S e c t i o n 1 0 5 o f t h e A c t c o n f e r s a n u n g u i d e d a n d a r b i t r a r y p o w e r o n
t h e A s s i s t a n t C o l l e c t o r o f C u s t o m s t o m a k e a s e a r c h , t h e o n l y c o n d i t i o n
b e i n g o f t h e f a c t s m e n t i o n e d t h e r e i n . I t i s s a i d t h a t t h e s a i d b e l i e f i s
p r a c t i c a l l y a s u b j e c t i v e s a t i s f a c t i o n a n d t h e s e c t i o n n e i t h e r l a y s d o w n a n y
p o l i c y n o r i m p o s e s a n y e f f e c t i v e c o n t r o l o n h i s a b s o l u t e d i s c r e t i o n . S o
s t a t e d t h e a r g u m e n t i s a t t r a c t i v e , b u t a d e e p e r s c r u t i n y o f t h e p r o v i s i o n s
i n d i c a t e s n o t o n l y a p o l i c y b u t a l s o e f f e c t i v e c h e c k s o n t h e e x e r c i s e o f
t h e p o w e r t o s e a r c h b y t h e A s s i s t a n t C o l l e c t o r o f C u s t o m s . T h e o b j e c t
o f t h e s e c t i o n i s t o m a k e a s e a r c h f o r t h e g o o d s l i a b l e t o b e c o n f i s c a t e d
o r t h e d o c u m e n t s s e c r e t e d i n a n y p l a c e w h i c h a r e r e l e v a n t t o a n y
p r o c e e d i n g u n d e r t h e A c t . T h e l e g i s l a t i v e p o l i c y r e f l e c t e d i n t h e s e c t i o n
i n t h a t t h e s e a r c h m u s t b e i n r e g a r d t o t h e t w o c a t e g o r i e s m e n t i o n e d
t h e r e i n , n a m e l y , g o o d s l i a b l e t o b e c o n f i s c a t e d a n d d o c u m e n t s r e l e v a n t
t o a p r o c e e d i n g u n d e r t h e A c t .
No doubt, the power can be abused. But
that is controlled by other means. Though under the section the Assistant
Collector of Customs need not give the reasons, if the existence of belief
is questioned in any collateral proceedings, he has to produce relevant
evidence to sustain his belief.”
Conclusion:
T h u s , i f t h e i n f o r m a t i o n i s s u c h a s l e a d s t h e P r o p e r O f f i c e r t o b e l i e v e
t h a t t h e a r t i c l e s o f s e a r c h a r e s e c r e t e d i n a p l a c e , h e m a y t h e r e b y h a v e
‘ r e a s o n s t o b e l i e v e ’ a s c o n t e m p l a t e d u n d e r s e c t i o n 6 7 o f t h e A c t a n d
a u t h o r i s e i n w r i t i n g a n y o t h e r o f f i c e r t o s e a r c h a n d s e i z e s u c h g o o d s .
A l l t h a t t h e C o u r t c a n c o n s i d e r i s , w h e t h e r t h e r e i s g r o u n d w h i c h
prima
facie
j u s t i f i e s t h e r e a s o n a b l e b e l i e f .
I n
Durga Prasad’s
c a s e (
supra
) i t h a s b e e n h e l d b y t h e S u p r e m e C o u r t
t h a t t h e p o w e r o f s e a r c h g r a n t e d u n d e r s e c t i o n 1 0 5 o f t h e C u s t o m s A c t
(
para materia
t o s e c t i o n 6 7 o f t h e 2 0 1 7 A c t ) i s a p o w e r o f g e n e r a l s e a r c h
b u t i t i s e s s e n t i a l t h a t b e f o r e t h i s p o w e r i s e x e r c i s e d , t h e p r e l i m i n a r y
c o n d i t i o n s r e q u i r e d b y t h e s e c t i o n m u s t b e s t r i c t l y s a t i s f i e d , t h a t i s , t h e
11
T E R M ‘ S E C R E T E D P L A C E ’ U / S 6 7 ( 2 )
Para 1.5

22. o f f i c e r c o n c e r n e d m u s t h a v e r e a s o n s t o b e l i e v e t h a t t h e d o c u m e n t s
a n d t h i n g s w h i c h i n h i s o p i n i o n a r e r e l e v a n t f o r a n y p r o c e e d i n g s
u n d e r t h e A c t , a r e s e c r e t e d i n t h e i r p l a c e . I n
R.S. Seth Gopikisen’s
c a s e
(
supra
) , t h e S u p r e m e C o u r t h e l d t h a t s e c t i o n 1 0 5 o f t h e C u s t o m s A c t
d i d n e i t h e r c o m p e l t h e o f f i c e r t o g i v e r e a s o n s n o r t h e p a r t i c u l a r s o f t h e
g o o d s a n d o f t h e d o c u m e n t s w e r e t o b e g i v e n i n t h e a u t h o r i s a t i o n . T h e
s t a t u t o r y r e q u i r e m e n t o f r e a s o n a b l e b e l i e f , r o o t e d i n t h e i n f o r m a t i o n i n
p o s s e s s i o n o f P r o p e r O f f i c e r u n d e r t h e A c t , i s t o s a f e g u a r d t h e c i t i z e n
f r o m v e x a t i o u s p r o c e e d i n g s .
C o n s i d e r i n g t h e S c h e m e o f t h e C G S T A c t t h e w o r d ‘ s e c r e t e d ’ p l a i n l y
i m p l i e s t o b e h i d d e n o r n o t d i s c l o s e d t o t h e r e v e n u e a u t h o r i t i e s f o r t h e
p u r p o s e s o f m a k i n g a f a i r s e l f - a s s e s s m e n t . O n c e t h e d e a l e r d o e s n o t
r e c o r d t h e g o o d s i n h i s r e g u l a r b o o k s o f a c c o u n t , a p r e s u m p t i o n a r i s e s
t h a t h e d o e s n o t i n t e n d t o d i s c l o s e t h e s a m e t o t h e A s s e s s i n g A u t h o r i t y
o r t h e r e v e n u e f o r t h e p u r p o s e o f m a k i n g a f a i r s e l f - a s s e s s m e n t o f h i s
t u r n o v e r . T h e A c t d o e s n o t w o r k o n t h e p r i n c i p l e o f p h y s i c a l v e r i f i c a t i o n
o f e a c h a n d e v e r y g o o d s d e a l t w i t h o r t r a n s a c t i o n p e r f o r m e d b y a n y
a s s e s s e e . I n f a c t i f a t a l l i t w o u l d b e t h e b o o k s o f a c c o u n t t h a t w o u l d
b e e x a m i n e d t o d e t e r m i n e b o t h t h e n a t u r e o f t h e g o o d s a s a l s o t h e
q u a n t u m o f v a l u e o f t h e g o o d s d e a l t w i t h b y t h e a s s e s s e e .
F u r t h e r , H o n ’ b l e A l l a h a b a d H i g h C o u r t i n t h e c a s e o f
Rajeev Traders
v .
State of U.P.
