GST Section 67(1) Misuse: Gujarat Traders Raise Concerns
Gujarat traders are raising alarm over the alleged misuse of GST Section 67(1), claiming routine business inspections are turning into harassment. This has reignited debate over the balance between tax enforcement and business ease under the GST regime.
What is GST Section 67(1)?
Section 67(1) of the CGST Act, 2017 allows GST officers to inspect premises when they believe:
- A taxpayer is suppressing turnover,
- Input Tax Credit (ITC) is wrongly claimed,
- Goods liable to tax have escaped assessment, or
Why Are Gujarat Traders Protesting?
- Without valid documentation or reasons,
- At odd hours, causing business disruption,
- In cases where minor mismatches or procedural lapses exist, not tax fraud.
The Gujarat Chamber of Commerce and Industry (GCCI) has written to the CBIC seeking intervention and a clear SOP.
Legal Conditions for Invoking Section 67(1)
| Condition | Officer Must Ensure |
|---|---|
| “Reason to believe” | Must be based on evidence, not guesswork |
| Authorisation | Must be written by a proper officer |
| Type of premises | Includes godowns, transporters, agents |
| Nature of action | Inspection, not search or seizure |
🔎 Legal reference: Rule 139 of CGST Rules + Circular No. 128/47/2019-GST
Recent Court View: Misuse Won’t Be Tolerated
In M/s Shiv Enterprises vs State of UP (2020), the Allahabad HC held that casual invocation of Section 67(1) violates Articles 14 and 19(1)(g) of the Constitution.
Expert View:
“Inspection under Section 67(1) is a serious intrusion.
What Can Businesses Do If Harassed?
- Insist on written authorisation before allowing inspection
- Ask for the grounds for “reason to believe”
- Maintain updated stock registers and e-way bills
- File a complaint to jurisdictional Commissioner or CBIC
- Move High Court under Article 226 for arbitrary action
Efiletax View: Compliance With Rights
While GST enforcement is necessary, it must respect business dignity. Section 67(1) shouldn’t become a shortcut to meet revenue targets.
đź“Ś Efiletax Tip: Maintain digital documentation and reconcile GSTR-1, GSTR-3B, and books monthly. Discrepancies can trigger scrutiny.
FAQs on GST Section 67(1)
Q1. Can inspection be done without prior notice?
Yes, if officer has recorded “reason to believe” based on credible info.
Q2. What’s the difference between inspection and search?
Inspection (67) is a preliminary action. Search and seizure (67(2)) requires higher threshold.
Q3. Can I challenge misuse of Section 67(1)?
Yes, under constitutional provisions and through proper legal remedy.
Final Word
The alleged misuse of GST Section 67(1) by officers in Gujarat is a reminder that tax enforcement must be fair, transparent, and lawful. Traders should stay compliant but also know their rights.