GST CASE DIGEST: Inspection, Search, Seizure and Arrest

For the smooth functioning of every tax administration there should have a proper mechanism for inspection, search and arrest. However, these are the important tools of the tax department for eradicating tax evasion. Both the direct tax laws and indirect tax laws have clearly mentioned the provisions related to search, seizure inspection and arrest.

In any tax administration the provisions for Inspection, Search, Seizure and Arrest are provided to protect the interest of genuine tax payers (as the Tax evaders, by evading the tax, get an unfair advantage over the genuine tax payers) and as a deterrent for tax evasion. Search or Seizure can only be carried out when an officer, of the rank of Joint Commissioner or above, has reasons to believe the existence of such exceptional circumstances. In such cases the Joint Commissioner may authorise, in writing, any other officer to cause inspection, search and seizure. However, in case of arrests the same can be carried out only where the person is accused of offences specified for this purpose and the tax amount involved is more than specified limit. Further, the arrests under GST Act can be made only under authorisation from the Commissioner.

Inspection ‘Inspection’ is a softer provision than search; the inspection can be carried out by an officer of CGST/SGST only upon a written authorization given by an officer of the rank of Joint Commissioner or above, a Joint Commissioner or an officer higher in rank can give such authorization only if he has reasons to believe that the person concerned has done one of the following actions:

 (a) Suppression of any transaction relating to supply of goods or services or stock in hand

 (b) Claimed excess input tax credit

 (c) Contravention of any provisions of the Act or the Rules to evade tax

 (d) Transporting or keeping goods which escaped payment of tax or manipulating accounts or stocks which may cause evasion of tax

Search & Seizure

Section 67(2) and 67(3) of the CGST Act, It is important to note that, section 67(2) of the CGST Act/SGST Act is pari materia to section 105 of the Customs Act, 1962.

The provisions of search and seizure also provides enough safeguards (a) Goods liable to confiscation or any documents/books/record/things, which may be useful for or relevant to any proceedings, are secreted in any place then all such places can be searched

 (b) All such goods/documents/books/record/ things may be seized, however, if it is not practicable to seize any such goods then the same may be detained. And the GST Law stipulates that search of any place of business etc.

(c) The seized documents/books/things shall be retained only till the time the same are required for examination/enquiry/ proceedings

(d) The seized goods shall be provisionally released on execution of bond and furnishing a security or on payment of applicable tax, interest and penalty.

(e) In case of seizure of goods, a notice has to be issued within six months, if no notice is issued within a period of six months, then all such goods shall be returned.

(f) An inventory of the seized goods/documents/ records is required to be made by the officer.

(g) To ensure that the provisions for search and seizure are implemented properly.

Arrest

the provisions of section 69 of the CGST Act,2017 deals with power of GST officers to arrest persons, section 132 of the CGST Act lists out the offences under the CGST Act which can lead to an arrest:

In the administration of taxation, the provisions for arrests are created to tackle the situations created by some unscrupulous tax evaders

(a) Provisions for arrests are used in exceptional circumstances and only with prior authorisation from the Commissioner.

(b) The law lays down a stringent criteria and procedure to be followed for arresting a person. A person can be arrested only if the criteria stipulated under the law for this purpose is satisfied.

(c) Further, even though a person can be arrested for specified offences involving tax amount exceeding Rs. 200 lakhs, however, where the tax involved is less than Rs. 500 lakhs, the offences are classified as non-cognizable and bailable and all such arrested persons shall be released on Bail by Deputy/Assistant Commissioner.

2023

ARVIND GOYAL CA Vs UNION OF INDIA & ORS.-2023 TAXSCAN (HC) 199

A Division Bench of the Delhi High Court recently directed to return the amount taken in possession by GST Officers with interest, noting that the GST Officers cannot take possession of cash found during search, under Goods and Services Tax Act, 2017.

The Division Bench of Justices Vibhu Bakhru and Amit Mahajan also directed to release the Bank guarantee furnished for the release of currency immediately. The concerned GST officers, Superintendent Vinod Prakash Sharma, and Sandeep Dhama were also directed to be present at the court on 20 February 2023, for the next hearing.

DHRUV KRISHAN MAGGU vs PRINCIPAL DIRECTOR GENERAL, DGGI (HQRS.), RK PURAM,NEW DELHI & ANR-2022 TAXSCAN (HC) 1019

The Delhi High Court has held that GST authorities can retain the seized goods for a maximum period of four and a half years.A conjoint reading of Section 74(2) and Section 74(10) would clearly show that the maximum period for issuance of the show-cause notice is six months prior to five years from the date of the erroneous refund. As per Section 67(3), if the documents, books or things are not being relied upon for the issuance of notice under the CGST Act, 2017, the same is supposed to be returned within a period not exceeding thirty days from the issue of the said notice. Justice Prathiba M  Singh observed that the period had not lapsed. The Court didn’t find it appropriate to directly release the computer, laptop, documents and other things seized vide punchnama dated 28th August 2019. The Writ petition was dismissed

SWASTIK PLASTICS vs COMMISSIONER OF DGST-2022 TAXSCAN (HC) 764

In a significant ruling, the Delhi High Court has recently quashed a GST assessment order passed by an investigating order who carried out the search proceedings for want of jurisdiction and directed the Revenue to re-adjudicate the proceedings.