5 W h i l e c o n s i d e r i n g l e g a l i t y o f s e i z u r e o r d e r p a s s e d u n d e r
s e c t i o n 6 7 ( 2 ) o f t h e U P G S T A c t h e l d t h a t o n c e i t w a s a d m i t t e d t h a t t h e
a s s e s s e e h a d n o t r e c o r d e d g o o d s f o u n d / s t o r e d a t i t s p r i n c i p a l p l a c e o f
b u s i n e s s , i n i t s b o o k s o f a c c o u n t , a p r e s u m p t i o n o f g o o d s h a v i n g b e e n
secreted
d i d a r i s e . T h e H o n ’ b l e A l l a h a b a d H i g h C o u r t w h i l e u p h o l d i n g
t h e s e i z u r e o r d e r o b s e r v e d t h a t t h e r e w a s n o t h i n g t o r e s t r i c t m e a n i n g
o f ‘
in any place
’ i n s e c t i o n 6 7 t o o n l y u n d i s c l o s e d p l a c e o f b u s i n e s s .
R e l e v a n t e x t r a c t o f j u d g m e n t i s r e p r o d u c e d b e l o w :
‘ 1 7 . T h e r e f o r e , o n c e i t w a s a d m i t t e d t o t h e a s s e s s e e d u r i n g t h e c o u r s e o f
t h e s u r v e y t h a t i t h a d n o t r e c o r d e d t h e g o o d s f o u n d s t o r e d a t h i s d i s c l o s e d
p l a c e o f b u s i n e s s i n t h e r e g u l a r b o o k s o f a c c o u n t , a p r e s u m p t i o n o f t h e
g o o d s h a v i n g b e e n ‘ s e c r e t e d ’ d i d a r i s e , c o n s t r u c t i v e l y . I t m a y b e a d d e d
h e r e i t s e l f t h a t t h e p r e s u m p t i o n , a s h a s b e e n c o n s i d e r e d h e r e , w o u l d
r e m a i n r e b u t t a b l e . H o w e v e r , a t t h i s s t a g e i t s e x i s t e n c e m a y n o t b e d e n i e d .
1 8 . A l s o , t o t h e p l a c e w h e r e t h e d o c u m e n t s , b o o k s o r i t e m s m a y b e
‘ s e c r e t e d ’ , t h e A c t u s e s t h e w o r d s ‘ i n a n y p l a c e ’ . P l a i n l y , t h e a m b i t o f
t h i s p h r a s e i n c l u d e s b o t h t h e d i s c l o s e d p l a c e / s o f b u s i n e s s a n d t h e
u n d i s c l o s e d p l a c e / s o f b u s i n e s s o f a n a s s e s s e e . T h e r e i s n o w a r r a n t t o
r e s t r i c t t h e m e a n i n g o f t h e s e w o r d s t o o n l y u n d i s c l o s e d p l a c e o f b u s i n e s s
5 .
W R I T T A X N o . 8 1 9 o f 2 0 1 9 .
Para 1.5
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
12

23. s i n c e t h e l e g i s l a t u r e h a s n e i t h e r u s e d a n y w o r d o r p h r a s e t o i n t r o d u c e
s u c h i n t e n d m e n t n o r o t h e r w i s e t h e r e i s a n y r e a s o n t o r e s t r i c t t h e p l a i n
g r a m m a t i c a l m e a n i n g o f t h o s e w o r d s .
1 9 . T h e o b j e c t o f t h e p r o v i s i o n b e i n g c l e a r l y t o e n s u r e t h a t d e a l e r s w o u l d
d i s c l o s e t h e i r s t o c k s i n t h e i r b o o k s o f a c c o u n t a n d n o t i n d u l g e i n a n y
u n d i s c l o s e d t r a d i n g , t h e i n t e r p r e t a t i o n a s s u g g e s t e d b y l e a r n e d c o u n s e l
f o r t h e a s s e s s e e w o u l d , i f a c c e p t e d , d e f e a t t h a t o b j e c t a n d e n c o u r a g e
c o n d u c t o f u n d i s c l o s e d b u s i n e s s f r o m d i s c l o s e d p l a c e / s o f b u s i n e s s . ’
I t i s a l s o n e e d t o b e n o t e d h e r e t h a t s i m i l a r v i e w h a s b e e n t a k e n b y t h e
Hon’ble Gujarat High Court
i n t h e c a s e o f G o l d e n
Cotton Industriesv .
Union of India
[ 2 0 1 9 ] 1 0 2 t a x m a n n . c o m 4 1 2 / 7 2 G S T 4 0 6 ( G u j . )
S e c t i o n 6 7 ( 3 ) o f t h e C G S T A c t p r o v i d e s t h a t r e t u r n o f t h o s e d o c u m e n t s /
b o o k s / t h i n g s w h i c h a r e n o t r e l i e d b y t h e p r o p e r o f f i c e r u p o n i s s u a n c e
o f s h o w n o t i c e t o t a x p a y e r a f t e r c o n d u c t i n g o f s e a r c h a n d s e i z u r e u n d e r
s u b - s e c t i o n ( 2 ) o f s e c t i o n 6 7 o f t h e C G S T A c t , s h a l l b e r e t u r n e d b a c k
w i t h i n a p e r i o d o f t h i r t y d a y s f r o m d a t e o f i s s u e o f n o t i c e .
I t i s p e r t i n e n t t o n o t e t h a t , j u r i s p r u d e n c e h a s a l r e a d y b e e n d e v e l o p e d
w i t h r e g a r d t o p o w e r o f s e a r c h a n d s e i z u r e u n d e r f i s c a l l a w s . T h e
H o n ’ b l e S u p r e m e C o u r t i n
M.P. Sharma
v .
Satish Chandra MagistrateA I R 1 9 5 4 S C 3 0 0 / [ 1 9 5 4 ] 2 E L T 2 8 7 ( h e l d t h a t p o w e r o f s e a r c h a n d
s e i z u r e i n a n y s y s t e m o f j u r i s p r u d e n c e i s a n o v e r r i d i n g p o w e r o f t h e
S t a t e t o p r o v i d e s e c u r i t y a n d t h a t p o w e r i s n e c e s s a r i l y r e g u l a t e d b y l a w .
F u r t h e r , H o n ’ b l e H i g h C o u r t o f M a d r a s i n t h e c a s e o f
V.V.V.R. Sathyam
v .
Superintendent (STU)
[ 2 0 1 3 ] 2 9 S T R 2 1 4 / [ 2 0 1 2 ] 2 7 6 E L T 3 1 8 h e l d t h a t
‘
search and seizure
’ i s n o t a n e w w e a p o n i n t h e a r m o r y o f t h o s e w h o s e
d u t y i s t o m a i n t a i n s o c i a l s e c u r i t y i t i t s b r o a d c a s t s e n s e . T h e p r o c e s s i s
w i d e l y r e c o g n i s e d i n a l l c i v i l i s e d c o u n t r i e s . A s e a r c h a n d s e i z u r e i s o n l y a
t e m p o r a r y i n t e r f e r e n c e w i t h t h e r i g h t t o h o l d t h e p r e m i s e s s e a r c h e d a n d
t h e a r t i c l e s s e i z e d . T h e r e f o r e , i t c a n n o t b e a v i o l a t i o n o f t h e p r o v i s i o n s
o f A r t i c l e 1 9 ( 1 ) o f t h e C o n s t i t u t i o n o f I n d i a .
