Deepak Construction Co. Vs Union of India and 7 Ors (Gauhati High Court)
Summary: The Gauhati High Court granted interim protection to M/S Deepak Construction Co. against coercive recovery of GST liability during an ongoing inspection/search proceeding. The petitioner, an assessee under the Central Goods and Services Tax Act, 2017 and Assam Goods and Services Tax Act, 2017, had its principal place of business at Hijuguri, Tinsukia. Its premises were visited by a team of State Tax officials pursuant to an authorisation for search dated 15.09.2026 issued in Form GST INS-01 under Section 67 of the CGST Act, 2017/AGST Act, 2017. The inspection/search commenced on 15.09.2026 and, as recorded by the Court, was still continuing when the matter was heard.
The petitioner stated that the search had not resulted in either an order of seizure or an order of prohibition till that stage, but officials remained present at its principal place of business throughout the period, including business hours. It alleged continuous pressure from the authorities to discharge a liability which, according to the petitioner, had already been wrongfully availed during the period when its GST registration was under suspension.
Counsel for the petitioner contended that any endeavour by the Proper Officer or officials conducting the inspection/search to direct the petitioner to discharge liability during those proceedings was contrary to the guidelines framed through Instruction No. 01/2022-2023 [GST – Investigation] dated 25.05.2022. The Instruction concerns deposit of tax during search, inspection or investigation and clarifies the distinction between voluntary payment by a taxpayer and recovery of tax by departmental officers during such proceedings.
The State, however, submitted that there were serious allegations regarding wrongful availment of benefits and contraventions of the CGST Act/AGST Act. It strongly denied the allegation that the Proper Officer or members of the search team were exerting pressure upon the petitioner to discharge any liability during the inspection/search. The State further submitted that, if any liability had not been discharged, the authorities would follow the statutory procedures for demand and recovery.
The High Court issued notice, returnable on 12.10.2026. As counsel appearing for the Union of India, the State respondents and CGST had accepted notice, formal notices to those respondents were dispensed with.
As an interim measure, the Court observed that the petitioner must be allowed to carry on its normal business activities. Having regard to the guidelines contained in Instruction No. 01/2022-2023 [GST – Investigation] dated 25.05.2022 and the rival contentions, the Court directed that the respondent authorities shall not take any coercive steps against the petitioner for discharge of any liability during the inspection/search proceeding. It further directed due adherence to the guidelines contained in the said Instruction until the returnable date.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
Heard Mr. A. Goyal, learned counsel for the petitioner; Mr. S.S. Roy, learned Central Government Counsel for the respondent no. 1; Mr. B. Choudhury, learned Standing Counsel, Finance & Taxation Department, Government of Assam for the respondent nos. 2 – 7; Mr. S. Chetia, learned Standing Counsel, CGST for the respondent no. 8.
2. The petitioner is an assessee under the Central Goods and Services Tax [CGST] Act, 2017 / Assam Goods and Services Tax [AGST] Act, 2017 having its Principal Place of Business [PPOB] at Hijuguri, Tinsukia. The said PPOB was visited by a team of officials led by the respondent no. 7 on the strength of an Authorisation for Search dated 15.09.2026 issued in Form GST INS-01 under Section 67 of the CGST Act, 2017 / AGST Act, 2017. The inspection / search started on 15.09.2026 itself. It is stated that the inspection / search is still continuing. The petitioner claims that the inspection / search has not resulted either in any order of seizure or in any order of prohibition till date. Yet, the officials are present in the PPOB throughout the entire period including the business hours. The petitioner has alleged that there has been continuous pressure on the petitioner for discharging liability which was allegedly wrongfully availed by the petitioner during the period when its registration under the GST Act was under suspension.
3. Mr. Goyal has submitted that such endeavour on the part of the Proper Officer and the official carrying out the inspection / search to direct the petitioner to discharge liability is contrary to the Guidelines framed vide Instruction No. 01-2022-2023 [GST – Investigation] dated 25.05.2022 [Annexure-XIII].
4. In response, Mr. Choudhury, learned Standing Counsel, Finance & Taxation Department has submitted that there are serious allegations about wrongful availment of benefits by the petitioners and contraventions of the provisions of the CGST Act / AGST Act. He has, strongly, refuted the contention of exerting pressure by the Proper Officer and the official in the team carrying out inspection / search for discharge of any liability during the inspection / search proceeding. Mr. Choudhury has submitted that if the petitioner has not discharged any liability under the CGST Act / AGST Act, the respondent authorities will follow the procedures under the statute for demand and recovery of such liability.
5. Let notice be issued. The Notice is made returnable on 12.10.2026.
6. As Mr. Roy, learned Central Government Counsel has appeared and accepted notice on behalf of the respondent no. 1; Mr. Choudhury, learned Standing Counsel, Finance & Taxation Department has appeared and accepted notice on behalf of the respondent nos. 2 – 7; and Chetia, learned Standing Counsel, CGST has appeared and accepted notice on behalf of the respondent no. 8, issuance of formal notices to the said respondents stand dispensed with. The learned counsel for the petitioner shall serve requisite nos. of extra copies of the writ petition along with annexures, to Mr. Roy, Mr. Choudhury and Mr. Chetia within 2 [two] working days from today.
7. It is observed that the petitioner is to be allowed to carry out its normal business activities. Having regard to the guidelines provided in Instruction No. 01/2022-2023 [GST – Investigation] issued on 25.05.2022 and the contention advanced on behalf of the petitioner and refuted on behalf of the State respondents, it is observed that there shall not be any coercive steps by the respondent authorities on the petitioner for discharge of any liability during the inspection / search proceeding and there shall be due adherence to the Guidelines laid in Instruction no. 01/2022-2023 [GST – Investigation] dated 25.05.2022 till the returnable date.