Quashing the impugned order, Justice Rajiv Shakdher and Justice Tara VitastaGanju held that “the petitioner, in this case, had raised an issue concerning jurisdiction, right at the very outset. In these circumstances, we are of the view, that the respondent/revenue will have to commence de novo proceedings, bearing in mind the modification Guidelines given in the aforementioned Circular i.e., the Circular dated 20.09.2022. Accordingly, the impugned order dated 11.03.2022 is set aside. The logical sequitur would be, that a fresh show cause notice will have to be issued, bearing in mind the aforementioned Circular dated 20.09.2022.”

Shree Info System Solutions Pvt. Ltd vs Assistant Commissioner-2022 TAXSCAN (HC) 1085

Madras High Court (HC) in its recent ruling quashed the proceedings against the petitioner on errors occurring in the order issued under Section 129(3) of Tamil Nadu-  Goods and Services Tax Act (TNGST).

The bench noted that the  argument of the petitioner stated that the respondent side distorted the facts. The E-way bill was created at 12:39 p.m according to the petitioners, and the contested order proceeded on the basis that the detention and seizure happened at 8:35 a.m. on December 13, 2022. The Court directed the respondent to redo Section 129(3) of TN-GST Actafter affording a fresh opportunity to the writ petitioner. Additionally observed that writ petitioner shall furnish Bank Guarantee as per 129(1)(c) read with Section 129(1)(a) of TN-GST Act i.e., penalty equivalent to 200% of the tax payable by 26.12.2022 as the counsel of the petitioner submitted the same.

National Co-operative Consumer Federation of India Limited vs State of Bihar-2022 TAXSCAN (HC) 1020

The Patna High Court has recently set aside the ex-parte rejection of the Goods and Services Tax (GST) Input Tax Credit (ITC) claim of National Co-operative Consumer Federation of India Limited owing to the violation of natural justice principles.

The petitioner undertook to to additionally deposit ten per cent of the amount of the demand raised before the Assessing Officer. This was directed to be done within four weeks by the Court. The High Court also directed to unfreeze and de-attach any bank accounts of the petitioner if attached/frozen. It was also directed that no coercive steps such as seizure or arrest be taken against the petitioner. It was further clarified that no opinions were expressed in regard to the merits of the matter but only the violation of natural justice principles were addressed in the decision. The order rejecting the claim and stating the amount due and payable by the assessee issued in Form GST DRC-07 was thus set aside.

DHRUV KRISHAN MAGGU vs PRINCIPAL DIRECTOR GENERAL, DGGI (HQRS.), RK PURAM,NEW DELHI & ANR-2022 TAXSCAN (HC) 1019

The Delhi High Court has held that GST authorities can retain the seized goods for a maximum period of four and a half years.Justice Prathiba M  Singh observed that the period had not lapsed. The Court didn’t find it appropriate to directly release the computer, laptop, documents and other seized vide punchnama dated 28th August 2019. The Writ petition was dismissed

Tvt.LAF Enterprises vs The Commissioner of Commercial Tax-2022 TAXSCAN (HC) 481

The Madras High Court has recently ordered the GST department to release the detained vehicle since the “proper officer” has failed to issue a notice during the proceedings.

Granting relief to the petitioner, the Court held that “In the present case, admittedly, no such notice has been issued till date though the seizure has been effected as early as on 30.05.2022. In the aforesaid circumstances, the act of the respondent in insisting that the petitioner retain the vehicle at the present location is in gross contravention of the statutory provisions.”

Mahavir Polyplast Pvt. Ltd vs State Of U.P-2022 TAXSCAN (HC) 654

The Allahabad High Court, in a significant ruling, has slammed the GST officials for seizing the goods inside the godown without jurisdiction.

Criticizing the action of the officials, the Court held that “the Court does not wish to go deeper into the intention of the officers concerned in issuing such notices and drawing up such proceedings for which they had no jurisdiction as that would entail calling of personal affidavits of the officers at the cost of precious time of the Court. However, the officers are accountable for their acts. Therefore, let this order be communicated to the Commissioner Commercial Tax UP to look into the matter, call for explanation and take appropriate action commensurate to the misconduct, if any, that may be found committed by the erring officers and to take consequential and corrective action to avoid such occurrences, in future.”

M/s. Dhariwal Products, E-106, B-1, Marudhar Industrial Area, Basni 2nd Phase, Jodhpur vs Union Of India-2022 TAXSCAN (HC) 189

The Rajasthan High court has directed the Goods and Service Tax Authority (GST) department not to Force Taxpayers to deposit GST or take Coercive Measures without adhering to the procedure provided under Section 74 of the CGST Act.

The petitioner, M/s. Dhariwal Products seeks to assail the action of the respondent GST Department and its officials in conducting search and seizure of the petitioner’s premises, coercing the petitioner to deposit a huge sum of Rs.11.5 crores during the course of search operations held on 05- 06.01.2022 as being in gross contravention of the mandatory requirement of Section 74 of the CGST Act.

“The petitioner shall not be forced to deposit any amount towards GST without adhering to the procedure provided under Section 74 of the CGST Act,” the court while listing the matter on March 10, 2022, said.

 AMIT HARISHKUMAR DOCTOR vs UNION OF INDIA & 3 other(s)-2022 TAXSCAN (HC) 138

A two-judge bench of the Gujarat High Court has released the confiscated cash and goods as the Goods and Service Tax (GST) Department delayed issuance of Show Cause Notice (SCN) beyond the statutory time period.

The Court further noted that the period prescribed under the law has already lapsed long before the show cause notice has been issued, this Court needs to intervene for this being a clear violation of statutory provisions of section 110 and other provisions of Customs Act, the items are required to be returned to the petitioner. The court directed the department to return the cash and articles/goods to the petitioner no later than the period of eight weeks seized from the petitione

Dhariwal Products, E-106, B-1, Marudhar Industrial Area, Basni 2nd Phase, Jodhpur vs Union Of IndIA- 2022 TAXSCAN (HC) 189

The Rajasthan High court has directed the Goods and Service Tax Authority (GST) department not to Force Taxpayers to deposit GST or take Coercive Measures without adhering to the procedure provided under Section 74 of the CGST Act.

“No coercive steps shall be taken against the petitioner/its representatives in furtherance of the search/seizure operations dated 05.01.2022/ 06.01.2022 and the summons issued in pursuance thereof,” the court said. “The petitioner shall not be forced to deposit any amount towards GST without adhering to the procedure provided under Section 74 of the CGST Act,” the court while listing the matter on March 10, 2022, said. Senior Advocate Vikas Balia assisted by Mr. Sharad Kothari, Mr. Mayank Taparia and Mr. Priyansh Arora appeared for the petitioners.

The Delhi High Court has recently directed the GST department to release a refund of Rs. 1.8 crores along with an interest of 6% for the reason that the department has not complied with the CBIC circular prohibiting payment during search proceedings and prescribing guidelines for receipt of voluntary payment by the assessee.

M/s GMT Industries Ltd vs The State of Jharkhand-2022 TAXSCAN (HC) 1082

The Division Bench of the Acting Chief Justice Aparesh Kumar Singh and Justice Deepak Roshan at Jharkhand High Court has recently directed the petitioner, M/s GMT Industries Ltd to seek available alternative remedies for refund of deposit amount in lieu of seizure of truck.

Taking into consideration that an efficacious alternative remedy by way of appeal is available to the petitioner under Section 107 of Jharkhand Goods and Services Tax Act, the bench of the Jharkhand High Court directed the petitioner to approach the appellate authority against the impugned order passed under Form GST MOV 09. The court also refused to hear the matter on merits.

State Authorities can’t harass Trading Community: Allahabad HC quashes wrongful Seizure of Consignment by GST Authorities

The Allahabad High Court while quashing the wrongful seizure of a consignment by GST authorities held that the State Authorities cannot harass the trading community.

The single bench of Justice Piyush Agrawal held that the State Government have tried to create an atmosphere for free flow of trade and commerce so that a good business environment can be developed in the State of Uttar Pradesh which can be used for development purpose but the State Authorities in their whims and fencing are bend upon to harass the trading community of the State. The present case is a glaring example of the mischievousness of the State Authorities which needs to be checked at the end of the State Government immediately. “The writ petition is allowed with a cost of Rs. 20,000/- payable to the petitioner. The cost shall be paid within a period of one month from today. The respondents are at liberty to recover the said cost from the erring officer,” the court said.

GTS Coal Sales vs Directorate General of Goods & Services Tax Intelligence-2022 TAXSCAN (HC) 959

The High Court of Jharkhand has refrained from deciding on the leviability of GST for GTA Services during the investigation. GTS Coal Sales, the petitioners prayed for a direction to refund the involuntarily deposited amount of Rs. 60 lac in W.P.(T) No. 1539 of 2021 and Rs. 47,64,900/- in W.P.(T) No. 14 of 2021 without there being any demand and/or adjudication proceeding.

The Court held that “if after investigation and subsequent proceedings, an adjudication order is passed against the respective petitioners and they are held liable to pay the tax @ 18%; then both the petitioners would be at liberty to raise their claim of the differential amount from respective Coal- companies in an appropriate proceeding before an appropriate forum which shall be decided as per law and the agreement/work orders between the parties and verification of documents.”

COMMISSIONER OF CGST AND CENTRAL EXCISE vs M/S. ASHIRWAD FOUNDRIES PRIVATE LIMITED AND ANOTHERS- 2022 TAXSCAN (HC) 1038

A Division Bench of the Calcutta High Court allowed appeal by the Revenue as there was absence retraction of statements and opined that Commissioner of Central Excise is not a Court.