1.6 ‘GOODS LIABLE TO CONFISCATION’ - SITUATION BASED TEST
I t i s i m p o r t a n t t o n o t e h e r e t h a t , s e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t p r o v i d e s
t h a t w h e r e t h e p r o p e r o f f i c e r h a v i n g r a n k o f J o i n t C o m m i s s i o n e r o r
a b o v e , e i t h e r p u r s u a n t t o a n i n s p e c t i o n a s c a r r i e d i n a c c o r d a n c e w i t h
p r o v i s i o n s o f s e c t i o n 6 7 ( 1 ) o f t h e C G S T A c t o r o t h e r w i s e , h a s r e a s o n s
t o b e l i e v e t h a t a n y g o o d s l i a b l e t o c o n f i s c a t i o n o r a n y d o c u m e n t s o r
b o o k s o r t h i n g s , w h i c h i n h i s o p i n i o n s h a l l b e u s e f u l f o r o r r e l e v a n t t o
a n y p r o c e e d i n g s u n d e r t h i s A c t , a r e s e c r e t e d i n a n y p l a c e , t h e n i n s u c h
c a s e h e m a y a u t h o r i s e i n w r i t i n g a n y o t h e r o f f i c e r o f c e n t r a l t a x t o s e a r c h
13
G O O D S L I A B L E T O C O N F I S C A T I O N
Para 1.6

24. a n d s e i z e o r m a y h i m s e l f s e a r c h a n d s e i z e s u c h g o o d s , d o c u m e n t s o r
b o o k s o r t h i n g s .
T h e r e f o r e , b o o k s o r d o c u m e n t s o r t h i n g s c a n b e s e i z e d w h e n p r o p e r
o f f i c e r i n h i s o p i n i o n 6 f i n d s t h a t a n y b o o k s o r d o c u m e n t s o r t h i n g s a r e
u s e f u l / r e l e v a n t f o r a n y p r o c e e d i n g s u n d e r t h e p r o v i s i o n s o f t h e C G S T
A c t ,
are
s e c r e t e d a t a n y p l a c e . H e n c e , f o r t h e p u r p o s e o f s e i z u r e o f b o o k s
o r d o c u m e n t s o r t h i n g s t h e r e m u s t b e s a t i s f a c t i o n o f t w i n c o n d i t i o n
i.e.
(
a
) s u c h b o o k s o r d o c u m e n t s o f t h i n g s a r e u s e f u l / r e l e v a n t f o r
p r o c e e d i n g s u n d e r t h e C G S T A c t a n d (
b
) t h e r e i s p r e s u m p t i o n / r e a s o n
t o b e l i e v e t h a t s u c h b o o k s o r d o c u m e n t s o r t h i n g s a r e s e c r e t e d a t a n y
p l a c e . T e r m ‘ s e c r e t e d p l a c e ’ h a s a l r e a d y b e e n d i s c u s s e d a b o v e .
H o w e v e r , i t i s n e e d t o b e a p p r e c i a t e d h e r e t h a t , g o o d s c a n b e s e i z e d
i n t e r m s o f s e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t o n l y w h e n t h e y a r e l i a b l e t o
c o n f i s c a t e d . A l t h o u g h t e r m
‘goods liable to confiscation’
i s n o t d e f i n e d
u n d e r t h e C G S T A c t h o w e v e r s e c t i o n 1 3 0 ( 1 ) o f t h e C G S T A c t e n v i s a g e s
t h e s i t u a t i o n w h e n g o o d s s h a l l b e l i a b l e t o c o n f i s c a t i o n . S e c t i o n 1 3 0 ( 1 )
o f t h e C G S T A c t r e a d s a s f o l l o w s :
“ ( 1 ) N o t w i t h s t a n d i n g a n y t h i n g c o n t a i n e d i n t h i s A c t , i f a n y p e r s o n —
(
i
)
s u p p l i e s o r r e c e i v e s a n y g o o d s i n c o n t r a v e n t i o n o f a n y o f t h e
p r o v i s i o n s o f t h i s A c t o r t h e r u l e s m a d e t h e r e u n d e r w i t h i n t e n t
t o e v a d e p a y m e n t o f t a x ; o r
(
ii
)
d o e s n o t a c c o u n t f o r a n y g o o d s o n w h i c h h e i s l i a b l e t o p a y t a x
u n d e r t h i s A c t ; o r
(
iii
)
s u p p l i e s a n y g o o d s l i a b l e t o t a x u n d e r t h i s A c t w i t h o u t h a v i n g
a p p l i e d f o r r e g i s t r a t i o n ; o r
(
iv
)
c o n t r a v e n e s a n y o f t h e p r o v i s i o n s o f t h i s A c t o r t h e r u l e s m a d e
t h e r e u n d e r w i t h i n t e n t t o e v a d e p a y m e n t o f t a x ; o r
(
v
)
u s e s a n y c o n v e y a n c e a s a m e a n s o f t r a n s p o r t f o r c a r r i a g e o f
g o o d s i n c o n t r a v e n t i o n o f t h e p r o v i s i o n s o f t h i s A c t o r t h e r u l e s
m a d e t h e r e u n d e r u n l e s s t h e o w n e r o f t h e c o n v e y a n c e p r o v e s
t h a t i t w a s s o u s e d w i t h o u t t h e k n o w l e d g e o r c o n n i v a n c e o f t h e
o w n e r h i m s e l f , h i s a g e n t , i f a n y , a n d t h e p e r s o n i n c h a r g e o f t h e
c o n v e y a n c e ,
t h e n ,
all such goods
o r c o n v e y a n c e s
shall be liable to confiscation
a n d
t h e p e r s o n s h a l l b e l i a b l e t o p e n a l t y u n d e r s e c t i o n 1 2 2 . ”
I n n u t s h e l l , s e c t i o n 1 3 0 ( 1 ) o f t h e C G S T A c t p r o v i d e s f o r s p e c i f i c s i t u a t i o n s
o r c a u s e s l e a d i n g t o t h e c o n f i s c a t i o n o f g o o d s / c o n v e y a n c e s . F o l l o w i n g s
a r e t h e s i t u a t i o n s w h e r e g o o d s s h a l l b e l i a b l e t o c o n f i s c a t i o n :
6 .
T h e m e a n i n g o f t e r m
‘Opinion’/inhisOpinion/Commissioner’sOpinion’
h a s b e e n d i s c u s s e d
s e p a r a t e l y i n C h a p t e r t i t l e d
Provisional Attachment to protect revenue in Summon pro-
ceedings under GST.
