This article provides an overview of the judgment/order issued by the Karnataka High Court in the case of Singhi Buildtech Pvt. Ltd. versus Additional Commissioner Of Commercial Taxes Enforcement. The court clarifies the power of officers under Section 67(4) of the Goods and Services Tax (GST) Act regarding the sealing or breaking of premises. The analysis delves into the arguments presented by the petitioner and the response from the learned counsel for the Revenue. Finally, the conclusion highlights the court’s decision and subsequent actions.
Analysis: The petitioner, Singhi Buildtech Pvt. Ltd., challenges the order issued by the respondent No.3 under Section 67(4) of the Karnataka Goods and Services Tax Act. The petitioner, a private limited company, claims to be a registered dealer under the provisions of the Act. The case revolves around the sealing of the petitioner’s premises by the respondent officers during a search operation. The petitioner argues that the sealing was done without legal authority.
The petitioner’s counsel contends that the authorization order for the search was issued solely based on suspicion and does not grant the authority to seal the premises. Additionally, it is argued that Section 67(4) of the Act does not empower the respondent No.3 to seal the business premises since access was not denied by the petitioner.
On the other hand, the Revenue’s counsel presents the original file, which contains an authorization issued by the Additional Commissioner of Commercial Taxes [Enforcement], South Zone, Bangalore. The authorization grants the officer, Sri J.J. Prakash, Assistant Commissioner of Commercial Taxes, the power to conduct inspection, search, and seizure of the premises in question. The court acknowledges the validity of this authorization, thus refuting the petitioner’s argument.
The court refers to Section 67(4) of the Act, which empowers the authorized officer to seal or break open premises and receptacles suspected of containing goods, accounts, registers, or documents. The Revenue asserts that denial of access to the computer system and the disruption of the tally software and internet connection led to the invocation of Section 67(4) and subsequent sealing of the premises.
However, the learned Additional Government Advocate, representing the respondent No.3, assures the court that the petitioner’s premises will be unsealed in the petitioner’s presence on a mutually convenient date, provided the petitioner cooperates with the inspection and search of the computer system and other records.
Conclusion: After considering the arguments presented by both parties, the court orders the Revenue to unseal the premises in question on a revised date of 08.02.2019, at 11:00 a.m. The petitioner is expected to cooperate with the inspection and search of the premises, including the computer system. This judgment clarifies the power of officers under Section 67(4) of the GST Act and emphasizes the importance of lawful procedures in conducting searches and sealing premises.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Learned Additional Government Advocate accepts notice for the respondents.
2. The petitioner has assailed the order passed by the respondent No.3 dated 09.01.2019 under Section 67 of the Karnataka Goods and Services Tax Act, 2017 /Central Goods and Services Tax Act, 2017 [‘Act’ for short].
3. The petitioner company is claiming to be a private limited company incorporated under the Companies Act, 2013 and a dealer registered under the provisions of the Act. The petitioner is a wholly owned subsidiary of M/s. Steel Hypermart India Pvt. Ltd. The two companies are promoted by the same individuals though belongs to same family. It transpires that the respondent officers along with team of officers visited the registered office of the petitioner at No.59, Money Point, Opposite BMTC Bus Stand, Bengaluru. It is contended that due to administrative convenience, the day-to-day business activities of the petitioner were also being carried out from the premises of M/s. Steel Hypermart Pvt. Ltd., at ground floor of the building situated at No.2/1A, Mannat, Nanjappa Road, Shanthinagar, Wilson Garden, Bengaluru-560027. Considering the same, the respondent officials begun conducting the search in the said premises. It is the grievance of the petitioner that respondent officers have sealed the said premises without authority of law.
4. Learned counsel appearing for the petitioner would submit that the first respondent issued authorization of search on 08.01.2019 on a suspicion that the directors would be involved in circular trading with other companies located in Bengaluru and Hosur. Mere suspicion is not suffice for issuing any authorization. The authorization order does not authorize the officer who had pass the order impugned, under Section 67 of the Act. Learned counsel further submitted that Section 67  of the Act does not empower the respondent No.3 to seal the business premises since access to the business premises was not denied by the petitioner as reflected in the order impugned.
5. Learned Additional Government Advocate appearing for the Revenue has made available the original file before the Court, wherein an authorization in the prescribed format – GST INS-1 has been issued by the Additional Commissioner of Commercial Taxes [Enforcement], South Zone, Bangalore on 08.01.2019 authorizing Sri.J.J.Prakash, Assistant Commissioner of Commercial Taxes [Enf], SZ-17, VTK-2, Koramangala, Bangalore-560047 to conduct inspection/search/ seizure of the premises in question. In view of the said authorization issued, the first argument of the learned counsel for the petitioner fails.
6. Section 67 of the Act contemplates that the officer authorized under Sub-section  shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied.
7. It is the contention of the Revenue that the books of accounts of some other companies were maintained in the premises where the inspection was carried on. However, the computer system wherein the business transaction of the company was stored, including the tally software stopped functioning all of a sudden along with internet connection abruptly. In the absence of tally information and internet connection, complete verification of the books of accounts of the company was not possible as the same was maintained in the tally software in the server. The directors of the petitioner company did not put any efforts to set out the said disruption. There being denial of access to the computer system, Section 67 was invoked to seal the premises in question.
8. However, learned Additional Government Advocate on instructions of the respondent No.3 – Sri. J. J. Prakash, who is present before the Court, fairly submits that the premises of the petitioner company in question shall be unsealed/de-sealed in the presence of the petitioner on any date convenient to the petitioner subject to the petitioner co-operating for inspection/search of the computer system and other records available in the premises.
9. The said submission of the learned Additional Government Advocate is placed on record.
10. In the circumstances, this Court is of the considered view that the justice would be sub-served in directing the Revenue to unseal the premises in question on 04.02.2019 at 11.00 a.m., which is convenient to the petitioner and the petitioner shall cooperate for inspection/search of the premises in question, including the computer system.
With the aforesaid observations, the writ petition stands disposed of.
Before finalizing the order, learned counsel for the petitioner has filed a memo seeking revision of the date fixed by this Court i.e., 04.02.2019 for de-sealing the premises in question and accordingly seeks to fix the date on 08.02.2019.
Learned Additional Government Advocate has no objections for the same.
Hence, the date is fixed on 08.02.2019 at 11.00 a.m., to unseal the premises in question.