The respondent is a manufacturer of castings falling under Chapter 73 of the First Schedule to the Central Excise Tariff Act, 1985. A notice to show cause was issued to the respondent alleging that they have contravened the provisions of Rule 4, 6, 8 and 12 of the Central Excise Rules, 2002, read with Rule 3, 4 and 9 of the CENVAT Credit Rules, 2004 in as much as they fraudulently reaped financial gain by availing inadmissible CENVAT Credit of Rs. 5 crores. What weighed in the mind of the tribunal was that during the course of search at the factory premises of the respondent incriminating documents were not recovered nor any shortage/excess of raw materials/finished goods were found by the officers of the anti evasion wing

The Bench consisting of Justice TS Sivagnanam and Justice Hiranmay Bhattacharyya observed that “The tribunal had “picked holes” in the adjudication process forgetting that the Commissioner of Central Excise is not a court but an adjudicating authority.

VALLABH TEXTILES vs SENIOR INTELLIGENCE OFFICER AND ORS-2022 TAXSCAN (HC) 1047

The Delhi High Court has recently directed the GST department to release a refund of Rs. 1.8 crores along with an interest of 6% for the reason that the department has not complied with the CBIC circular prohibiting payment during search proceedings and prescribing guidelines for receipt of voluntary payment by the assessee.

Concluding the order, the Court added that “the violation of the safeguards put in place by the Act, Rules and by the Court, to ensure that unnecessary harassment is not caused to the assessee, required adherence by the official respondents/revenue, as otherwise, the collection of such amounts towards tax, interest and penalty would give it a colour of coercion, which is not backed by the authority of law.”

M/S RAJEEV TRADERS vs UNION OF INDIA-2022 TAXSCAN (HC) 676

In a significant ruling relating to confiscation under the Central GST Act, the Karnataka High Court has held that the power of confiscation under the Act can be invoked in extra-ordinary circumstances.

Quashing the impugned order, the Court held that “It is to be kept in mind the predominant principle under the Act is to ensure that the registered person is given a chance to rectify his wrongdoing whenever the wrongdoing is noticed and pay the applicable tax and penalty or interest as the case may be. The proper officer cannot snatch away that right conferred on the registered person by invoking proceedings to confiscate the goods itself.

Confiscation before Seizure can’t be Ordered on Mere Suspicion: Gujarat HC

The Gujarat High Court in the case of Synergy Fertichem Pvt. Ltd v State of Gujarat held that for the purpose of issuing a notice of confiscation u/s 130 of the Act, mere suspicion may not be sufficient to invoke Section 130 of the Act straightway.

The Bench clarified that they have, otherwise, not gone into the merits of the petitions however has ordered interim release of the goods as well as the conveyance subject to the final outcome of the confiscation proceedings. Justice A.C. Rao while concurred with the decision Justice J.B. Pardiwala was of the view that the Legislature should, once again, look into both the provisions, i.e. Sections 129 and 130 of the Act and amend the Sections accordingly so as to remove certain inconsistencies in the two provisions. 

GST Dept should Release the Seized Goods immediately after Security Deposit is made: Allahabad HC

The High Court of Allahabad has reaffirmed that the GST dept.  should release the seized goods after the security of the equivalent amount is furnished.“The bank guarantee furnished by the petitioner (assessee) to the State Revenue Authorities shall remain with the State Revenue Authorities and its invocation shall be subject to the result of the adjudication,” the division bench said. “The notice under Section 129(3) of the UPGST Act, 2017 is infructuous and the proceedings taken thereunder are liable to be treated as concluded,” the Court observed.

M/S RADHA TRADELINKS PVT LTD vs STATE OF GUJARAT-2020 TAXSCAN (HC) 179

The Gujarat High Court directed the release of the goods and vehicle confiscated on the deposit of Rs.1.70 Lakhs along with a bank guarantee. The writ applicant, M/s Radha TradelinksPvt. Ltd. is engaged in the business of areca nut, spices, etc. A consignment of areca nut was transported from Karnataka so as to reach Ahmedabad. While the goods were in transit, the same came to be intercepted by the mobile squad of the GST at the Songadh Check Post. It appears that at the time of seizure and thereafter upon further inquiry many discrepancies were noticed by the authority as regards the documents etc.

The court directed the authority concerned to release the goods and the vehicle at the earliest on receiving the deposit and penalty along with the bank guarantee.

GST: Once the Seizure is held to be bad in law, No Confiscation can take place, says Allahabad High Court

The Allahabad High Court held that once the seizure is held to be bad in law, no confiscation can take place.“We do not deem it fit to address on the question of validity and legality of the provisional release order inasmuch as once the seizure is held to be bad in law, no confiscation can take place, however, we leave the other arguments raised by the counsel for the petitioners while attacking the provisional release order open,” the court said.