Para 1.6
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
14

25. (
a
)
I f s u p p l y i s m a d e i n c o n t r a v e n t i o n o f a n y o f t h e p r o v i s i o n s o f
G S T l a w w i t h i n t e n t i o n t o e v a d e p a y m e n t o f t a x ; o r
(
b
)
I f g o o d s a r e n o t a c c o u n t e d f o r o n w h i c h t a x i s l i a b l e t o b e p a i d ;
o r
(
c
)
I f g o o d s l i a b l e t o t a x a r e s u p p l i e d w i t h o u t h a v i n g a p p l i e d f o r
r e g i s t r a t i o n ( 3 0 d a y s t i m e l i m i t i s t h e r e f o r a p p l y i n g r e g i s t r a t i o n ,
f r o m t h e d a t e p e r s o n b e c o m e s l i a b l e f o r p a y i n g t a x ) ; o r
(
d
)
C o n t r a v e n e s a n y o f t h e p r o v i s i o n s o f t h i s A c t o r t h e r u l e s m a d e
t h e r e u n d e r w i t h a n i n t e n t i o n t o e v a d e p a y m e n t o f t a x .
T h e r e f o r e , i f a n y o f t h e a b o v e r e f e r r e d s i t u a t i o n s e m e r g e d t h e n o n l y ,
g o o d s s h a l l b e l i a b l e f o r c o n f i s c a t i o n . F u r t h e r , i f g o o d s a r e l i a b l e f o r
c o n f i s c a t i o n t h e n o n l y g o o d s c a n b e s e i z e d . I n o t h e r w o r d s , i f g o o d s a r e
n o t l i a b l e t o c o n f i s c a t i o n i n t e r m s o f p r o v i s i o n s o f s e c t i o n 1 3 0 ( 1 ) o f t h e
C G S T A c t t h e n s u c h g o o d s c a n n o t b e s e i z e d i n t e r m s o f p r o v i s i o n s o f
s e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t .
I t i s n e e d t o b e a p p r e c i a t e d h e r e t h a t , i n t e r m s o f s e c t i o n 6 7 ( 2 ) o f t h e
C G S T A c t , g o o d s c a n b e s e i z e d w h e n p r o p e r o f f i c e r h a s r e a s o n t o b e l i e v e
t h a t g o o d s a r e l i a b l e f o r c o n f i s c a t i o n . T h e r e f o r e , r e a s o n t o b e l i e v e a s
f o r m e d b y t h e p r o p e r o f f i c e r s h o u l d c a t e g o r i c a l l y j u s t i f y / s h o w s , u n d e r
w h i c h s i t u a t i o n (
out of 4 situations as envisaged under sub-section
(
1
)
of section 130
) g o o d s a r e l i a b l e t o c o n f i s c a t i o n .
S e c t i o n 1 3 0 o f t h e C G S T A c t p r e s c r i b e s s p e c i f i c c i r c u m s t a n c e s f o r t h e
p u r p o s e o f i n v o k i n g t h e p r o v i s i o n s r e l a t i n g t o c o n f i s c a t i o n . I t i s n e e d t o
b e a p p r e c i a t e d h e r e t h a t s e c t i o n 1 3 0 o f t h e C G S T A c t s p e c i f i c a l l y t a l k s
a b o u t t h e i n t e n t i o n . I t i s n e e d t o b e a p p r e c i a t e d h e r e t h a t t h e H o n ’ b l e
G u j a r a t H i g h C o u r t i n t h e c a s e o f
Synergy Fertichem (P.) Ltd.
v .
State
of Gujarat
[ 2 0 2 0 ] 1 1 6 t a x m a n n . c o m 2 2 1 ( G u j . ) h e l d t h a t a t t h e t i m e o f
d e t e n t i o n a n d s e i z u r e o f g o o d s , t h e f i r s t t h i n g t h e a u t h o r i t i e s n e e d t o
l o o k i n t o c l o s e l y i s t h e n a t u r e o f t h e c o n t r a v e n t i o n o f t h e p r o v i s i o n s o f
t h e A c t o r t h e R u l e s . T h e s e c o n d s t e p i n t h e p r o c e s s f o r t h e a u t h o r i t i e s
t o e x a m i n e c l o s e l y i s w h e t h e r s u c h c o n t r a v e n t i o n o f t h e p r o v i s i o n s o f
t h e A c t o r t h e R u l e s w a s w i t h a n i n t e n t t o e v a d e t h e p a y m e n t o f t a x
( w h e r e i t i s e s s e n t i a l ) . A t t h i s j u n c t u r e , i t i s n e e d t o b e a p p r e c i a t e d h e r e
t h a t s e c t i o n 1 3 5 o f t h e C G S T A c t p r o v i d e s f o r p r e s u m p t i o n o f c u l p a b l e
m e n t a l s t a t e b u t s u c h p r e s u m p t i o n i s a v a i l a b l e t o t h e d e p a r t m e n t o n l y
i n t h e c a s e s o f p r o s e c u t i o n a n d n o t f o r t h e p u r p o s e o f s e c t i o n 1 3 0 o f t h e
A c t . T h e H o n ’ b l e H i g h C o u r t o b s e r v e d t h a t , t h e c o n t r a v e n t i o n m a y b e
q u i t e t r i v i a l o r m a y n o t b e o f s u c h a m a g n i t u d e w h i c h b y i t s e l f w o u l d b e
s u f f i c i e n t t o t a k e t h e v i e w t h a t t h e c o n t r a v e n t i o n w a s w i t h t h e n e c e s s a r y
i n t e n t t o e v a d e p a y m e n t o f t a x .
15
G O O D S L I A B L E T O C O N F I S C A T I O N
Para 1.6

26. M e r e l y o n s u s p i c i o n , t h e a u t h o r i t i e s m a y n o t b e j u s t i f i e d i n i n v o k i n g
s e c t i o n 1 3 0 o f t h e C G S T A c t s t r a i g h t w a y a n d c o n c l u d e t h a t g o o d s a r e
l i a b l e f o r c o n f i s c a t i o n a n d a c c o r d i n g l y s u c h g o o d s s h a l l b e s e i z e d i n
t e r m s o f p r o v i s i o n s o f s e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t . G S T a u t h o r i t i e s
w h i l e h o l d i n g t h a t g o o d s s h a l l b e l i a b l e f o r c o n f i s c a t i o n r e c o r d t h e i r
r e a s o n s f o r s u c h b e l i e f i n w r i t i n g , a n d s u c h r e a s o n s s h a l l b e r e c o r d e d
i n w r i t i n g . K i n d l y r e f e r C h a p t e r 3 f o r d e t a i l e d d i s c u s s i o n .
I t i s n e e d t o b e a p p r e c i a t e d h e r e t h a t , f o r m a t i o n o f r e a s o n t o b e l i e v e
b y t h e J o i n t C o m m i s s i o n e r o r a b o v e r a n k , r e g a r d i n g g o o d s a r e l i a b l e
t o c o n f i s c a t i o n m u s t b e b a s e d o n c r e d i b l e m a t e r i a l a n d s u c h r e a s o n t o
b e l i e v e s h o u l d b e f o r m e d i n g o o d f a i t h . T h e f o r m a t i o n o f t h e o p i n i o n b y
t h e a u t h o r i t y t h a t t h e g o o d s a r e l i a b l e t o b e c o n f i s c a t e d s h o u l d r e f l e c t
i n t e n s e a p p l i c a t i o n o f m i n d a n d b a s e d o n j u s t i f i a b l e g r o u n d s . I n s h o r t ,
a c t i o n m u s t b e h e l d i n g o o d f a i t h a n d s h o u l d n o t b e a m e r e p r e t e n c e .
