Is Your Business Really GST Ready?

31 December 2014

Harold Tan and Sarah Kate Lee consider the powers of enforcement under the GST Act 2014.

The clock is ticking. Time is running out. As 1 April 2015 draws closer, the race to be ready for the imposition of goods and services tax (“GST”) takes a quicker pace. In the midst of the rush to be GST ready, we highlight one important area under the Goods and Services Tax Act 2014 (“GST Act”) which may be inadvertently overlooked.
 
ENFORCEMENT POWERS
 
Part X of the GST Act (“Part X”) houses the powers of enforcement of the officers of goods and services tax (“officer”). Within these provisions are obligations which businesses must be aware of to ensure that offences are not committed. Thus, it is imperative that businesses include this area in their preparation for the implementation of GST.
 
POWERS OF SENIOR OFFICERS
 
The GST Act provides a senior officer of goods and services tax (“senior officer”) with all the powers of a police officer of whatever rank as provided for under the Criminal Procedure Code in relation to enforcement, inspection and investigation.
 
ACCESS TO PREMISES
 
A senior officer has the right of full and free access at all times to any premises where a person carries on business. Refusal to permit a senior officer to exercise this right is an offence. The penalty upon conviction is imprisonment for a term not exceeding seven years, or a fine not exceeding RM100,000.00, or both.
 
It should also be noted that a senior officer when entering any premises has certain discretionary powers. For example, he may require the production of any thing which relates to the person’s business and may examine, seize and detain any goods, document or thing which in his opinion may afford evidence of the commission of any offence under the GST Act. He may also require the person to answer any questions, demand any receptacle to be opened, examine any package, goods or material, and take samples.
 
A senior officer who is unable to obtain full and free access to any premises or to any receptacle contained therein, has the power to enter the premises and open the receptacle by force, if necessary.
 
If a senior officer exercises the power of access to premises, the person who carries on business or any other person present at the premises at that time of entry must provide to the senior officer all reasonable facilities and assistance for the exercise of his duties. Failure to do so is an offence, which upon conviction, is punishable with imprisonment for a term not exceeding seven years, or a fine not exceeding RM100,000.00, or both.
 
POWER TO STOP AND SEARCH CONVEYANCE
 
An officer has the power to stop and examine any conveyance for the purposes of ascertaining whether any goods in respect of which he has reason to believe that an offence under the GST Act has been committed, are contained therein.
 
For the purposes of the GST Act, a conveyance includes any vessel, train, vehicle, aircraft or any other means of transport by which persons or goods can be carried.
 
The person in control or in charge of the conveyance must, if so required by the officer, stop the conveyance and allow the officer to examine it, or move it to another place for examination, and not proceed until permission to do so has been given by the officer.
 
Further, the person having control or charge of the conveyance must, on the request of the officer, open all parts of the conveyance for examination by the officer and take all measures necessary to enable the officer to conduct such examination as the officer considers necessary.
 
POWER OF SEARCH
 
Search with warrant
 
Any officer empowered by a warrant issued by a Magistrate in relation to any place, premises or conveyance has the authority at any time and with or without assistance:
 

1. to enter the place, premises or conveyance and search for and seize goods, documents or things; 

 

2. to break open any outer or inner door of the place, premises or conveyance and enter every part thereof, if necessary, by force; and

 

3. to remove, if necessary, any obstruction by force to enter, search or seize as empowered under the warrant.

 
Search without warrant
 
A senior officer may search, without warrant, any place, premises or conveyance if he has reasonable cause to believe that (i) there are concealed or deposited any goods, document or thing in the place, premises or conveyance which may be evidence of the commission of any offence under the GST Act; and (ii) it is likely that a delay in obtaining a search warrant may result in such goods, document or thing being removed.
 
POWER OF ARREST
 
Arrest with warrant
 
An officer empowered by a warrant issued by a Magistrate in relation to any place, premises or conveyance, is authorised:
 

1. to arrest any person in the place, premises or conveyance, who is in possession of the goods, document or thing or who may reasonably be suspected of concealing or depositing such goods, document or thing; and

 

2. to detain, if necessary, every person found in the place, premises or conveyance until the search has been completed.

