Inspection Conducted Without Independent Witnesses and Seizure Order Tampered: Patna HC Quashes ₹88.64 Lakh GST Demand [Read Order]

In a recent decision, the Patna High Court quashed a Rs. 88.64 lakh GST demand after finding that the inspection was carried out without the presence of independent witnesses and that the seizure order had been tampered with after the proceedings had begun.

The  Sri Sai Food Grain and Iron Stores, petitioner, a proprietorship firm based in Gopalganj, Bihar, challenged the demand order dated May 9, 2024, issued under Section 74(9) of the BGST/CGST Act, 2017. The demand arose from an inspection conducted by the Assistant Commissioner of State Tax on January 18, 2024.

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The petitioner argued that the inspection was unlawful as it did not comply with Section 67 of the CGST Act and Section 100 of the CrPC, which require the presence of two independent witnesses during such proceedings.

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The State Tax Department claimed that the seizure was lawful and supported by the presence of two witnesses, but later admitted in court that the seizure order had been interpolated. The Assistant Commissioner acknowledged inserting a phrase into the order post-facto and submitted a written apology, citing her inexperience.

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The bench comprising Justice P. B. Banjanthri and Justice Alok Kumar Sinha found that the individuals named in the inspection report were not independent but were connected to the petitioner’s firm and further observed that the seizure order had been modified after judicial proceedings had commenced, raising serious doubts about the credibility of the official records. The court expressed that the inspection and seizure process must strictly adhere to statutory safeguards to ensure procedural fairness and transparency.

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The court ruled that the procedural lapses rendered the inspection illegal and the demand arising from it unsustainable. The court also issued a warning to the concerned officer, cautioning her against any future interference with official or court documents and stating that further violations would attract disciplinary action. The court allowed the writ petition and quashed the impugned

To Read the full text of the Order CLICK HERE

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