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IN THE HIGH COURT AT CALCUTTA
Raja Basu Chowdhury, J.
M/s. Kanak Timber House & Anr. – Petitioners
Versus
Assistant Commissioner of Sales Tax & Ors. – Respondents
WPA 4729 of 2024
Decided On : 11-03-2024
GST Act - Prohibition Order - Section 67(2), Section 67(7), Section 122 - The court discussed the provisions of Section 67(2) and (7) of the GST Act, along with the implications of a prohibitory order and the right of an assessee to seek release of goods under Section 67(6). The court also referred to relevant judgments highlighting the necessity for the assessee to invoke the provisions of the GST Act to seek release of the goods.
Fact of the Case:
The writ petition sought quashing of a prohibition order issued under Section 67(2) of the GST Act, relating to a search and seizure procedure initiated at the petitioner's place of business.
Finding of the Court:
The court found that the petitioner had not approached the respondent for release of the seized goods under Section 67(6) of the GST Act, and therefore, no case for interference was made out.
Issues: The issues revolved around the issuance of the prohibition order, the right of the assessee to seek release of goods, and the applicability of Section 67(7) of the GST Act.
Ratio Decidendi: The court emphasized the necessity for the assessee to invoke the provisions of the GST Act to seek release of the goods, as highlighted in relevant judgments.
Final Decision: The writ petition was disposed of with no order as to costs.
JUDGMENT :
Raja Basu Chowdhury, J:
1. Considering the nature of urgency involved, the present writ petition is taken up for consideration.
2. The present writ petition has been filed, inter alia, praying for quashing of the order of prohibition dated 25th March, 2023 issued under Section 67(2) of the CGST/WBGST Act, 2017 (hereinafter referred to as the “GST Act”).
3. It is the petitioners’ case that on/or about 24th March, 2023, a search and seizure procedure was initiated under Section 67 of the GST Act at the petitioners’ registered place of business. On the following date, in terms of first proviso to Section 67(2) of the GST Act, a prohibitory order was issued. Since then, on 26th December, 2023, a notice under Section 122 of the GST Act was issued. According to the petitioners, the petitioners had duly responded to the said notice and are participating in the proceedings. Subsequently, on 17th January, 2024, the petitioners had requested the respondents to release the stock of timber which had remained seized and covered under the prohibitory order dated 25th March, 2023.
4. In response to such application, the office of the respondent no.1 by an e-mail communication dated 25th January, 2024 without appropriately replying to the petitioners’ communication had only informed that a show-cause notice under Section 122 of the GST Act has already been issued.
5. Mr. Kanodia, learned advocate representing the petitioners, by drawing attention of this Court to Section 67(2) of the said Act submits that power has been vested on the proper officer not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or book or things which in his opinion shall be useful for or relevant to any proceedings under this Act are secreted in any place, he may authorize in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or things.
6. By referring to the first proviso to Section 67(2) of the GST Act, it is submitted that when it is not practicable to seize any such goods, the proper officer or any other officer authorized by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with or otherwise deal with the goods except with the previous permission of such officer. Mr. Kanodia submits that the respondent no.1 by invoking the first proviso to Section 67(2) had issued the order dated 25th March, 2023.
7. By referring to Section 67(7) of the GST Act, he submits that when any goods are seized under sub-section (2) and no notice in respect thereof has been given within six months from the date of seizure of the goods, the goods shall be returned to the person from whose possession those were seized.
8. By placing reliance on the aforesaid provision, it is submitted that since the respondent no.1 had issued a show-cause under Section 122 of the GST Act, beyond the prescribed period of six months, the respondent no.1 was obliged to return the goods to the petitioner.
9. In support of his aforesaid contention, he has placed reliance on a judgment delivered by the Hon’ble Supreme Court in the case of State of Uttar Pradesh v. Kay Pan Fragrance Pvt. Ltd., reported in (2020) 5 SCC 811, and the judgment delivered by the Hon’ble High Court of Delhi in the case of Best Crop Science Pvt. Ltd. v. Superintendent of Central Goods and Services Tax Delhi West, reported in (2023) 10 Centax 295 (Del.).
10. Per contra, Mr. Chakraborty, learned advocate representing the respondents has taken me through the provisions of Section 67(7) of the GST Act. According to Mr. Chakraborty, the said section comes into play when no notice of the seizure is issued within a period of six months. Mr. Chakraborty further by referring to the provisions of Section 67(6) of the said Act submits that an assessee has a right to get such goods released on p
The main legal point established in the judgment is the necessity for the assessee to invoke the provisions of the GST Act to seek release of the goods, as highlighted in relevant judgments.
The main legal point established in the judgment is that the issuance of a show cause notice after the specified period does not invalidate the notice, and the court may reserve all rights and conten....
Compliance with statutory provisions, specifically Section 67(6) of the Act and Rule 140 of the Rules, is necessary for the release of seized goods.
The court established that under Section 67(6) of the CGST Act, a bank guarantee is mandatory for the provisional release of seized goods.
The court ruled that search and seizure actions under the CGST Act require a substantiated belief backed by evidence, as arbitrary suspicion is insufficient for such intrusive powers.
Authorization for search and seizure under the U.P. GST Act must comply with statutory procedures; failure to comply renders the action illegal and void.
A show cause notice issued under the GST Act based on an investigation by an improper officer is invalid and must be set aside.
Seizure of cash under CGST Section 67(2) invalid absent recorded 'reason to believe' of secretion and relevance to proceedings; automatic return mandated under Section 67(7) if no notice within six m....
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