 
Arrest without warrant
 
An officer may arrest without warrant, any person:
 

1. found committing, or attempting to commit, or employing or aiding any person to commit, or abetting the commission of, an offence under the GST Act;

 

2. whom he reasonably suspects, has in his possession any goods, document or thing liable to seizure under Part X; or 

 

3. whom he reasonably suspects, has committed an offence under the GST Act.

 
If an arrest without warrant is made, the officer making such arrest must bring the person arrested to the nearest police station without any unnecessary delay.
 
The officer may also search or cause to be searched any person so arrested. However, certain safeguards are afforded under the GST Act to the person to be searched, namely:
 

1. the person arrested may request that he be searched in the presence of a senior officer, in which event, he is only to be searched in the presence and under the supervision of a senior officer; 

 

2. where the goods and baggage of a person are to be searched, he may request to be present at the search but must present himself within a reasonable time to enable the search to be conducted; and

 

3. a person may only be searched by a person of the same gender, and such search must be conducted with strict regard to decency.

 
OBSTRUCTION, NON-COOPERATION AND FALSE INFORMATION
 
Having introduced the provisions that deal with the powers of enforcement of officers relating to search, arrest, access to premises and their power to stop and search conveyances, it is pertinent to highlight the two offences set out below.
 
It is an offence for a person to assault, hinder or obstruct or fail to give reasonable facilities or assistance to any officer in the performance of his duties under the GST Act. Upon conviction, such person shall be liable to imprisonment for a term not exceeding seven years, or to a fine not exceeding RM100,000.00, or to both.
 
Further, a person who refuses to give any information reasonably required by an officer, or gives false information to an officer, commits an offence. The penalty is a fine not exceeding RM30,000.00, or imprisonment for a term not exceeding two years, or both. It is not a defence for a person to allege that the untrue or incorrect information was furnished inadvertently or without criminal or fraudulent intent, or was misinterpreted or not fully interpreted by an interpreter provided by the informant.
 
SEIZURE OF GOODS
 
When an officer has reasonable cause to suspect that there has been an offence committed under the GST Act, he has the power to seize any goods, document or thing and any receptacle, package or conveyance in which the goods, document or thing may have been found, or which has been used in connection with the offence, as well as any other goods, document or thing which he reasonably believes may have a bearing on the case.
 
If such seizure has taken place, the officer must forthwith give written notice of the seizure and the grounds thereof to the owner, if known, of the goods, document, receptacle, package or conveyance, by delivering the notice to him personally or by post.
 
RETURN OR DISPOSAL OF MOVABLE GOODS
 
Where any movable goods have been seized, a senior officer has the discretion to return (temporarily or permanently), sell or destroy such goods.
 
A temporary return of movable goods is subject to the terms and conditions imposed by the senior officer, and subject in any case, to sufficient security being furnished to the satisfaction of the senior officer that the goods will be surrendered on demand being made by the senior officer and that the terms and conditions imposed will be complied with.
 
Any person, other than a guarantor or surety, who fails to surrender, on demand, to a senior officer the movable goods which have been temporarily returned to him, or fails to comply with any of the terms or conditions imposed by the senior officer, commits an offence. Upon conviction, a fine not exceeding RM10,000.00, or imprisonment for a term not exceeding one year, or both may be imposed.
 
CONFIDENTIALITY OF INFORMATION
 
Although Part X confers extensive powers on officers, the officers are subject to a duty of confidentiality. The GST Act provides that every person who has an official duty or is appointed or employed under the GST Act shall regard and deal with all documents, information, returns or declarations relating to the business, value of the supply of goods and services of any taxable person or value of imported goods, as confidential.
 
It is an offence for a person who has possession or control over such confidential information to communicate, or attempt to communicate, such information to any person, or to permit any person to have access to such information, except for the purposes of the GST Act or with express authority of the Director General. The penalty for committing such offence is a fine not exceeding RM30,000.00, or imprisonment for a term not exceeding two years, or both.
 
CONCLUSION
 
If there is one message to take home from this article, it is that the powers of enforcement conferred on officers under the GST Act is not an area to be overlooked in preparing for the implementation of GST. The entire business organization must understand the provisions on enforcement and exercise due care to avoid falling foul of any of the offences stated in the GST Act.