The Gujarat High Court held that Godown of dealers cannot be sealed by Goods and Service Tax (GST) authorities without having reasons to believe that goods stored were liable for confiscation.
The writ applicant, AnopsinhKiritsinhSarvaiyaowns a godown which is used by the distinct entities, namely, Ajay raj & Co.; Dharamraj Exports; Kamani Exports; R.L. Enterprise and Ruturaj& Co. for the purpose of storing agricultural produce like cotton bales and cotton yarn. According to him, the relationship is that of landlord and tenant.
The GST authorities under the Central Goods and Service Tax (CGST) Act visited the godown, and in exercise of power under section 67 of the Central Goods and Service Tax (CGST) Act, applied seal on the godown.
The applicant contended “the authorities ought to have undertaken the search by breaking open the lock as they are empowered to do so under Section 67(4) of the Central Goods and Service Tax (CGST) Act, and in the course of the search or inspection, if they would have found goods liable to confiscation, then such goods could have been seized.”
Before the High Court, the applicant contended that if the Department have any suspicion that the five dealers have stored goods or other articles which are liable to confiscation, then the GST authorities could have seized such goods and documents a long time back. Once the goods and other articles are seized from the premises, then there could be no good reason to keep the godown in a sealed condition. In the case on hand, the writ applicant, being the owner of the godown is concerned with the seal which has been affixed and which continues as on date.
The division bench consisting of Justice J. B. Pardiwala and Justice Bhargav D. Karia held, “if they want to proceed against the five dealers, they may proceed. They should be concerned with the goods or other articles stored in the godown which may be liable to confiscation. There is no point in keeping the godown closed with a seal affixed on it.”
The bench further said, “the High Court is trying to find a way out, by which the seal can be removed without prejudice to the rights of the department to proceed against the dealers in accordance with law.”
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