Hypothetical Question under Central Goods and Service Tax Act, 2017
FACTS
Presuming Mr A is running an enterprise in the name of IGNITED. The business house is situated in a location called Y street. The manufacturing unit is located on Z street. The enterprise is a collaborative effort of several founders. The business is involved in manufacturing cosmetic products. One fine day around 11 A.M. on 23.4.2019, A went for a meeting to meet a person named H. He is a CEO of a Think Tank located at M street. The purpose of the meeting was to explore the business opportunity to grow the business and reach a wide consumer base within the Country. After the meeting was over. A headed towards the office, while he was in the Car, A received a call from the office stating that the factory located at G street is sealed by the Mr L from the CGST department (hereinafter referred to as the department) and the work is hampered. Now in the given circumstances, A got worried and contacted the finance team over call and asked why the department had to seal such premises. The finance team appraised that the department has not issued the panchnama while sealing the premises. Also informed that the department was asking for some documents which were not available at that moment. Hence resulted in such circumstances.
Rule
Section 67(4) of the Delhi Goods and Service Tax Act, 2017 read with Central Goods and Service Tax Act, 2017.
Power of inspection, search, and seizure. —
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(5) The officer authorized under subsection (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic device, 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.
(10) The provisions of the Code of Criminal Procedure, 1973 relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word Magistrate, wherever it occurs, the word “commissioner’ were substituted.
Section 165 The Code of Criminal Procedure -Search by a police officer – “such officer may, after recording in writing the grounds of his belief and specifying in such writing, so far as possible, the things for which search is to be made, search, or cause search to be made, for such things in any place within the limits” XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Analysis
The enterprise “IGNITED” unit stands sealed and the business operation is hampered. In the given situation the solution to the said problem can be found under the provision of the Central Goods and Service Tax Act. As per section 67(4) of the Central Goods and Service Tax Act, 2017 the officer has the power to seal but wherein the person is not restricting the department to conduct the proper search operation, in that case, the sealing is unreasonable to my mind. Given the situation wherein the documents are in the almirah, electronic devices, box, and receptacle, the officer has the power to break or seal the same if the keys were not provided but that is not the case here. In the case in hand, the employee of Ignited has complied with instructions given during the search by the department but was not able to produce the document as asked by the department then and there as it was not available. Hence, the department had taken the tough call and sealed the premises. However, the department failed to provide the panchanam which is a mandatory condition under section 165 of the Code of Criminal Procedure. Therefore. Mr A may consider after consultation filing a Writ Petition before the Hon’ble jurisdictional Court to seek relief immediately as the business operations are stalled. Also, while taking the recourse after the consultation. A may consider also arranging for the documents as asked by the department for the scrutiny. This will show the bonafide on the part of Mr A and in all probability will get relief as sought.
Conclusion
In the peculiar circumstances, Mr A after consultation/clarification may consider analyzing the Section 64(4) of the Central Goods and Service Tax Act, 2017 read with Section 165 of the Code of Criminal Procedure to find the solution and seek a remedy before the Jurisdictional Hon’ble High Court and also make readily available the documents which are necessary for the adjudication of the issues so that the operation of the business starts running.
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The author of this article can be reached at dachambersconnect@outlook.com for any discussion or clarification. Please feel free to drop a mail. Author Deepanshu Arora holds a degree in B. Com from the University of Delhi and Law.
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