A t t h i s j u n c t u r e , i t i s n e e d t o b e n o t e d h e r e t h a t s e c t i o n 1 3 0 ( 4 ) o f t h e
C G S T A c t p r o v i d e s t h a t n o o r d e r o f c o n f i s c a t i o n o f g o o d s s h a l l b e
p a s s e d w i t h o u t g r a n t i n g a n o p p o r t u n i t y o f h e a r i n g t o t h e c o n c e r n e d
p e r s o n . I n a u t h o r ’ s v i e w p r o v i s i o n o f s e c t i o n 1 3 0 ( 4 ) o f t h e C G S T A c t
h a s n o r o l e w h i l e p a s s i n g o f s e i z u r e o r d e r . I t i s n e e d t o b e a p p r e c i a t e d
h e r e t h a t , s e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t p r o v i d e s t h a t g o o d s s h a l l b e
s e i z e d w h e n t h e y a r e l i a b l e t o c o n f i s c a t i o n a n d s i t u a t i o n w h e r e g o o d s
s h a l l b e l i a b l e t o c o n f i s c a t i o n a r e e n v i s a g e d u n d e r s e c t i o n 1 3 0 ( 1 ) o f t h e
C G S T A c t . S e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t n o w h e r e p r o v i d e s t h a t f o r t h e
p u r p o s e o f p a s s i n g o f s e i z u r e o r d e r , t h e r e i s p r e r e q u i s i t e o f c o m p l i a n c e o f
S e c t i o n 1 3 0 ( 4 ) o f t h e C G S T A c t . T h e g o o d s m a y b e s e i z e d b y t h e p r o p e r
o f f i c e r n o t b e l o w t h e r a n k o f J o i n t C o m m i s s i o n e r , w h e n s u c h p r o p e r
o f f i c e r h a s r e a s o n t o b e l i e v e t h a t g o o d s a r e l i a b l e t o c o n f i s c a t i o n a n d
t e r m ‘
goods liable to confiscation
’ m u s t b e r e a d i n c o n t e x t o f s e c t i o n
1 3 0 ( 1 ) o f t h e C G S T A c t o n l y . I t i s a l s o n e e d t o b e n o t e d h e r e t h a t f o r
t h e p u r p o s e o f s e i z u r e o f g o o d s i n t e r m s o f p r o v i s i o n s o f s e c t i o n 6 7 ( 2 )
r e a d w i t h s e c t i o n 1 3 0 ( 1 ) o f t h e C G S T A c t , t h e r e i s n o r e q u i r e m e n t f o r
p a s s i n g o f c o n f i s c a t i o n o r d e r a n d h e n c e n o q u e s t i o n o f c o m p l i a n c e o f
s e c t i o n 1 3 0 ( 4 ) c o m e s a s s e c t i o n 1 3 0 ( 4 ) o f t h e C G S T A c t i s e f f e c t i v e o n l y
w h e n a n y c o n f i s c a t i o n o r d e r i s p a s s e d .
T h e p h r a s e “
with intent to evade payment of tax
” a n d t h e e l e m e n t o f
mens rea
:
W h e n t h e s t a t u t e t a l k s a b o u t i n t e n t t o e v a d e p a y m e n t o f t a x , t h e s a m e
c o u l d b e c o - r e l a t e d w i t h t h e t e r m
“wilful attempt”
. F o r t h e p u r p o s e o f
e v a d i n g t a x a n d t h a t t o o , w i t h t h e n e c e s s a r y i n t e n t i o n , t h e r e i s a l w a y s a
w i l f u l a t t e m p t . I n o t h e r w o r d s , t h e a t t e m p t t o e v a d e s h o u l d b e
“wilful”
.
T h e t e r m
“wilful”
h a s n o t b e e n d e f i n e d u n d e r t h e C G S T A c t . U n d e r t h e
Para 1.6
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
16

27. c o m m o n l e g a l c o l u m n s , t h e w o r d “
wilful”
s u g g e s t s t h e g u i l t y m i n d o f
t h e a s s e s s e e . I n o t h e r w o r d s , t h e a s s e s s e e h a s c o n s c i o u s l y o r k n o w i n g l y
a t t e m p t e d t o t h w a r t t h e c h a r g e a b i l i t y o r p a y m e n t o f t a x . F u r t h e r , s u c h
w i l f u l a t t e m p t s h o u l d b e t o
“evade”
t h e c h a r g e a b i l i t y o r i m p o s i t i o n o r
p a y m e n t o f t a x e t c . T h e w o r d “
evade
” h a s a l s o n o t b e e n d e f i n e d i n t h e
C G S T A c t . A s p e r t h e C a m b r i d g e D i c t i o n a r y , t h e w o r d “
evade
” m e a n s
“to avoid or escape from someone or something
” . F u r t h e r , a s p e r t h e
K . J . A y a r ’ s J u d i c i a l D i c t i o n a r y , t h e w o r d “
evade
” i s c a p a b l e o f b e i n g
u s e d i n t w o s e n s e s , o n e w h i c h s u g g e s t u n d e r h a n d d e a l i n g a n d a n o t h e r
w h i c h m e a n s n o t h i n g m o r e t h a n t h e i n t e n t i o n a l a v o i d a n c e o f s o m e t h i n g
d i s a g r e e a b l e . I t i s n e e d t o b e a p p r e c i a t e d h e r e t h a t l e g i s l a t u r e h a s u s e d
t h e w o r d s
“with intent to evade payment of tax”
i n s e c t i o n 1 3 0 o f t h e
C G S T A c t . T h e r e f o r e , w h e n t h e l a w r e q u i r e s a n i n t e n t i o n t o e v a d e
p a y m e n t o f d u t y , t h e n i t i s n o t m e r e f a i l u r e t o p a y d u t y . I t m u s t b e
s o m e t h i n g m o r e . T h a t i s , t h e a s s e s s e e m u s t b e a w a r e t h a t t h e d u t y
w a s l e v i a b l e a n d i t m u s t d e l i b e r a t e l y a v o i d p a y i n g i t . T h e w o r d “
evade
”
i n t h e c o n t e x t m e a n s d e f e a t i n g t h e p r o v i s i o n s o f l a w o f p a y i n g d u t y .
I t i s m a d e m o r e s t r i n g e n t b y u s e o f t h e w o r d
“intent”
. I n o t h e r w o r d s ,
t h e a s s e s s e e m u s t d e l i b e r a t e l y a v o i d t h e p a y m e n t o f d u t y w h i c h i s
p a y a b l e i n a c c o r d a n c e w i t h l a w .
