Anopsinh Kiritsinh Sarvaiya Vs State of Gujarat (Gujarat High Court)
Godown of dealer cannot be seal by GST authorities without having reasons to believe that goods stored were liable for confiscation
In the given case, the writ applicant claims to be an agriculturist. It is his case that he owns a godown bearing No.14, situated at the Marketing Yard at Gondal, District: Rajkot. According to him, the said Godown No.14, situated at the Marketing Yard has been given on rent to five distinct entities, namely, (I) Ajayraj & Co. (ii) Dharamraj Exports (iii) Kamani Exports (iv) R.L. Enterprise and (5) Ruturaj & Co. It is the case of the writ applicant that this particular godown is used by the above referred entities for the purpose of storing agricultural produce like cotton bales and cotton yarn. According to him, the relationship is that of landlord and tenant.
The authorities under the CGST Act visited the godown, and in exercise of power under section 67 of the Act, applied seal on the godown.
We may straightway, once again, look into the sealing memos. The plain reading of the contents of the sealing memos would indicate that after the seal was affixed, the authorities had to stop further action for the reasons recorded in the memos. The reasons recorded in the memos are as under;
“1. To avail Wrong ITC
2. Collected tax wrongly & not deposited to Govt. Treasury
3. Try to neglect searching team
4. Non-Co-operation in search process.”
The plain reading of the section 67 of law makes it clear that if the proper officer, not below the rank of Joint Commissioner, either pursuant to a search carried out under sub-section (1) or otherwise has reasons to believe that any goods liable to confiscation or any documents or books, which in the opinion of the proper officer, may be useful or relevant to any proceedings which may be undertaken or such goods are liable to be secreted to any place, then the proper officer may authorize in writing any other officer of the State Tax to search and seize the goods, documents or books or things. clause (4), referred to above, empowers the authorized officer to seal or break open the door of any premises where access to such premise is denied.
If it is the case of the Department that the five dealers have stored goods or other articles which are liable to confiscation, then the authorities could have seized such goods and documents long time back. Once the goods and other articles are seized from the premises, then there could be no good reason to keep the godown in a sealed condition. In the case on hand, the writ applicant, being the owner of the godown is concerned with the seal which has been affixed and which continues as on date.
In the case on hand, HC have not been shown anything to indicate that the proper officer had any reasons to believe that the goods stored in the godown in question are liable to confiscation. However, for the time being, HC are not going into this issue. HC are trying to find a way out, by which, the seal can be removed without prejudice to the rights of the department to proceed against the dealers in accordance with law.
Once the aforesaid exercise is completed, it shall be open for the writ applicant to takeover the possession of the godown. At the same time, HC direct the writ applicant to remain present on 10th February, 2020 at 2:00 p.m. at the place where his godown is situated with the documents evidencing ownership. However, the authorities should not be more concerned with the contractual relationship between the writ applicant and the dealers. HC are still not able to understand why the authorities, under the GST Act, are insisting for proof of ownership and rent agreement. HC are of the view that the authorities cannot insist for such documents. If they want to proceed against the five dealers, they may proceed. They should be concerned with the goods or other articles stored in the godown which may be liable to confiscation. There is no point in keeping the godown closed with a seal affixed on it.”
With the above directions, this writ application is disposed of.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. Rule returnable forthwith. Mr. Chintan Dave, the learned AGP, waives service of notice of rule for and on behalf of the respondents.
2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs;
“(A) quash and set aside the sealing memos at Annexure-A (Colly) in relation to the Godown No.14 situated at Makerting Yard, Gondal.
(B) pending the admission, hearing and final disposal of this petition, stay the implementation and operation of the impugned sealing memos in relation to the Godown No.14 situated at Marketing Yard, Gondal at Annexure-A( Colly);
(C ) any other and further relief deemed just and proper be granted in the interest of justice.
(D) to provide for the cost of this petition.”
3. The facts, giving rise to this writ application, may be summarized as under;
The writ applicant claims to be an agriculturist. It is his case that he owns a godown bearing No.14, situated at the Marketing Yard at Gondal, District: Rajkot. According to him, the said Godown No.14, situated at the Marketing Yard has been given on rent to five distinct entities, namely, (I) Ajayraj & Co. (ii) Dharamraj Exports (iii) Kamani Exports (iv) R.L. Enterprise and (5) Ruturaj & Co. It is the case of the writ applicant that this particular godown is used by the above referred entities for the purpose of storing agricultural produce like cotton bales and cotton yarn. According to him, the relationship is that of landlord and tenant.
3.2 On 17th November, 2018, the authorities under the CGST Act visited the godown, and in exercise of power under section 67 of the Act, applied seal on the godown. The godown in question came to be sealed by the officials of the Department vide sealing memos dated 17th November, 2018 and 19th November, 2018 respectively. The sealing memo dated 17th November, 2018 reads thus;
“Office of the Deputy Commissioner of State Tax Enforcement, Div. I, Ahmedabad, Gujarat State, A-4, Rajya Kar Bhavan, Ashram Road, Ahmedabad, 380009.
Date:
SEALING MEMO
