Traders across Gujarat have levelled serious allegations against officials from both the Central and State GST departments, accusing them of misusing Section 67(1) of the GST Act to harass, intimidate, and extort money under the guise of inspections and surprise visits.
According to multiple complaints, GST officials have been entering business premises without clearly stating the legal basis of their action. While Section 67(1) of the GST Act permits officers to inspect a place of business based on specific intelligence regarding tax evasion, traders allege that officials are overstepping their legal authority by conducting operations resembling full-scale raids and seizures, which fall under Section 67(2), a different and more stringent provision.
Several traders have reported that officers show up with vague or incomplete warrants, failing to mention whether the action pertains to inspection (67(1)) or search and seizure (67(2)). This ambiguity, coupled with aggressive behavior, reportedly leads to panic, especially among small traders and elderly business owners who are unfamiliar with legal nuances.
In several instances, officers allegedly confiscated mobile phones, accessed stock registers, accounting software, and issued informal demands for hefty payments under CGST and SGST heads. Traders claim these actions far exceed the scope of an inspection and border on extortion.
A formal complaint has been submitted to CGST Chief Commissioner Sunil Kumar Mal, detailing the misuse of power and demanding immediate corrective measures.
In response, the Ahmedabad Traders' Federation has called on the government to reform inspection procedures and protect small businesses from undue harassment. Their key suggestions include:
- Mandatory specification of legal provision (67(1) or 67(2)) in warrants before any action is taken.
- Allowing traders to be accompanied by their tax consultants during inspections.
- Educational initiatives to inform traders about the difference between inspections and seizures under the GST Act.
- Encouraging officers to guide and support traders in achieving compliance rather than resorting to intimidation.
Federation leaders stressed that minor procedural errors are being blown out of proportion, and officers are allegedly using fear tactics to extract money under the threat of future action.
The traders' associations across the state have echoed the sentiment, warning that such misuse of legal provisions is damaging trust in the GST system and could deter voluntary compliance unless urgently addressed.
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