Uttar Pradesh VAT Rules

Tax Audit, Inspection, Search and Seizure

Tax audit

1. The assessing authority or an officer authorized to exercise powers under sub-section (1) of section 45 may, for examining the correctness of return or returns filed and admissibility of various claims including input tax credit, undertake tax audit of the records, stock in trade and the related documents of the dealers, who are selected by the Commissioner in the manner, as may be prescribed for the purpose.
2. For the purpose of the tax audit, officer empowered to make audit may require the dealer to produce before him records and other documents in his office or at such other public place as may be mentioned in the notice.

   Provided that where it is convenient, officer may take up tax audit in the office, business premises or warehouse of the dealer.

3. Where tax audit is made by any officer other than the assessing authority of the dealer, such officer shall send audit report prepared by it to the assessing authority of the dealer.
4. The dealer shall extend necessary co-operation and assistance in making tax audit.

Power to order production of accounts and power of entry, inspection, search and seizure

1. Any officer empowered by the State Government in this behalf (hereinafter in this section referred to as the authorized officer), for the purpose of this Act, may require any dealer to produce before him any book, document or account relating to his business and may inspect, examine and copy the same and make such enquiries from the dealer as may be necessary.

   Provided that books, accounts and documents of a period more than five years prior to the assessment year shall not be so required, unless in any special case, for reasons to be recorded, such officer considers it necessary.

2. The authorised officer may, at all reasonable times, enter and search any place of business or vehicle, vessel or other building or place where he has reason to believe that the dealer keeps or is for the time being keeping any book, register, document, account or goods relating to his business:

   Provided that no residential accommodation (not being a place of business cum residence) shall be entered into, inspected or searched by such officer unless specially authorised in this behalf by the Commissioner in writing.

3. All books, documents, and accounts maintained by a dealer in the ordinary course of business, the goods in his possession and his place of business, vessel or vehicle shall be open to search and inspection at all reasonable times by the authorised officer.
4. If the authorised officer while examining any books, accounts or documents or conducting search or inspection has reasonable grounds for believing that any dealer is trying to evade liability of payment of tax or other dues under this Act and that anything necessary for the purpose of an investigation into his liability may be found in any account, register or document, he may seize such account, register or document as may be necessary. The authorised officer shall forthwith grant a receipt for the same and shall be bound to return them to the dealer or the person from whose custody they were seized, within a period of ninety days from the date of seizure after having such copies or extracts taken therefrom as may be considered necessary, provided the dealer or the aforesaid person gives a receipt in writing for the account, register or document returned to him. The officer may, before returning the account, register or documents, affix his signature and his official seal at one or more places thereon, and in such case the dealer or the aforesaid person will be required to mention in the receipt given by him the number of places where the signature and seal of such officer have been affixed on each account, register or documents.
5. Notwithstanding anything contained in sub- section (4), the officer seizing any account, register or other document under that sub -section may, for reasons to be recorded by him in writing and with the prior approval of the Commissioner, retain such account, register or document for such period not extending beyond thirty days from the date of completion of all the proceedings under this Act in respect of the years for which they are relevant, as he deems necessary.
6. An officer conducting search or inspection under sub-section (3) -
   • shall have the power to seal the place of business, vehicle, any box, almirah or other receptacle found on such place of business or vehicle in which he has reason to believe that any account, register or other documents or goods are kept or contained, if the owner or other person in occupation or in-charge of such office, shop, godown, vessel, vehicle, box, almirah or other receptacle leaves the place or is not available or fails or refuses to open it when called upon to do so;
   • where the owner or other person in occupation or in charge of the office, shop, godown, vessel or vehicle or the box almirah or other receptacle found in the place of business, or vehicle is present but leaves the place or after an opportunity having been given to him to do so, fails to open, as the case may be, such office, shop, godown, vessel or vehicle or the box, almirah or other receptacle may break open the same and prepare a list of the goods and documents found therein.
7. No person shall tamper with any seal put under sub-section (6).
8. Any authorized officer while making search or inspection under this section may require any dealer or the other person to give any information likely to be in his possession or knowledge in respect of such books, documents, accounts or goods as are found at the time of search, inspection or seizure under this section.
9. The officer who has made inspection, search or seizure of any books, accounts or documents or has investigated into the liability of tax of a dealer shall, on the basis of facts found and enquiry made, prepare a report in respect of such inspection, search, seizure or investigation and where the officer preparing the report is an officer different from the assessing authority, he shall forward a copy of such report to the assessing authority of the dealer.
10. Where the officer preparing the report referred to in sub-section (9), is of the opinion that liability of payment of tax by the dealer in addition to liability of payment of tax admitted by such dealer may exceed rupees one lakh, he shall, before forwarding copy of report referred to in sub-section (9), serve the dealer with a notice stating facts to show cause why adverse inference should not be drawn on the basis of such facts. The dealer on receipt of such notice shall submit his reply to such officer in two copies. Thereafter the officer shall forward to the assessing authority a copy of report, a copy of show cause notice issued and a copy of reply received from the dealer, if submitted by the dealer along with its comments on the reply submitted by the dealer.
11. The provisions of section 100 and 165 of Code of Criminal Procedure, 1973 shall, as far as may be, apply in relation to any entry, or search or inspection under this section, as they apply in relation to any inspection or search under the said code.

    Explanation : In calculating the period specified in sub-section (4) the period during which proceedings under this Act remain stayed under the orders of any Court or authority, shall be excluded.

Power of search, inspection and seizure in case of a person other than dealer

Where a person carries on any activity ancillary or incidental to or in connection with business of a dealer, any officer authorized under sub-section (1) of section 45, for the purpose of investigation into tax liability of a dealer, subject to provision of sub-section (11) of section 45, may exercise powers under sub-section (1) to sub-section (10) of the said section.

Explanation: For the purpose of this section, following persons shall be deemed to carry on activities ancillary or incidental to or in connection with the business of a dealer:

1. broker or canvassing agent who acts as mediator between purchaser and seller of goods; or
2. transporter or any other carrier or a forwarding agent of goods; or
3. person who fabricates or manufactures any goods for a dealer; or
4. person who takes delivery or who dispatches goods on behalf of a dealer; or
5. person who holds in custody any goods belonging to a dealer; or
6. person who possesses books, accounts or documents relating to business of a dealer; or
7. person who handles goods of a dealer in any other capacity.