The Delhi High Court recently observed that a search can be authorized only if the conditions specified under Section 67 of the Central Goods and Services Tax (CGST) Act, 2017 are fulfilled.
The petitioners, Bhagat Ram Om Prakash Agro Pvt Ltd and Another, have filed the present petition, inter alia, impugning the search authorization issued by the proper officer. It is the petitioners’ case that the said search authorisation is illegal as the same was issued without the proper officer having any reason to believe that the conditions as specified under Section 67(1) of the Central Goods & Services Tax Act, 2017 (‘the Act’) were complied with.
It is the petitioners’ case that the search was conducted in view of the directions issued by the Special Judge (P.C. Act) to the Income Tax Department, GST Department, and Enforcement Directorate to check the source of ₹50,00,000/- received by the petitioners.
Petitioner no.2 (Prem Shankar Verma) has purchased a property from one Rajesh Kumar Anand for a sum of ₹50,00,000/-. Rajesh Kumar Anand had deposited the said consideration in a fixed deposit receipt which was offered as a collateral for securing the bail of Kapil Wadhawan and others.
A Division Bench of Justices Vibhu Bakhru and Tara Vitasta Ganju observed that “We have serious reservations whether any such roving and fishing inquiry under the Central Goods and Services Act, 2017 could have been directed to be conducted by the Special Judge. Further, the proper officer can authorise the search only if the conditions specified in Section 67 of the Act are fulfilled.”
The Court also noted that “The respondent shall also produce the relevant files containing the directions for conducting the search. In the meanwhile, the proceedings pursuant to the search conducted are stayed.”
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