Sri Sai Food Grain and Iron Stors Vs State of Bihar (Patna High Court)
In the case of Sri Sai Food Grain and Iron Stores vs. State of Bihar, the Patna High Court examined the validity of a GST demand based on an inspection carried out on January 18, 2024. The petitioner challenged the ₹88.64 lakh demand under Section 74(9) of the CGST/BGST Act, asserting that the inspection and seizure violated statutory provisions. As per Section 67(10) of the CGST Act and Section 100 of the Code of Criminal Procedure, an inspection must be conducted in the presence of two independent witnesses. However, in this case, the inspection report was signed by the son of the proprietor and a staff member, both of whom did not qualify as independent witnesses. The respondents later attempted to introduce the names of unrelated persons as independent witnesses in the seizure order, a move the Court identified as an afterthought.
Further scrutiny revealed that the officer in charge, Ms. Kumari Anu Soni, had tampered with the original seizure order by inserting additional text while the matter was sub judice. Upon confrontation, she admitted to the interpolation, citing inexperience and the pressure of the situation. Though the Court recognized this as serious misconduct, it refrained from initiating disciplinary proceedings, instead issuing a stern warning. The Court found that both the inspection and seizure were not conducted in compliance with legal procedures, rendering the demand based on them invalid. Consequently, the demand notice dated May 9, 2024, was quashed. The case underscores the importance of procedural compliance and integrity in tax administration.