 The court directed the respondent authority to release the goods i.e. ‘Areca Nuts’ as well as the vehicle in question in favor of the petitioner.

M/s. AMI Enterprises Pvt. Ltd vs Union of India-2022 TAXSCAN (HC) 614 Be the Fir

A division bench of the Jharkhand High Court has held that the goods or conveyance shall not be detained or seized without serving an order of detention or seizure on the person transporting the goods on the allegation of making transit in contravention of the provisions of the GST Act, 2017 or connected Rules.

The division bench, after hearing arguments from both sides, held that “a bare perusal of the provisions of Section 129 shows that no goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods on the allegation of making transit in contravention of the provisions of the Act or Rule made thereunder.

Shri Venkateshvara Logistics Fleet Owners and Transport Contractors vs The Assistant Commissioner of Central Tax-2020 TAXSCAN (HC) 229

The Karnataka High Court quashed the order of detention of goods conveyance vehicle by GST authorities passed for the second time against a Transporter by initiating a proceeding under section 67 of the CGST Act.

“However, liberty is reserved for the proper authority under the CGST Act to continue the proceedings initiated under Section 67 and determine the amount of tax payable on the previous supplies made under Section 74 or initiate any penal action under Section 132 of the CGST Act against the supplier or the registered recipients for the alleged fraudulent availing of input tax credit or the wrongful generation of invoices,” the bench said.

ional Attachments Order under GST cant be delegated to Assistant Commissioner: Gujarat HC

The Gujarat High Court has held that the Commissioner ought not to have delegated his powers of provisional attachments under Section 83 of the CGST Act to the Assistant Commissioner.

The Court ruled that the Commissioner ought not to have delegated his powers of provisional attachment under Section 83 of the Act to the Assistant Commissioner. Therefore, the orders of provisional attachment as well as the order of prohibition are not sustainable on two counts, i.e. (i) the order has been passed by the Assistant Commissioner, and (ii) the order has been passed without any credible materials, available for the purpose of passing such order of provisional attachments. The order of provisional attachment passed by the Assistant Commissioner, so far as the immovable property is concerned, is hereby quashed and set aside.

Smt. Kanishka Matta vs Union of India and Others-2020 TAXSCAN (HC) 192

The Madhya Pradesh High Court said that cash can be seized in Goods and Service Tax (GST) search as it is covered under definition of ‘Things’.

The division bench of Justice S.C. Sharma and Shailendra Shukla opined that a conjoint reading of Section 2(17), 2(31), 2(75) and 67(2) makes it clear that money can also be seized by an authorised officer. Resultantly, the court keeping in view the totality of the circumstances of the case, the material available in the case diary and also keeping in view Section 67(2) of the CGST Act, 2017, held that the authorities have rightly seized the amount from the husband of the petitioner and unless and until the investigation is carried out and the matter is finally adjudicated, the question of releasing the amount does not arise.

GST Dept issues new Standard Operating Procedure for conducting Inspections, Search in Andhra Pradesh

The Chief Commissioner of Andhra Pradesh Goods and Service Tax Act (APGST) notified Standard Operating Procedure to be followed by the field officers in respect of Enforcement activities like conducting an inspection, search, and seizure, summons, access to the business premises of a registered person, etc.

It is observed that uniform procedure is not being followed by the Proper Officers and the Officers so authorised to have access of any place of business of a registered person in the State and in order to bring uniformity in the procedure for the said access to business premises of registered person the following SOP is issued for guidance of the officers. Each SOP consists of procedures to be followed while discharging functions of Enforcement activities, draft Panchnama and the Registers to be maintained in the office. It is directed to follow the above procedures with strict adherence to the SOP’s while conducting Enforcement activities.

GST: Madhya Pradesh High Court upholds Cash Seizure of about Rs. 66.43 lakhs

The Madhya Pradesh High Court while analyzing the scope and ambit of section 67(2) of GST Act has upheld Cash seizure of about Rs. 66.43 lakhs.

The respondents have stated that keeping in view Section 67(2) of the CGST Act, 2017 read with definition Clause makes it very clear that the respondents were justified in seizing the amount from the petitioner and the statute empowers them to do so. The respondents have also submitted the Case Diary in a sealed cover before this Court. The division judge bench of Justice S.C. Sharma and Justice Shailendra Shukla keeping in view the totality of the circumstances of the case, the material available in the case diary and also keeping in view Section 67(2) of the CGST Act, 2017, opined that the authorities have rightly seized the amount from the husband of the petitioner and unless and until the investigation is carried out and the matter is finally adjudicated, the question of releasing the amount does not arise.

GST: Kerala High Court upholds Inspection, Search, and Seizure for goods kept under illegal custody

The Kerala High Court upheld the inspection, search and seizure under Section 67 of the CGST Act for goods kept under illegal custody and an amount of Rupees One Crore extorted from them.

