Case Law Details
RCI Industries And Technologies Ltd Vs Commissioner DGST Delhi & Ors. (Delhi High Court)
If an officer of the Central GST initiates intelligence- based enforcement action against a taxpayer administratively assigned to State GST, the officers of the former would not transfer the said case to their counterparts in the latter department and they would themselves take the case to its logical conclusion. At this stage, we are only concerned with the search action initiated and the ultimate logical conclusion would have to be gone into at the appropriate stage, when the Revenue proceeds for determination of tax. The Respondents would be bound by the aforenoted circulars and we reiterate that in case the action of the State and Central Authorities is overlapping, the Petitioner would be at liberty to take action to impugn the same in accordance with law.
As regards the absence of the two independent witnesses, we may first note that there is no panchnama on record. In essence, the main thrust of Petitioner’s argument is that the statement of Mr. Rajeev Gupta does not record the presence of the two independent witnesses or signatures, making the search action illegal. We have already dealt with the contention of the Petitioner regarding the alleged involuntary/forced statement and in view of our observations made hereinabove, this issue, is rendered insignificant. Further, no specific provision is shown to us that deals with recording of statement in search action. The only relevant section is Section 70, which does not entail signatures of witnesses. Be that as it may, determination of tax liability, has to be in accordance within the confines of statutory provisions of the GST laws. We reiterate that the evidentiary value of the aforenoted statement, and the effect of payment of tax and interest made pursuant thereto, are issues which would have to be gone into at the stage of adjudication.
We also do not find merit in the contention of the Petitioner that absence of the signature of the authorised person on Form GST INS-01 would render the search action to be non-est. Mr. Babbar does not dispute that the persons who carried out the search were indeed those whose names has been mentioned in the said authorisation, and they had displayed their identity cards at the time of search. It is also not the case of the Petitioner that the officers who carried out the search did not properly discharge their official duty or otherwise acted in furtherance of some extraneous purpose. The absence of signatures does not manifest an absence of delegation of power in favour of the team which conducted the search action. Further, the provisions of DVAT Act quoted in the documents also cannot render the proceedings as illegal.
As regards the reasons to believe to inspect and search the premises of the Petitioner, we have been shown that such reasons exist with the Respondents. Under Section 67 of the CGST Act, when an authorized officer carries out an inspection, search and seizure, the same is on the basis of the satisfaction arrived at by the proper officer not below the rank of the Joint Commissioner that reasons to believe as specified under the said provision. Our scrutiny is limited because of the well settled principles of law relating to judicial review of search action. While exercising writ jurisdiction, we cannot adjudge or test the adequacy and sufficiency of the grounds. We can only go into the question and examine the formation of the belief to satisfy if the conditions specified under the statutory provision invoked are met. The Courts can interfere and hold the exercise of power to be bad in law only if the grounds on which reason to believe is founded have no rational connection between the information or material recorded; or are non-existent; or are such on which no reasonable person can come to that belief. The reasons to believe shown to us demonstrate that the Appropriate authority had the reasons, as per mandate of Section 67(2) of the DGST Act alongwith relevant Rules, for formation of belief to carry out the search. Applying the test of reasonable man, we cannot say that there is no application of mind while issuing search warrant. Thus, we would not like to countermand the action taken against the Petitioner. Accordingly, the present petition is disposed of in the above terms. We clarify that we have not expressed any opinion on the merits of the case.
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