2025 (5) TMI 296 - HC - GST

Validity of inspection/seizure in law - Order of seizure tampered/interpolated - inspection carried out without any independent witnesses - challenged the demand of tax interest and penalty issued under Section 74 (9) of BGST/CGST Act 2017 - violation of the provision contained in Section 67(10) of BGST/CGST Act 2017 read with Section 100(4) of the Code of Criminal Procedure 1973 - HELD THAT - As observed the order of seizure appears to have been prepared not on the spot on 18.01.2024 but later only to cover up the serious lacunas existing in the inspection report wherein the presence of the two independent witnesses was not recorded which made the inspection/seizure unsustainable in law. Further taking note of the fact that the order of seizure had been admittedly tampered/interpolated by Ms. Kumari Anu Soni who is the maker of the said document further makes the order of seizure totally invalid and unreliable. Thus we find that the inspection was carried out without any independent witnesses and even the order of seizure is invalid due to tampered/ interpolated documents on both these counts they are against the provision as contained under Section 67 of the BGST/CGST Act 2017 read with Section 100 of the Code of Criminal Procedure 1973. Hence we set-a-side the demand order dated 09.05.2024 (Annexure P-4 to the writ application) which is based on the inspection said to have been carried out on 18.01.2024 and we admonish Ms. Kumari Anu Soni Deputy Commissioner of State Tax to not to tamper with any departmental/court record in future failing which disciplinary authority or this court will be constrained to order for disciplinary action to be taken against her. The writ petition stands allowed and all pending Interlocutory Applications shall stand disposed of.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court are:

• Whether the order of seizure prepared by the Assistant Commissioner, State Tax, was tampered or interpolated, and the legal consequences of such tampering.
• Whether the inspection/search conducted on 18.01.2024 complied with the mandatory procedural safeguards under Section 67 of the BGST/CGST Act, 2017 read with Section 100(4) of the Code of Criminal Procedure, 1973, particularly the requirement of presence of two independent witnesses.
• Whether the demand notice issued under Section 74(9) of the BGST/CGST Act, 2017, based on the impugned inspection/search, was legally sustainable.
• The appropriate course of action against the officer who admitted to tampering with official records.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Tampering/Interpolation of the Order of Seizure

Relevant legal framework and precedents: The integrity of official records is foundational to administrative and judicial processes. Tampering with such records constitutes serious misconduct and undermines the rule of law. While the judgment does not cite specific precedents, the principles of maintaining sanctity of evidence and official documents are well-established.

Court's interpretation and reasoning: The Court, upon examination of the original records furnished, found that the order of seizure (Annexure '1' to the Counter affidavit) was tampered with by the officer Ms. Kumari Anu Soni. Specifically, the phrase 'As Per Physical Verification' was inserted into Column No. (A) - Details of Goods Seized, which was absent in the original draft.

When confronted, Ms. Soni admitted to this interpolation during the pendency of the case and tendered an unconditional apology, explaining her inexperience and the pressure of the situation. The Court accepted her explanation but admonished her, warning that any future misconduct of this nature would attract disciplinary proceedings.

Key evidence and findings: The original order of seizure produced by the respondents showed the interpolation, and the officer's personal affidavit admitted to the act.

Application of law to facts: The Court treated the tampering as a serious breach but exercised leniency due to the officer's inexperience and apology, emphasizing the need for caution in official documentation.

Treatment of competing arguments: While the Court acknowledged the seriousness, it refrained from ordering disciplinary action immediately, balancing between strict enforcement and fairness.

Conclusion: The tampering rendered the order of seizure unreliable and invalid, warranting admonishment of the responsible officer.

Issue 2: Compliance with Mandatory Procedural Safeguards under Section 67 BGST/CGST Act and Section 100 CrPC

Relevant legal framework and precedents: Section 67 of the BGST/CGST Act, 2017 mandates that inspections and searches must be conducted in accordance with the Code of Criminal Procedure, 1973. Section 100(4) CrPC requires the presence of two independent witnesses during search or seizure to ensure transparency and prevent abuse of power. Additionally, Instruction No. 01/2020-21 GST-Investigation dated 02.02.2021 mandates that search authorization must be executed before the start of the search, with signatures of the person in charge and witnesses obtained on the authorization document.

Court's interpretation and reasoning: The Court scrutinized the inspection report dated 18.01.2024 (Annexure 'P-1') and the order of seizure. The inspection report was signed by two witnesses, Sri Sandeep Jaiswal and Sri Ram Pravesh Yadav, both connected to the petitioner (son of proprietor and staff respectively), hence not independent witnesses as mandated.