The Single Judge found that the writ petition is premature and there was no evidence produced by the petitioners to substantiate the contention of harassment perpetrated on them. The Single Judge held that it is inappropriate to form an opinion regarding the allegations raised, at this stage, especially for the reason of there being no supporting material to establish the allegations. The division bench of Justice K. Vinod Chandran and Justice T.R. Ravi held that the proceedings initiated under Section 67 are not improper, illegal or that the actions projected before us were in any manner proceeded with, in an arbitrary or high-handed fashion. “We dismiss the appeal, leaving the parties to suffer their respective costs,” the bench said.

Presence of a Lawyer can’t be allowed during Search and Examination by Customs Officers: Madhya Pradesh HC

The High Court of Madhya Pradesh, in the light of the decision of the Supreme Court, held that the presence of a lawyer cannot be allowed at the time of search proceedings and the examination of a person under the Customs Office. The petitioner, Subhash Joshi is the manufacturer of sweet betel nut and which has all the necessary licenses and permissions for this purpose and is regularly paying the GST.

The division bench of Justice Prakash Shrivastava and Justice Vandana Kasrekar held that no legal right has been pointed out by the petitioner to carry out the search and seizure operation in the presence of the Advocate, so it cannot be accepted. The bench in light of the decision of the Supreme Court also held that the presence of a lawyer cannot be allowed at the time of examination of a person under the Customs Office.

Petition in Rajasthan HC challenges Constitutional Validity of Provisions on Detention, Seizure and Release of Goods and conveyances in transit and Levy Penalty

A Petition has been filed in the Rajasthan High Court Constitutional Validity and Vires of Section 129 and 130 of the Central Goods & Services Tax Act, 2017 and the corresponding Sections of the Rajasthan Goods & Services Tax Act, 2017.The Section 129 of the CGST Act, 2017 dealt with Detention, seizure and release of goods and conveyances in transit and Section 130 dealt with Confiscation of goods or conveyances and levy of penalty.

The Division Bench comprising Justice Mohammad Rafiq and Justice Goverdhan Bardhar on 04.12.2018 admitted the petition and issued the Notices.

State GST Officers has Power to Inspect, Search and Seize Goods under IGST Act: Madhya Pradesh HC

A two-judge bench of the Madhya Pradesh High Court has held that the State GST Officers are also authorized to exercise the powers to inspect, search, and seize the goods under the Integrated Goods and Services Tax (IGST) Act, 2017.

“On due consideration of the arguments of the learned counsel for the parties so also the provisions of Section 4 of the IGST Act, we are of the view that officers appointed under the MPGST Act are authorized to be proper officers for the purpose of IGST and, therefore, the contention of the petitioner that no notification was issued and in absence of any notification under Section 4 of the IGST Act has no force, we cannot accept the contention of the petitioner that the action of the respondent No.4 is wholly without jurisdiction,” the bench said.

Seizure under Uttar Pradesh GST Act involving Inter-State Transactions is permissible: Allahabad HC

While granting an interim order to M/S Seth Prasad Agro Private Limited, the Allahabad High Court held that the seizure of goods under the Uttar Pradhesh Goods and Services Tax Act involving an inter-State transaction is valid under the new tax regime as the similar provision is provided in the Central GST and IGST Act.

“In this way the power of seizure under the IGST Act read with Central G.S.T. Act is analogues to that under Section 129 of the U.P. G.S.T. Act. In view of above, the impugned order of seizure cannot be held to be bad in law only for the reason that the wrong provision of Act has been mentioned while passing the same as the power of seizure is clearly traceable under the relevant Act as well.” The bench further held that the impugned order is to be treated to have been passed under IGST Act read with Section 129 of the Central G.S.T. Act rather than the one passed under U.P.G.S.T. Act.

Rivigo Services Pvt. Ltd. vs State Of U.P. And 3 Others-2018 TAXSCAN (HC) 104

The Allahabad High Court has ruled that the goods cannot be seized for non-filling of Part B of the E-Way Bill transported within a distance of 50kms. The Writ Petition has been filed by the petitioner challenging the seizure order and the consequential penalty notice passed/issued under Section 129(1) and 129(3) of the Act respectively.

While allowing the Writ Petition, the division bench comprising of Justice Ashok Kumar and Justice Krishna Murari observed that, “there is no reason to disbelieve the contention of the petitioner which has been furnished at the time of inspection of the vehicle before the respondent no.4”.

VSL Alloys (India) Pvt. Ltd. vs State Of U.P. And Another-2018 TAXSCAN (HC) 101

The Allahabad High Court recently held that mere non-mentioning of vehicle number of the dealer in Part-B of the E-Way Bill cannot be reason for seizure of the Vehicle under the Goods and Services Tax ( GST ) regime. The petitioner, in the instant case is engaged in manufacture and supply as well as export of industrial SS Tube, fittings and pipe fittings etc. during the course of transporting the goods, the department inspected the vehicle and seized the same on ground that the e-way bill accompanied is not valid as Part-B of the same is not entered.

Accordingly, the bench quashed the impugned seizure order and directed the department to release the goods.

