GST: HC directed to return documents collected from investigation conducted without fulfilling conditions u/s 67(1) [Read Order]

The Delhi High Court in the matter of BHAGAT RAM OM PRAKASH AGRO PRIVATE LIMITED Vs. COMMISSIONER CENTRAL TAX GST has directed to return documents collected from the investigation conducted without fulfilling conditions u/s 67(1).

The petitioners have filed the present petition, inter alia, praying that the records of the search authorization dated 22.08.2023 issued by the respondent, for conducting the search at the premises of the petitioner, be re-called and that the same be quashed. The petitioners also impugn summons dated 05.09.2023 issued under Section 70 of the Central Goods & Services Tax Act, 2017 (hereafter ‘the CGST Act’) and the proceedings initiated pursuant thereto. Additionally, the petitioners pray that the respondent be directed to return the documents belonging to the petitioner company along with the photocopies, which were collected during the search/inspection conducted on 22.08.2023.

A search under Section 67(1) of the CGST Act was conducted at the premises of the petitioners on 22.08.2023.

It is clear from the record that apart from the directions issued in terms of the order dated 05.04.2023, there were no reasons for the respondent to initiate the search against the petitioners under Section 67(1) of the CGST Act. The authorization issued is thus, patently erroneous as none of the grounds as set out in the said authorization are borne out from the information or material on the record of the respondent. Concededly, the inspection was conducted pursuant to the order dated 05.04.2023, passed by the learned Special Judge.

We have serious reservations as to whether any such directions could have been issued by the Special Judge for conducting a roving and fishing inquiry by the GST authority. It is clear that the said directions were given without reference to the statutory provisions of the CGST Act and without being cognizant of the powers of the GST authorities to conduct inspection, search and seizure operations under the said Act.

This Court is informed that Mr. Rajesh Kumar Anand has also filed a petition impugning the order dated 05.04.2023 passed by the Special Judge and the same is pending adjudication before a learned Single Judge of this Court. We are refraining from making any further observations in regard to the order dated 05.04.2023, passed by the Special Judge as the same is the subject matter of a petition pending adjudication before the learned Single Judge.

Insofar as the petitioners’ prayer that the documents be returned to the petitioners, is concerned, it is stated on behalf of the respondent that no documents have been seized, however, certain photocopies of the documents/ documents were collected. Clearly, since the conditions for inspection under Section 67(1) of the CGST Act were not satisfied, the said documents are required to be returned to the petitioners. It is so directed.

Insofar as the summons issued under Section 70 of the CGST Act are concerned, we do not consider it apposite to issue any directions. The GST authorities are not precluded from continuing or initiating proceedings in accordance with the provisions of the CGST Act. Thus, if any information is available with the Department that requires an inquiry to be conducted against the petitioners, the respondent authorities are not impeded to do so. However, we clarify that no further inquiries or action is required to be conducted or taken by the GST authorities, for complying with the order dated 05.04.2023 passed by the Special Judge.

No further orders are required to be passed in the present petition.

For Official Judgment Download PDF Given Below: