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TMI Blog2019 (7) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... e before appropriate authority. c. Such other and further relief as deemed just and expedient be granted. d. Your Lordships be pleased to issue a writ mandamus or in the nature of mandamus quashing and setting aside the instruction issued wide letter dtd. 23-05-2019 by Respondent No. 4 bearing No.SARAVEKMI (1) ANVESHAN/V-3/ GANDHINAGAR /2019-20/Ja: dated 23-05-2019." 2.00. The case of the writ applicant in his own words, as pleaded in the writ application, is as under :- "1. The Petitioner says and submits that the petitioner is engaged in processing of raw cotton classifiable under chapter 52 of the Schedule to the Goods and Service Tax Act, 2017 and is holder of Registration Certificate bearing No.24AAKFG9023B1ZR and are under the control of State Tax Officer, Ghatakt 93, Range-l, Rajkot. The Petitioner says and submits that they were holding registration under the provisions of Gujarat Value Added Tax Act and on introduction of Goods and Service Tax Act, has migrated as per the procedure prescribed under the law. 2. The Petitioner says and submits that they are following all the procedure prescribed under the provisions of the respective Acts and are also availing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The petitioner says and submits that the respondents are served with the notice and are in the knowledge of the fat that the petitioner has challenged the order of prohibition issued under Section 67(2) of the CGST Act, 2017 has issued instructions that the time limit of the said order is further extended by six months." 2.01. Thus, it appears from the materials on record that an order of seizure dated 5/12/2018 came to be passed by the Assistant Commissioner of State Tax (Enforcement Division-3), Gandhinagar. In the order it has been indicated that the goods as well as the Books and other documents have been seized. It also appears that thereafter an order of prohibition came to be passed under Rule 139(4) with respect to the goods in the nature of cotton seeds and bales. The Seizure Order reads thus :- "FORM GST INS-O2 ORDER OF SEIZURE [See rule 139 (2)] Whereas an inspection under sub-section (1)/search under sub-section (2) of Section 67 was conducted by me on 04/12/2018 at __ AM/ PM in the following premise(s): SURVEY No-50, DHOKLIYA, JAMNAGAR ROAD, AMRELI GAM ROAD DlST-RAJKOT which is/are a place/places of business/premises belonging to: GOLDEN COTTON INDU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the inspection/search, I have reasons to believe that certain goods liable to confiscation and/or books and/or documents and/or things useful for or relevant to proceedings under this Act are secreted in place(s) mentioned above. Therefore, in exercise of the powers of the conferred upon me under sub-section (2) of section 67, I hereby order that you shall not / shall not cause to remove, part with, or otherwise deal with the goods except without the previous permission of the undersigned. Sr No Description of goods Quantity or units Make/make or model Remarks 1 2 3 4 5 1 COTTON, COTTON SEEDS AND BALES. - - Rs. 2,50,00,000 Place : Dhokaliya. Date : 05-12-2018 Sd/- Illegible. Assistant Commissioner of State Tax Enforcement) Div.3, Vadodara." Signature of the Witnesses : Sr. No. Name and address Signature 1 DINESHBHAI PARSTOMBHAI PATEL 5/ ROYAL PARK, KALAVAD ROAD, 201/SANKHESHVAR APPARTMENT, RAJKOT. D.P. Patel 2 AMRUTLAL CHANGANLAL RAMKABIR, POST DHOKALIYA, TA-PADDHARI, DlST-RAJKOT. Ramkabir A.C. Place : Dhokliya. Date : 05-12-2018 Sd/- Illegible. Assistant Commissioner of State Tax (Enforcement) Div.3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of principles of natural justice and is in excess of the powers conferred under the provisions of Section 67(2) of Goods and Service Tax Act, 2017? (B). The petitioner says and submits that the order passed by the proper officer is premature and is in contravention to the provisions of Central goods and Service Act, inasmuch as the department has neither determined any liability by following the adjudication proceeding nor has issued any assessment order determining any liability as contemplated under the law. (C). The petitioner says and submits that the order of prohibition passed by the roper officer without considering the fact that the goods under consideration are duly accounted for and are utilized in manufacturing of final product which are cleared with payment of tax and the liability thereon also stands discharged. (D). The petitioner says and submits that the stock lying in the premises has no connection with the so called allegation of the department and is out of the purchases either from the traders who has discharged their liability or from farmers for which the petitioner has discharged liability under the provisions of the Reverse Charge Mechanism. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectfully submitted that, upon issuance of such form under Rule-139 of the Gujarat Goods and Services Act, 2017, the petitioner was also served with the copy of show cause notice under form GST DRC 01 dated 05.12.2018, showing as to cause the petitioner did not produce related documents of purchase like Lorry receipt, Delivery Chalan, Gate Pass, weigh receipt. 8. It is respectfully submitted that pursuant there to a criminal complaint was filed before the Hon'ble Additional Chief Metropolitan Magistrate, Ahmedabad bearing Criminal Case no. 111714 of 2018, wherein as accused no.22 one Mr. Nitin Chaganbhai Sirza, accused No.23 namely Bharatbhai Chaganbhai Sirza who are the partners of M/s Golden Cotton Industries and accused no. 24 M/s. Golden Cotton Industries. 