Delay in producing E-Way Bill is a Mere Technical Breach: Allahabad HC Deletes Penalty

While deleting penalty against M/S Raj Iron & Building Materials, a division bench of the Allahabad High Court held that delay in submitting e-way bill would amount to a mere ‘technical breach’ under the Goods and Services Tax (GST) law. In the instant case, the petitioners imported goods from West Bengal under regular tax invoice. The goods were later seized by the department for want of e-way bill.

“It is also not disputed that being faced at present there are certain difficulties with regard to the downloading of the E-Way Bill and also certain doubts still remain with regard to the requirement and submission of E-Way Bill. In view of the above, the penalty order and the seizure order cannot be sustained and are hereby quashed,” the bench said.

Collection of Post-dated Cheques during Inspection not permissible under GST: Gujarat HC sets aside Provisional Attachment of Bank Accounts

In M/s. Remark Flour Mills Pvt. Ltd vs. State of Gujarat, the Gujarat High Court slammed the practice of collecting post-dated cheques during inspection is not permissible under the Goods and Services Tax ( GST ) laws. The Court, while allowing a petition filed by the assessee, pointed out that the authority had failed to provide reasons for the exercise of such drastic power of attachments of bank accounts.

Allowing the petition, the Court observed that the authority had failed to provide reasons for the exercise of such drastic power of attachments of bank accounts. The Court set aside the provisional attachments of the bank accounts, imposing two conditions namely – (1) Petitioner should maintain stock worth a minimum sum of Rs.50 lacs till the final disposal of the case & (2) Petitioner shall file an undertaking to this effect.

Directorate General of GST Intelligence vs Shri Nikit Mittal-2023 TAXSCAN (HC) 115

The Jharkhand High Court at Ranchi has recently dismissed the contempt petition of Directorate General of Goods and Services Tax (Intelligence), filed instead of pursuing arrest or other coercive measures as it was withdrawn.

The Single Bench of Justice Sujit Narayan Prasad expressed his view that the court failed to understand “what is the occasion for the petitioner to file this contempt case instead of taking coercive measure for securing the appearance of the litigant.” The petitioner subsequently submitted that the permission to withdraw the contempt case may be given. Resultantly, the Jharkhand High Court dismissed the contempt case as withdrawn.

GST: Commissioner empowered to authorize ‘arrest’ prior to Completion of Assessment, rules Gujarat High Court

The Gujarat High Court held that the Commissioner was empowered to authorise ‘arrest’ prior to completion of the assessment. The petitioner is the proprietor of a M/s Heugo Metal engaged in the business of trading and supply of the stainless steel and scrap and was using the godown.“In view of the foregoing reasons, observations and directions, the petitions are accordingly ordered to be rejected. Ad interim relief granted earlier stands vacated. Rule is discharged with no order as to costs. Civil Applications, if any, stand disposed of,” the court said.

CHARU CHAINS AND JEWELS PVT LTD vs ASSISTANT COMMISSIONER OF INCOME TAX-2023 TAXSCAN (HC) 248

The Delhi High Court has held that the underlying information or material that formed the basis for triggering the assessment or reassessment proceedings needs to be furnished to the assessee. Charu Chains and Jewels Pvt ltd, the petitioner challenged the order dated 25.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961 and the consequential notice under the Income Tax Act, 1961. The Assessing Officer (AO) observed certain unsecured loan transactions entered into amongst three entities amounting to a cumulative sum of Rs.2.7 crores. Further viewed that these were accommodation entries. 

Inspection/enquiry was conducted at two locations which revealed that the lenders were either not found at the given address or exhibited typical characteristics of entry-providing entities

The Court set aside the impugned order dated 25.07.2022 passed under Section 148A(d) of the Act and the consequential notice of even date i.e., 25.07.2022 issued under Section 148 of the Act.

Authorities to Wait for Confiscation Order If Search and Seizure Challenged: Allahabad High Court

The Allahabad High Court in a writ petition Rimjhim Ispat Ltd. v. State of U.P. partly holding in favour of the appellant held that even though there was no stay order restraining the respondents from passing the confiscation order, the respondent authorities should have awaited the outcome of the challenge made to the search by the petitioner.

The Court constituting of Justice Pankaj Mithal and Justice Pankaj Bhatia held that Department had ‘reasons to believe’ and, in pursuance of the said reasons, the search and seizure operations were carried as such the writ petition fails as regards insufficiency of material for carrying out the search and seizure. Further, for the issue concerning confiscation order, it was held that even though there was no stay order restraining the respondents from passing the confiscation order, the respondent authorities should have awaited the outcome of the challenge made to the search by the petitioner. The confiscation order was hence quashed, ruling in favor of the assessee.

 GST: Kerala High Court upholds Inspection, Search, and Seizure for goods kept under illegal custody

The Kerala High Court upheld the inspection, search and seizure under Section 67 of the CGST Act for goods kept under illegal custody and an amount of Rupees One Crore extorted from them.