The respondents attempted to rely on the order of seizure which mentioned two other persons as independent witnesses. The Court rejected this as an afterthought, noting the absence of their signatures on the inspection report and the lack of contemporaneous evidence that the order of seizure was prepared on the spot.

The Court observed that the order of seizure was likely prepared later to cover the deficiency in the inspection report and was further invalidated by the admitted tampering.

Key evidence and findings: The inspection report and order of seizure documents, the identities and relationships of witnesses, and the officer's admission of interpolation.

Application of law to facts: The absence of two independent witnesses during the inspection/search violated the mandatory provisions of Section 67 BGST/CGST Act read with Section 100 CrPC, rendering the inspection/search procedurally defective and legally unsustainable.

Treatment of competing arguments: The respondents' contention that the order of seizure contained independent witnesses was rejected as a post-facto attempt to validate a flawed process.

Conclusion: The inspection/search was not conducted in accordance with statutory requirements, making the resultant demand order invalid.

Issue 3: Validity of the Demand Order Issued under Section 74(9) BGST/CGST Act

Relevant legal framework and precedents: Section 74(9) of the BGST/CGST Act, 2017 authorizes issuance of demand notices for tax, interest, and penalty based on inspection or search findings. However, such demand must be founded on lawful and procedurally valid inspections/searches.

Court's interpretation and reasoning: Since the inspection/search was found to be procedurally defective and the order of seizure tampered with, the demand notice dated 09.05.2024 (Annexure 'P-4') based on that inspection was held to be unsustainable.

Key evidence and findings: The defective inspection/search and tampered seizure order undermined the foundation of the demand notice.

Application of law to facts: The demand order could not stand on the basis of invalid inspection/search and hence was liable to be set aside.

Treatment of competing arguments: The respondents' defense of the demand notice was rejected on the grounds of procedural non-compliance and document tampering.

Conclusion: The demand order was quashed.

Issue 4: Appropriate Disciplinary Action against the Officer

Relevant legal framework and precedents: Officers responsible for tampering with official records may be subject to disciplinary proceedings under service rules and criminal law.

Court's interpretation and reasoning: The Court recognized the gravity of Ms. Kumari Anu Soni's misconduct but took a lenient view due to her inexperience and apology. It admonished her and warned that any future misconduct of similar nature would attract disciplinary action.

Key evidence and findings: Admission of tampering by the officer and her personal affidavit tendering apology.

Application of law to facts: The Court balanced the need for accountability with fairness to a young officer and issued a cautionary directive.

Treatment of competing arguments: No competing arguments were noted on this point.

Conclusion: The officer was admonished and warned against future misconduct.

3. SIGNIFICANT HOLDINGS

"The original order of seizure had been tampered/interpolated by Ms. Kumari Anu Soni who had signed and prepared the order of seizure... After having accepting her mistake she begged for apology."

"Section 67 of BGST/CGST Act, 2017 specifically mandates an inspection to be conducted in accordance with the Code of Criminal Procedure. Section 100 of the Code of Criminal Procedure stipulates that there shall be two witnesses when the inspection is conducted."

"The inspection report... has been signed by two witnesses... both are connected to the petitioner and have no independent status as a witness."

"The order of seizure appears to have been prepared not on the spot on 18.01.2024 but later only to cover up the serious lacunas existing in the inspection report..."

"The inspection was carried out without any independent witnesses and even the order of seizure is invalid due to tampered/interpolated documents, on both these counts they are against the provision as contained under Section 67 of the BGST/CGST Act, 2017 read with Section 100 of the Code of Criminal Procedure, 1973."

"We set-aside the demand order dated 09.05.2024... and we admonish Ms. Kumari Anu Soni, Deputy Commissioner of State Tax to not to tamper with any departmental/court record in future..."

Core principles established include:

• The mandatory requirement of two independent witnesses during inspection/search under Section 67 BGST/CGST Act read with Section 100 CrPC is non-negotiable and procedural non-compliance renders the inspection and subsequent demand invalid.
• Tampering/interpolation of official records by an officer is a serious misconduct that undermines the validity of such records and the actions based thereon.
• Courts may exercise leniency towards first-time or inexperienced officers who admit mistakes and apologize but will not hesitate to impose disciplinary consequences for repeat misconduct.
• Demand notices based on procedurally defective inspections/searches and tampered documents cannot be sustained.

Final determinations:

• The order of seizure was tampered with and hence invalid.
• The inspection/search was conducted without independent witnesses, violating statutory mandates.
• The demand order issued on the basis of such inspection/search was quashed.
• The officer responsible for tampering was admonished with a warning for future conduct.