“Mens rea”
i s a s t a t e o f m i n d . U n d e r
t h e c r i m i n a l l a w ,
mens rea
i s c o n s i d e r e d a s t h e ‘ g u i l t y i n t e n t i o n ’ a n d
u n l e s s i t i s f o u n d t h a t t h e ‘ a c c u s e d ’ h a d t h e g u i l t y i n t e n t i o n t o c o m m i t t h e
‘ c r i m e ’ , h e c a n n o t b e h e l d ‘ g u i l t y ’ o f c o m m i t t i n g t h e c r i m e . T h e p r i n c i p l e
o f
mens rea
c o m e s f r o m E n g l i s h C r i m i n a l L a w f r o m t i m e s w h e n t h e
l a w w a s n o t c o d i f i e d . I t w a s s a i d t h a t
actus non facit reum nisi mens
sit rea
( t h e i n t e n t a n d a c t m u s t b o t h c o n c u r t o c o n s t i t u t e t h e c r i m e ) .
B u t t h i s p r i n c i p l e h a s l o s t m u c h o f i t s s i g n i f i c a n c e o w i n g t o g r e a t e r
p r e c i s i o n o f m o d e r n s t a t u t e s . T h e n a t u r e o f i n t e n t o r t h e i n g r e d i e n t s
o f o f f e n c e s a r e n o w c l e a r l y s t a t e d i n t h e s t a t u t e s a n d n o t h i n g f u r t h e r
i s r e q u i r e d t o e s t a b l i s h a s o f f e n c e t h e n w h a t t h e s t a t u t e s p e c i f i e d . W e
h a v e w o r d s l i k e
‘voluntarily’, ‘intentionally’, ‘negligently’, ‘knowingly’,
‘fraudulently’, ‘dishonestly’, ‘rashly’, ‘omits’, ‘without lawful authority’
etc.
, i n v a r i o u s s t a t u t e s . P r o o f o f t h e s t a t e o f m i n d o r o f t h e c o n d u c t o f
t h e p e r s o n a s i n d i c a t e d b y t h e a f o r e s a i d w o r d e s t a b l i s h e s t h e o f f e n c e
a n d n o f u r t h e r g u i l t y i n t e n t o r
mens rea
n e e d b e p r o v e d . I n f a c t t h e r e
a r e m a n y a c t s w h i c h a r e o f f e n c e s a n d d o n o t r e q u i r e p r o o f a n y
mens
rea
o r g u i l t y i n t e n t i o n . I t i s n o t a l w a y s n e c e s s a r y t h a t t h e d o c t r i n e o f
mens rea
i s a t t r a c t e d i n e v e r y f i s c a l s t a t u t e i n a l l s i t u a t i o n s 7 . T h e r e f o r e ,
c o n f i s c a t i o n p r o c e e d i n g c a n n o t b e h e l d a s c r i m i n a l p r o c e e d i n g s , i t s h o u l d
7 .
R.S. Joshi
v .
Ajit Mills Ltd.
A I R 1 9 7 7 S C 2 2 7 9 ;
State of Rajasthan
v .
D.P. Metals
A I R 2 0 0 1 S C
3 0 7 6 ;
Lalji Moolji Transport Co.
v .
State of Rajasthan
[ D B C W N o . 3 2 4 o f 2 0 0 2 ( R a j . ) ] .
17
G O O D S L I A B L E T O C O N F I S C A T I O N
Para 1.6

28. b e c o n s i d e r e d a s q u a s i j u d i c i a l p r o c e e d i n g . O r d i n a r i l y , p r o o f b e y o n d
r e a s o n a b l e d o u b t a n d p r o o f o f
mens rea
a r e f o r e i g n t o t h e s c o p e o f t h e
c o n f i s c a t i o n p r o c e e d i n g 8 . H o w e v e r , t h e l a n g u a g e o f t h e s t a t u t e s h o u l d
b e r e a d c l o s e l y . S o m e t i m e s , t h e l a n g u a g e o f t h e s t a t u t e m a y i n d i c a t e
t h e n e e d t o e s t a b l i s h t h e e l e m e n t o f
mens rea
. I t i s t r u e t h a t
mens reai s n o t a n e s s e n t i a l e l e m e n t f o r i m p o s i n g .
1.7 MEANING OF ‘BOOK’
S e c t i o n 6 7 ( 2 ) o f t h e C G S T A c t p r o v i d e s t h a t p r o p e r o f f i c e r n o t b e l o w t h e
r a n k o f J o i n t C o m m i s s i o n e r m a y s e a r c h a n d s e i z e b o o k s o r d o c u m e n t s
o r t h i n g s , t h u s q u e s t i o n a r i s e w h a t w o u l d b e t h e m e a n i n g o f t h e s e t e r m s
i.e.
‘ b o o k ’ o r ‘ d o c u m e n t s ’ o r ‘ t h i n g s ’ .
I t i s n e e d t o b e n o t e d h e r e t h a t t e r m ‘ b o o k s ’ i s n o t d e f i n e d u n d e r t h e
p r o v i s i o n s o f t h e C G S T A c t . R e f e r e n c e i s i n v i t e d t o j u d g m e n t o f t h e
H o n ’ b l e N a g p u r H i g h C o u r t i n t h e c a s e o f
Mukundram
v .
DayaramA I R 1 9 1 4 N a g p u r 4 4 o b s e r v e d t h a t i n o r d i n a r y s e n s e , b o o k s i g n i f i e s a
c o l l e c t i o n o f s h e e t s o f p a p e r b o u n d t o g e t h e r i n a m a n n e r w h i c h c a n n o t
b e d i s t u r b e d o r a l t e r e d e x c e p t b y t e a r i n g a p a r t . T h e b i n d i n g i s o f a k i n d
w h i c h i s n o t i n t e n d e d t o t h e m o v a b l e i n t h e s e n s e o f b e i n g u n d o n e a n d
p u t t o g e t h e r a g a i n . T h e s a i d j u d g m e n t i s d e l i v e r e d i n t h e c o n t e x t o f
s e c t i o n 3 4 o f t h e I n d i a n E v i d e n c e A c t , 1 8 7 2 9 . R e l e v a n t e x t r a c t o f t h e
j u d g m e n t i s r e p r o d u c e d h e r e i n b e l o w :
‘ I n i t s o r d i n a r y s e n s e i t s i g n i f i e s a c o l l e c t i o n o f s h e e t s o f p a p e r b o u n d
t o g e t h e r i n a m a n n e r w h i c h c a n n o t b e d i s t u r b e d o r a l t e r e d e x c e p t b y
t e a r i n g a p a r t . T h e b i n d i n g i s o f a k i n d w h i c h i s n o t i n t e n d e d t o t h e
m o v a b l e i n t h e s e n s e o f b e i n g u n d o n e a n d p u t t o g e t h e r a g a i n . A c o l l e c t i o n
o f p a p e r s i n a p o r t f o l i o , o r c l i p , o r s t r u n g t o g e t h e r o n a p i e c e o f t w i n e
w h i c h i s i n t e n d e d t o b e u n t i e d a t w i l l , w o u l d n o t , i n o r d i n a r y E n g l i s h ,
b e c a l l e d a b o o k . . . I t h i n k t h e t e r m ‘ b o o k ’ i n S . 3 4 a f o r e s a i d m a y p r o p e r l y
b e t a k e n t o s i g n i f y , o r d i n a r i l y , a c o l l e c t i o n o f s h e e t s o f p a p e r b o u n d
t o g e t h e r w i t h t h e i n t e n t i o n t h a t s u c h b i n d i n g s h a l l b e p e r m a n e n t a n d
t h e p a p e r s u s e d c o l l e c t i v e l y i n o n e v o l u m e . I t i s e a s i e r h o w e v e r t o s a y
w h a t i s n o t a b o o k f o r t h e p u r p o s e s o f S . 3 4 , a n d
I have no hesitation
in holding that unbound sheets of paper in whatever quantity, though
filled up with one continuous account, are not a book of account within
the purview of S. 34.