The division bench of Justice K. Vinod Chandran and Justice T.R. Ravi held that the proceedings initiated under Section 67 are not improper, illegal or that the actions projected before us were in any manner proceeded with, in an arbitrary or high-handed fashion.

GST: Bombay High Court to hear plea challenging Arrest provisions under CGST Act

The Bombay High Court to hear pleas challenging Arrest provisions under the CGST Act. A writ petition was filed by Abhishek Rastogi, partner at Khaitan & Co challenging the arrest provisions under the goods and services tax (GST) laws.

The petition stated that Section 132 (1) of the Central GST Act provides that specified offenses involving tax evasion in excess of Rs.5 crore will be cognizable and non-bailable and that officials can proceed with arrest as per the procedure laid out under Section 69 of the CGST Act.

Seizure under Uttar Pradesh GST Act involving Inter-State Transactions is permissible: Allahabad HC

While granting an interim order to M/S Seth Prasad Agro Private Limited, the Allahabad High Court held that the seizure of goods under the Uttar Pradesh Goods and Services Tax Act involving an inter-State transaction is valid under the new tax regime as the similar provision is provided in the Central GST and IGST Act.

VIJAY STEELCON PRIVATE LIMITED vs PRINCIPAL COMMISSIONER OF CENTRAL TAX (GST) DELHI EAST & ORS 2021 TAXSCAN (HC) 159

The Delhi High Court upholds the Seizure of cash as the Taxpayer voluntarily deposited the balance GST, interest and penalty.

The division bench of Justice Navin Chawla and Justice Manmohan held that the assessee can by making a voluntary deposit of tax, interest, and penalty avail the benefit of restriction of penalty to only 15% of such tax. In the present case, the petitioner availed of this remedy, and based thereon, proceedings against the petitioner arising out of the search and seizure activities carried out on 04.03.2021 were closed. This was also informed to the petitioner vide impugned letter dated 24.09.2021 of the respondents. The petitioner having availed of the relief, cannot now turn around and challenge the said proceedings.

R.J. TRADING CO. vs COMMISSIONER OF CGST, DELHI NORTH & ORS. 2021 TAXSCAN (HC) 294

The Delhi High Court while quashing the seizure Order said that the Search and Seizure power of GST Authority is intrusive power and needs to be wielded with utmost care.

The division bench of Justice Rajiv Shakdher and Justice Talwant Singh noted that the Additional Commissioner, CGST Delhi North Commissionerate exercised his powers for authorization to conduct search and seizure, at RJT’s premises, even though the jurisdictional ingredients were absent. The request of Joint Commissioner (AE), Gautam Budh Nagar conveyed through the communication, was only to ascertain as to whether RJT, which was the L2 supplier of M/s Mridul Tobie Inc., was in existence. There was no independent application of mind by the Additional Commissioner, CGST Delhi North Commissionerate.

Gujarat High Court directs GST Authorities to release Seized Documents if can’t be returned then assign Cogent Reasons

The Gujarat High Court directed the GST authorities to release the seized documents, if they can not be returned then assign cogent reasons.

The division bench of Justices J.B.Pardiwala and Ilesh Vora held that once the show-cause notice is issued to the party concerned, the documents/records, which have not been relied upon, should be returned to the party. This is what is even suggested in the master circular dated January 19, 2017.

Search and Seizure by Police Officials without Invoking Provisions of Section 67 of the AGST Act is against the Law: Gauhati HC

The Gauhati High Court held that search and seizure made by the police officials without invoking the provisions of Section 67 of the Assam Goods and Services Tax Act (AGST Act) and following the procedure prescribed therein would be an aberration of the established procedure of law.

The division bench comprising of Justice Achintya Malla Bujor Barua and Justice Nelson Sailo held that if the authorities under the AGST Act of the State of Assam are of the view that the appellants are required to be proceeded with or prosecuted under the GST Act, it would be appropriate to invoke the provisions of Section 67 of the AGST Act and proceed accordingly. But without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks.

Arrest of GST Evaders: Supreme Court Upholds Telangana HC Order

P.V. RAMANA REDDY VS UNION OF INDIA & ORS.

In a significant ruling, the Supreme Court has upheld the order of the Telangana High Court where the Court gave a green signal to the GST officials to arrest the tax evaders.to the companies due to the ‘special circumstances’ of the case

Telangana HC upholds Arrest by GST Officials

The Telangana High Court has reportedly dismissed a p

While upholding the arrest, a Division Bench of the High Court comprising Justice V. Ramasubramanian and Justice P. Keshava Rao rejected the technical objections raised by the petitioners over the powers and reasons of the GST officials to arrest them. The bench observed that despite the petitions being maintainable and incongruities within some provisions of the Central Goods and Service Tax (CGST) Act-2017, the relief could not be granted etition seeking a direction to the Hyderabad GST Commissionerate officials not to arrest them and set aside summons issued

The bench observed that despite the petitions being maintainable and incongruities within some provisions of the Central Goods and Service Tax (CGST) Act-2017, the relief could not be granted to the companies due to the ‘special circumstances’ of the case.

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