Case Law Details
Gaurav Saurav Traders And Contractors Vs State of U.P. And 4 Others (Allahabad High Court)
The Gaurav Saurav Traders and Contractors found themselves embroiled in a legal battle against the State of Uttar Pradesh and others before the esteemed Allahabad High Court. The crux of the matter lay in the alleged unauthorized search and seizure conducted on their premises, which the petitioner contended was in violation of Section 67(1) of the Uttar Pradesh Goods and Services Tax Act, 2017 (U.P. GST Act).
The heart of the dispute revolved around the procedural lapses in the authorization of the search and seizure. The petitioner argued that the Joint Commissioner had not adhered to the mandatory provisions of Section 67(1) by authorizing the search without first being provided with the reasons for such action. The court scrutinized the timeline of events, noting that while the authorization was issued on August 31, 2022, the reasons for the search were provided to the Joint Commissioner only on September 1, 2022. This sequence of events, the court observed, constituted a violation of Section 67(1) where the authorization should have been preceded by the provision of reasons.
Authorisation of search under GST Search without by Joint Commissioner without recording reasons is invalid
The court delved into the text of Section 67(1), emphasizing its mandatory nature and the prerequisite of providing reasons before granting authorization for search and seizure. It underscored that the authorization cannot be granted in isolation but must be preceded by a thorough consideration of the grounds necessitating such action. In failing to adhere to this procedural requirement, the authorization in question was deemed invalid, rendering the subsequent search and seizure illegal.
In light of the procedural irregularities, the Allahabad High Court ruled in favor of the petitioner, Gaurav Saurav Traders and Contractors. The court quashed and set aside the unauthorized search and seizure, directing the release of all detained or confiscated goods and documents within 15 days. This landmark judgment serves as a reminder of the significance of procedural compliance in matters of search and seizure, ensuring that fundamental rights are upheld and arbitrary actions are curtailed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
This application under Article 226 of the Constitution of India has been filed by the petitioner aggrieved by the action of search and seizure carried out on the premises of the assessee on September 2, 2022.
Case of the petitioner is that the mandatory provision with regard to Section 67 (1) of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the “U.P. GST Act”) has not been complied with by the Joint Commissioner while granting the authorization for search and seizure.
Upon a perusal of the documents, we find that the authorization for search under the Form GST INS -01 was issued on 31.08.2022. However, the reasons for carrying out the search was provided to the Joint Commissioner subsequently which he has signed on September 1, 2022.
Under such circumstances, we are of the opinion that this is a clear case of putting the cart before the horse wherein the officer concerned has authorized the search and seizure without even looking into the reasons for the authorization of the same. Section 67(1) is being provided below for a clear understanding of the mandatory nature of the Section:-
“67. Power of inspection, search and seizure.-(1). Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that:-
(a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or
(b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of State tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner of the operator of warehouse or godown or any other place.”
Upon a careful perusal of the Section quoted above, it is clear that it is only after reasons are provided to the Joint Commissioner that he can authorize in writing any search and seizure to be carried out.
In the present case, the said procedure had not been followed, and accordingly, the entire authorization is vitiated and liable to be quashed.
Under such circumstances, the entire search and seizure that has been carried out is based on an illegal authorization and is accordingly quashed and set aside. The Authorities are directed to release all goods and documents that they may have detained or confiscated within a period of 15 days from date.
In the light of the same, prayer nos. (i), (ii), (ii-a), (iii) and (iv) are allowed.
With these observations, the writ petition is allowed.
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