’
8 .
S y n e r g y F e r t i c h e m ( G u j a r a t H i g h C o u r t ) (
Supra
) .
9 .
S e c t i o n 3 4 o f t h e I n d i a n E v i d e n c e A c t , 1 8 7 2 r e a d s a s u n d e r :
“
Entries in books of accounts including those maintained in an electronic form, when
relevant.
— E n t r i e s i n b o o k s o f a c c o u n t s , i n c l u d i n g t h o s e m a i n t a i n e d i n a n e l e c t r o n i c f o r m ] ,
r e g u l a r l y k e p t i n t h e c o u r s e o f b u s i n e s s , a r e r e l e v a n t w h e n e v e r t h e y r e f e r t o a m a t t e r i n t o
w h i c h t h e C o u r t h a s t o i n q u i r e , b u t s u c h s t a t e m e n t s s h a l l n o t a l o n e b e s u f f i c i e n t e v i d e n c e
t o c h a r g e a n y p e r s o n w i t h l i a b i l i t y . ”
Para 1.7
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
18

29. I t i s i m p e r a t i v e t o n o t e h e r e t h a t t h e H o n ’ b l e S u p r e m e C o u r t i n c e l e b r a t e d
j u d g m e n t o f
Central Bureau of Investigation
v .
V.C. Shukla
( 1 9 9 8 ) 3 S C C
4 1 0 f o l l o w e d t h e v i e w o f t h e H o n ’ b l e N a g p u r H i g h C o u r t a s t a k e n i n
t h e c a s e o f
Mukundram
(
supra
) a n d h e l d t h a t ‘ B o o k ’ o r d i n a r i l y m e a n s
a c o l l e c t i o n o f s h e e t s o f p a p e r o r o t h e r m a t e r i a l , b l a n k , w r i t t e n , o r
p r i n t e d , f a s t e n e d o r b o u n d t o g e t h e r s o a s t o f o r m a m a t e r i a l w h o l e .
L o o s e s h e e t s o r s c r a p s o f p a p e r c a n n o t b e t e r m e d a s ‘ b o o k ’ f o r t h e y
c a n b e e a s i l y d e t a c h e d a n d r e p l a c e d . T h e H o n ’ b l e S u p r e m e C o u r t
h e l d t h a t s p i r a l p a d s , d a i r i e s a n d s p i r a l n o t e b o o k s a r e ‘ b o o k s ’ w h e r e
i t r e c o r d s m o n e t a r y t r a n s a c t i o n s , e n t r i e s o f r e c e i p t o f m o n e y f r o m
c e r t a i n p e r s o n s o n l e f t s i d e o f p a g e a n d p a y m e n t t o c e r t a i n p e r s o n s o n
r i g h t s i d e . E n t r i e s a l s o t o t a l l e d a n d b a l a n c e d a n d t h u s d u l l y r e c k o n e d .
S u c h n o t e b o o k i s a ‘ b o o k ’ / ‘ b o o k s o f a c c o u n t ’ a n d n o t a b u n d l e o f l o o s e
s h e e t s o f p a p e r s a s c o n t a i n e d i n f i l e s . T h e r e f o r e , c o l l e c t i o n s o f s h e e t s o r
p a p e r s w h e t h e r s e r i a l l y n u m b e r e d o r n o t , p r i n t e d o r h a n d w r i t t e n b u t
f a s t e n e d o r b o u n d t o g e t h e r s o a s t o f o r m a m a t e r i a l a s w h o l e w o u l d
b e t r e a t e d a s b o o k . H o w e v e r , a n y l o o s e p a p e r s o r a n y f i l e c o n t a i n i n g
l o o s e s h e e t s o f p a p e r s w o u l d n o t b e t r e a t e d a s ‘ b o o k s ’ . I t i s n e e d t o b e
n o t e d h e r e t h a t v i e w o f t h e S u p r e m e C o u r t a s h e l d i n c a s e o f
V.C. Shukla(
supra
) 1 0 h a s b e e n f o l l o w e d b y t h e M u m b a i ( T h r e e M e m b e r ) B e n c h o f
H o n ’ b l e I n c o m e - t a x A p p e l l a t e T r i b u n a l i n c a s e o f
S.P. Goyal
v .
Dy. CIT[ 2 0 0 2 ] 8 2 I T D 8 5 ( M u m . - T r i b . ) ( T M ) . I t i s i m p e r a t i v e t o n o t e h e r e t h a t
i n t h i s c a s e d u r i n g t h e c o u r s e o f s e a r c h c e r t a i n d o c u m e n t s w e r e s e i z e d
c o n s i s t i n g o f 1 0 l o o s e s h e e t s . O u t o f t h i s , o n e s h e e t o f p a p e r c o n t a i n e d
c e r t a i n h a n d w r i t i n g b y t h e a s s e s s e e . T h e s a i d h a n d w r i t i n g w a s o n t h e
l o o s e d i a r y s h e e t o f N o v e m b e r 1 9 9 2 w h e r e s u m o f I N R 6 0 l a k h s h a d
b e e n e n t e r e d a s c a s h . Q u e s t i o n b e f o r e t h e H o n ’ b l e I T A T w a s w h e t h e r
l o o s e s h e e t s o f p a p e r t o r n o u t o f d i a r y f o r 1 9 9 2 c o u l d b e c o n s i d e r e d
a s b o o k s f o r p u r p o s e o f s e c t i o n 6 8 o f t h e I n c o m e - t a x A c t , 1 9 6 1 . I n t h i s
c a s e t h i r d m e m b e r h e l d t h a t i f t h e l o o s e p a p e r s s e i z e d i n t h e p r e m i s e s
o f t h e a s s e s s e e w e r e e x a m i n e d i n t h e l i g h t o f t h e r a t i o o f t h e S u p r e m e
C o u r t i n
V.C. Shukla’s case
(
supra
) , i t w a s q u i t e c l e a r t h a t t h e s e l o o s e
p a p e r s c o u l d n o t b e t e r m e d a s b o o k s o f a c c o u n t a n a s s e s s e e m a i n t a i n e d
f o r a n y p r e v i o u s y e a r . T h e l o o s e p a p e r s a p p e a r e d t o b e p a r t o f a 1 9 9 2
d i a r y . H o w e v e r , t h e s e l o o s e p a p e r s c o n s i s t e d o f p a g e s t o r n o u t f r o m
M a r c h , A p r i l , N o v e m b e r a n d D e c e m b e r . T h e r e w e r e n e i t h e r c l o s i n g
b a l a n c e s n o r o p e n i n g b a l a n c e s a n d t h e r e w a s n o r e c o n c i l i a t i o n o f t h e s e
e n t r i e s . T h e r e f o r e , t h e s e c o u l d n o t b e t e r m e d a s b o o k s m a i n t a i n e d b y
1 0 .
