R. J. Trading Co. Vs Commissioner of CGST, Delhi North & Ors. (Delhi High Court)
Search and Seizure carried out by the Inspector of CGST without authority of a proper jurisdictional officer is unlawful – Delhi High Court
In case of R J Trading Company vs. Commissioner of CGST, Delhi (W.P.(C).4847/2021 it is held that search and seizure carried out by the Inspector of CGST without authority of a proper jurisdictional officer is unlawful/ unsustainable.
Brief of the case is herein below:
The petitioner M/s. R J Trading Company was engaged in the business of trading in cigarettes and tobacco products which were supplied to him by the authorized dealers and well known manufacturing companies.
The officer of CGST Delhi North Commissionerate conducted search and seizure at his premises. Being aggrieved the petitioner filed a writ petition contending that the said search and seizure was without proper authorization and unlawful.
The Honorable High Court observed that in this case, the search and seizure was conducted by an Inspector of CGST based on the authorization of Additional Commissioner of the same department.
It was also observed that actually no investigation was carried out against the petitioner and the search and seizure investigation was not conducted pursuant to sub-section (1) of Section 67 of CGST Act. In the instant case, the conduct of search and seizure appeared to have been carried out under the cover of omnibus term ‘otherwise’ provided in sub-section (2) of Section 67 of GST Act.
Further, it was observed that authorization of search was merely on the basis of the communication address by Joint Commissioner (AE), Gautam Budh Nagar to the Additional/ Joint Commissioner, CGST Delhi North Commissionerate.
On careful perusal of the communication of Joint Commissioner (AE), Gautam Budh Nagar it was held that Joint Commissioner (AE), Gautam Budh Nagar merely wanted to know existence of the petitioner in connection with another investigation in respect to other assessee and therefore, authorization issued by Additional Commissioner, CGST Delhi North Commissionerate was unsustainable in law.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
Preface: –
1. This is a writ petition instituted by an entity going by the name M/s R.J. Trading Co. [in short “RJT”] wherein, in effect, the reliefs sought are for issuance of the following directions.
i. For setting aside and quashing the order of prohibition whereby goods inventoried in panchnama dated 05.03.2021 have been detained by respondent no. 5.
ii. Issuance of a writ, order or direction, like a mandamus to the respondents to release the goods detained under the aforementioned prohibition order dated 05.03.2021.
iii. To declare the search conducted on the premises of RJT as illegal since it did not align with the provisions of Section 69 [sic Section 67] of the Central Goods and Services Tax (CGST) Act, 2017 [in short “CGST Act”].
iv. Lastly, award costs.
2. Before we proceed to adjudicate the writ petition, it would be relevant to advert to certain facts, circumstances, as also assertions, made in the pleadings by the parties.
Background facts: –
3. RJT claims that it obtained registration with the GST department and was, accordingly, issued a registration certificate on 20.09.2020.
3.1. RJT also claims that it is inter alia in the business of trading in cigarettes which are supplied to it by authorised dealers of well-known manufacturing companies. It is also averred by RJT that since the time it commenced business, it has traded in tobacco products, which includes, as indicated above, cigarettes, and in that regard, has complied with the provisions of not only the CGST Act but also the Delhi Goods and Services Tax Act, 2017. It is claimed by RJT that it has deposited tax from time to time as required under the said statutes. The details of the tax deposited and copies of challans have been filed along with the writ petition. There is also an assertion that necessary filings [GSTR – 3B] as required under the law, have been made by RJT for the period spanning between September to December 2020 and January and February 2021. It is claimed that GSTR – 1 was filed from March 2021 as well.
3.2. Given the statutory compliances said to have been made by RJT, it claims it was surprised, when on 13.02.2021 the officers of Directorate General of Goods and Services Tax Intelligence (DGGI), Ahmedabad Zonal Unit, (AZU) visited its premises located in Delhi backed by an authorization issued by Joint Director, DGGI (AZU) dated 12.02.2021 under Section 67(2) of the CGST Act. The team which visited RJT’s premises also comprised various officers attached to DGGI Delhi Zonal Unit (DZU) including Inspector, CGST South Commissionerate Delhi, South Delhi.
3.3. Since on the day of the visit, RJT‟s registered premises was found locked, the same was sealed. These events were recorded by a Senior Intelligence Officer (SIO), DGGI (AZU) in the panchnama dated 13.02.2021.
3.4. On 14.02.2021, the officers of DGGI (AZU) once again, paid a visit to the premises of RJT. A search was conducted at RJT’s premises after they were de-sealed. The search revealed that RJT on that date carried a stock of 1,08,000 Gold Flake Super Star cigarettes which were packed in 9 boxes. Accordingly, a panchnama of even date i.e. 14.02.2021 was drawn up by SIO, DGGI (AZU). Inter alia, in this panchnama, it was noted that the stock was “found in order”. Furthermore, the panchnama also recorded the fact that the officers of DGGI (AZU) had resumed certain documents, the details of which, were recorded in GST INS – 02 i.e. the order of seizure generated in consonance with the provisions of Rule 139(2) of the CGST Rules, 2017 [in short “Rules”]. The documents resumed/seized, as reflected in Form GST INS – 02, were as follows.
