Procedural Lapses: Allahabad HC quashes Search and Seizure Order and GST Proceedings [Read Order]

The Allahabad High Court has quashed the search and seizure order as well as subsequent proceedings against a company under Goods and Services Tax Act, owing to procedural irregularities.

The petitioner challenged the search and seizure order from January 4, 2018, along with the notice issued on February 8, 2021, and the order dated September 1, 2021, passed under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017. The petition also contested the appellate order dated January 6, 2023.

The petitioner argued that the respondent authorities failed to comply with the mandatory provision of Section 67 of the Act. Specifically, the Joint Commissioner did not provide the necessary "reasons to believe" that a search was warranted when authorising the search and seizure.

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Upon reviewing the documents, the court noted the existence of two INS-01 forms—one dated February 11, 2019, and another dated January 4, 2018. The INS-01 issued in 2019 was deemed invalid as it was created after the search. The INS-01 from January 4, 2018, also lacked recorded reasons to believe, raising questions about its authenticity.

The petitioner highlighted these discrepancies in paragraphs 41 and 42 of the writ petition, questioning the genuineness of the authorization for the search and seizure.

The State's counter affidavit, failed to provide a coherent explanation for the dual INS-01 document and the court found the State's attempts to justify the search authorization unconvincing and confusing.

The court concluded that the necessary procedural requirements under Section 67 were not followed, rendering the entire authorization process invalid.

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In light of the procedural lapses and inconsistencies identified, the court quashed and set aside the entire proceedings initiated from the unauthorised search and seizure under Section 67 of the Act.

The court also directed the State authorities to release all goods and documents detained or confiscated within three weeks and refund any amount deposited by the petitioner under Section 74 of the Act within eight weeks.

To Read the full text of the Order CLICK HERE

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