I t i s n e e d t o b e n o t e d h e r e t h a t A h m e d a b a d B e n c h o f H o n ’ b l e I T A T i n c a s e o f
Prarthana
Construction
(
P.
)
Ltd.
v .
Dy. CIT
[ 2 0 0 1 ] 1 1 8 T a x m a n 1 1 2 ( A h d . - T r i b . ) ( M a g . ) h e l d t h a t l o o s e
p a p e r s / l o o s e s h e e t s o f p a p e r s c a n n o t b e t e r m e d a s b o o k .
19
M E A N I N G O F ‘ B O O K ’
Para 1.7

30. t h e a s s e s s e e d u r i n g t h e p r e v i o u s y e a r . T h e H o n ’ b l e I T A T a l s o o b s e r v e d
t h a t l o o s e p a p e r i n i t s e l f h a s g o t n o i n t r i n s i c v a l u e . I n l i g h t o f t h e a b o v e
j u d g m e n t s i t i s a m p l e c l e a r t h a t l o o s e p a p e r s / l o o s e s h e e t s o f p a p e r s o r
f i l e s o f l o o s e p a p e r s / s h e e t s c a n n o t b e t e r m e d a s ‘ b o o k ’ 1 1 . H o w e v e r , t h e
s a m e m a y b e t e r m e d a s ‘ d o c u m e n t s ’ o r ‘ t h i n g s ’ . T h e t e r m ‘ d o c u m e n t s ’
o r ‘ t h i n g s ’ a r e a l s o n o t d e f i n e d u n d e r t h e C G S T A c t . H o w e v e r , I n d i a n
E v i d e n c e A c t , 1 8 7 2 d e f i n e s t e r m ‘ d o c u m e n t ’ a s f o l l o w s :
‘
“ D o c u m e n t ” - m e a n s
any matter expressed or described upon any
substance by means of letters, figures, or marks, or by more than one of
those means, intended to be used, or which may be used, for the purpose
of recording that matter
.
Illustrations:
A w r i t i n g i s a d o c u m e n t ;
W o r d s p r i n t e d , l i t h o g r a p h e d o r p h o t o g r a p h e d a r e d o c u m e n t s ;
A m a p o r p l a n i s a d o c u m e n t ;
A n i n s c r i p t i o n o n a m e t a l p l a t e o r s t o n e i s a d o c u m e n t ;
A c a r i c a t u r e i s a d o c u m e n t . ’
B a r e p e r u s a l o f d e f i n i t i o n o f ‘ d o c u m e n t ’ a s s t a t e d u n d e r I n d i a n E v i d e n c e
A c t , 1 8 7 2 , i t a p p e a r s t h a t e v e r y l e t t e r , f i g u r e s , m a r k s , e t c . w h i c h a r e u s e d
o r i n t e n d e d t o b e u s e d f o r t h e p u r p o s e o f r e c o r d i n g . T h e r e f o r e , l o o s e
p a p e r s / l o o s e s h e e t s o f p a p e r s o r f i l e s o f l o o s e p a p e r s w h i c h p r o b a b l y
w o u l d n o t q u a l i f y t h e d e f i n i t i o n o f ‘ b o o k ’ b u t i n a u t h o r ’ s v i e w c e r t a i n l y
c a n b e c o n s i d e r e d a s ‘ d o c u m e n t ’ . A t t h i s j u n c t u r e , i t i s n e e d t o b e n o t e d
h e r e t h a t ‘ t h i n g ’ i s n e i t h e r d e f i n e d u n d e r I n d i a n E v i d e n c e A c t , 1 8 7 2 n o r
u n d e r G e n e r a l C l a u s e s A c t . I n v i e w o f a u t h o r t e r m ‘ t h i n g s ’ i s v e r y w i d e
t e r m a n d t h e r e f o r e a n y t h i n g w h i c h i s n e i t h e r ‘ b o o k ’ n o r ‘ d o c u m e n t ’
w o u l d b e c o u n t e d a s ‘ t h i n g s ’ b u t i t o b v i o u s l y w o u l d n o t i n c l u d e s t o c k ,
g o o d s , e t c .
1.8 POWER OF PROPER OFFICER TO BREAK/SEAL ANY PREMISE/
ALMIRAH/ELECTRONIC DEVICE, ETC
S u b - s e c t i o n ( 4 ) o f s e c t i o n 6 7 o f t h e C G S T A c t e m p o w e r s p r o p e r o f f i c e r
t o b r e a k / s e a l / a c c e s s a n y p r e m i s e / a l m i r a h / e l e c t r o n i c d e v i c e , e t c . i n
1 1 .
A t t h i s j u n c t u r e , i t i s n e e d t o b e n o t e d h e r e t h a t t e r m ‘ b o o k s o f a c c o u n t s ’ i s a l s o n o t d e f i n e d
u n d e r t h e C G S T A c t . I t i s n e e d t o b e a p p r e c i a t e d h e r e t h a t , u n d e r t h e I n c o m e - t a x A c t t e r m
‘ b o o k s o f a c c o u n t s ’ i s e q u a t e d w i t h t e r m ‘ b o o k ’ . S e c t i o n 2 (
12A
) o f I n c o m e - t a x A c t , 1 9 6 1
d e f i n e s ‘ b o o k s ’ o r a n d ‘ b o o k s o f a c c o u n t s ’ a s f o l l o w s :
‘
“
books or books of account
”
includes
l e d g e r s , d a y - b o o k s , c a s h b o o k s , a c c o u n t - b o o k s a n d
o t h e r b o o k s , w h e t h e r k e p t i n t h e w r i t t e n f o r m o r a s p r i n t - o u t s o f d a t a s t o r e d i n a f l o p p y ,
d i s c , t a p e o r a n y o t h e r f o r m o f e l e c t r o - m a g n e t i c d a t a s t o r a g e d e v i c e ; ’
Para 1.8
I N S P E C T I O N , S E A R C H S E I Z U R E U N D E R G S T
20

31. Thisbookpresentsadetailedcommentaryon‘search,seizure,summonsand
arrestproceedingsunderGoodsandServicesTaxLaw’.Thisbookcoversthefollow-
ingSection(s)oftheCentralGoodsandServicesTaxAct,2017(‘CGSTAct’)andcorre-
spondingRulesmadethereunder:
Section67
Section69
Section70
Section83
Sections132-138
Thisbookdedicatedlyservestaxofficialswhoarehandlinganti-evasionactivities
othertaxprofessionals.ThePresentPublicationisthe1stEditionitisupdatedtill
4thSeptember2020,authoredbyApritHaldiaPrateekGattani,withthefollowing
noteworthyfeatures:
Thisbookdiscussesmostessentialconceptsandbasicestablishedprocedureswith
thehelpofvariousjudgementsofSupremeCourtHighCourts
Thisbookalsodiscussesbasicandpracticalaspectsofsearch,seizure,summons
andarrestproceedingsundertheGSTLaw