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.

JUDGMENT

Rajiv Shakdher, J.

TABLE OF CONTENTS

Preface

Background facts

Submissions made on behalf of RJT

Submissions advanced on behalf of the revenue

Analysis and Reasons

Conclusion

Preface:

1. This is a writ petition instituted by an entity going by the name M/s R.J. Trading Co. [in short "RJT"] wherein, in effect, the reliefs sought are for issuance of the following directions.

i. For setting aside and quashing the order of prohibition whereby goods inventoried in panchnama dated 05.03.2021 have been detained by respondent no. 5.

ii. Issuance of a writ, order or direction, like a mandamus to the respondents to release the goods detained under the aforementioned prohibition order dated 05.03.2021.

iii. To declare the search conducted on the premises of RJT as illegal since it did not align with the provisions of Section 69 [sic Section 67 ] of the Central Goods and Services Tax (CGST) Act, 2017 [in short "CGST Act"].

iv. Lastly, award costs.

2. Before we proceed to adjudicate the writ petition, it would be relevant to advert to certain facts, circumstances, as also assertions, made in the pleadings by the parties.

Background facts:

3. RJT claims that it obtained registration with the GST department and was, accordingly, issued a registration certificate on 20.09.2020.

3.1. RJT also claims that it is inter alia in the business of trading in cigarettes which are supplied to it by authorised dealers of well-known manufacturing companies. It is also averred by RJT that since the time it commenced business, it has traded in tobacco products, which includes, as indicated above, cigarettes, and in that regard, has complied with the provisions of not only the CGST Act but also the Delhi Goods and Services Tax Act, 2017. It is claimed by RJT that it has deposited tax from time to time as required under the said statutes. The details of the tax deposited and copies of challans have been filed along with the writ petition. There is also an assertion that necessary filings [GSTR-3B] as required under the law, have been made by RJT for the period spanning between September to December 2020 and January and February 2021. It is claimed that GSTR-1 was filed from March 2021 as well.

3.2. Given the statutory compliances said to have been made by RJT, it claims it was surprised, when on 13.02.2021 the officers of Directorate General of Goods and Services Tax Intelligence (DGGI), Ahmedabad Zonal Unit, (AZU) visited its premises located in Delhi backed by an authorization issued by Joint Director, DGGI (AZU) dated 12.02.2021 under Section 67 (2) of the CGST Act. The team which visited RJT's premises also comprised various officers attached to DGGI Delhi Zonal Unit (DZU) including Inspector, CGST South Commissionerate Delhi, South Delhi.

3.3. Since on the day of the visit, RJT's registered premises was found locked, the same was sealed. These events were recorded by a Senior Intelligence Officer (SIO), DGGI (AZU) in the panchnama dated 13.02.2021.

3.4. On 14.02.2021, the officers of DGGI (AZU) once again, paid a visit to the premises of RJT. A search was conducted at RJT's premises after they were de-sealed. The search revealed that RJT on that date carried a stock of 1,08,000 Gold Flake Super Star cigarettes which were packed in 9 boxes. Accordingly, a panchnama of even date i.e. 14.02.2021 was drawn up by SIO, DGGI (AZU). inter alia, in this panchnama, it was noted that the stock was "found in order". Furthermore, the panchnama also recorded the fact that the officers of DGGI (