The Calcutta High Court observed that the prohibitory order under section 67(7) Goods and Services Tax ( GST ) Act, 2017 cannot be permitted to continue indefinitely. Since the assessee has not approached the respondents under Section 67(6) of the GST Act and as such, there is no reason for the Court to interfere at this stage save and except.
M/s. Kanak Timber House & Anr.praying for quashing of the order of prohibition dated 25th March, 2023 issued under Section 67(2) of the CGST/ WBGST Act, 2017 ( GST Act ).
A search and seizure procedure was initiated under Section 67 of the GST Act at the petitioners’ registered place of business. On the following date, in terms of first proviso to Section 67(2) of the GST Act, a prohibitory order was issued. Since then, on 26th December, 2023, a notice under Section 122 of the GST Act was issued.
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According to the petitioners, the petitioners had duly responded to the said notice and are participating in the proceedings. Subsequently, on 17th January, 2024, the petitioners had requested the respondents to release the stock of timber which had remained seized and covered under the prohibitory order dated 25th March, 2023.
The office of the respondent no.1 by an e-mail communication without appropriately replying to the petitioners’ communication had only informed that a show-cause notice under Section 122 of the GST Act has already been issued.
Mr. Kanodia,advocate representing the petitioners, submitted that power has been vested on the proper officer not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or book or things which in his opinion shall be useful for or relevant to any proceedings under this Act are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or things.
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As per Section 67(2) of the GST Act, when it is not practicable to seize any such goods, the proper officer or any other officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with or otherwise deal with the goods except with the previous permission of such officer. Mr. Kanodia submitted that the respondent no.1 by invoking the first proviso to Section 67(2) had issued the order dated 25th March, 2023.
Per contra, Mr. Chakraborty, advocate representing the respondents has taken me through the provisions of Section 67(7) of the GST Act. According to Mr. Chakraborty, the said section comes into play when no notice of the seizure is issued within a period of six months. Mr. Chakraborty further by referring to the provisions of Section 67(6) of the said Act submits that an assessee has a right to get such goods released on provisional basis even upon execution of a bond and furnishing a security in such manner and of such quantum, respectively, as may be prescribed. According to him, the petitioners have not approached the respondents for release of the goods even on a provisional basis.
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A single bench of Justice Raja Basu Chowdhury observed that the prohibitory order cannot be permitted to continue indefinitely. Since the assessee has not approached the respondents under Section 67(6) of the GST Act and as such, there is no reason for the Court to interfere at this stage save and except, if any application is made by the assessee with the respondent no.1 in terms of Section 67(6) of the GST Act, the same shall be considered in accordance with law.
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