9. It is respectfully submitted that, in paragraph no.2 of the compliant it is stated that, the Assistant Commissioner of State Tax has accorded sanctioned as warrant under section 132 (6) and section 134 of the Gujarat Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017 for the purpose of launching prosecution against the cited accused Vide sanctioned order bearing no.1925 dated 18.12.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner has engaged into sham/bogus billing transaction with three firms namely Srinath Refoils, Gopinath Trading Company and Radharaman Enterprise. It is further respectfully submitted that, these three firms are being run by sole proprietorship and are accused nos. 10, 15 and 16 in the criminal complaint filed before Hon'ble Additional Chief Metropolitan Magistrate, Ahmedabad. It further respectfully submitted that, the three firms are engaged in the business of edible and non-edible oils and cakes. 12. It is respectfully submitted that, as far as subrule 4 and Rule-139 is concerned. It is further respectfully submitted that, sub-rule-4 of the Rule 139 reads as under; "Sub-Rule 4 and Rule 139 : "Where it is not practicable to seize any such goods, the proper officer or the authorized officer may serve on the owner or the custodian of the goods, an order of prohibition in FORM GST INS-03 that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer." In the light of the above, it is submitted that, the rule begins with words where it is not practicable to seize any such goods and therefore, in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search and seize such goods, documents or books or things. One another aspect of which we take note of is that the confiscation proceedings have been initiated against the writ application by issuing notice under section 73 and section 74 of the Act. This is suggestive of the fact that pending the confiscation proceedings, action has been taken under section 67 of the Act with regard to the search, seizure and prohibition. 5.02. Section 67 of the GST Act reads thus : "Section 67 :(1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that- (a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or (b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the proper officer, prejudicially affect the investigation. (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months. (8) The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by the proper officer in such manner as may be prescribed. (9) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is ground which prima facie justifies the said reasonable belief." 5.05. If the information is such as leads the Proper Officer to believe that the articles of search are secreted in a place, he may thereby have 'reasons to believe' as contemplated under Section 67 of the Act and authorise in writing any other officer to search and seize such goods. All that the court can consider is, whether there is ground which prima facie justifies the reasonable belief. 5.06. In Durga Prasad's case, AIR 1966 SC 1209 it has been held by the Supreme Court that the power of search granted under Section 105 of the Customs Act (para-materia to section 67 of the Act, 2017) is a power of general search but it is essential that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied, that is, the officer concerned must have reasons to believe that the documents and things which in his opinion are relevant for any proceedings under the Act, are secreted in their place. In Gopikisen's case, AIR 1965 SC 1298 the Supreme Court held that Section 105 of the Customs Act did neither compel the officer to give reasons nor the particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es shall, so far as may be, apply to searches under this section Subject to the modification that subsection (5) of section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the words "Collector of Customs" were substituted." The Supreme Court, thereafter proceeded to observe as under :- "According to the appellant the power of seizure under s.105 of the Customs Act cannot be exercised unless the Assistant Collector had reason to believe that the documents were secreted. It was argued that the word "secreted" is used in s. 105 in the sense of being hidden or concealed and unless the officer had reason to believe that any document was so concealed or hidden, a search could not be made for such a document. We are unable to accept the submission of the appellant as correct. In our opinion, the word "secreted" must be understood in the context in which the word is used in the section. In that context, it means 'documents which are kept not in the normal or usual place with a view to conceal them' or it may even mean 'documents or things which are likely to be secreted'; In other words, documents or things which a person is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arwal's case reported in AIR 1967 SC 1298. The Supreme Court in the said decision observed as follows :- "Section 105 of the Act confers an unguided and arbitrary power on the Assistant Collector of Customs to make a search, the only condition being of the facts mentioned therein. It is said that the said belief is practically a subjective satisfaction and the section neither lays down any policy nor imposes any effective control on his absolute discretion. So stated the argument is attractive, but a deeper scrutiny of the provisions indicates not only a policy but also effective checks on the exercise of the power to search by the Assistant Collector of Customs. The object of the section is to make a search for the goods liable to be confiscated or the documents secreted in any place which are relevant to any proceeding under the Act. The legislative policy reflected in the section in that the search must be in regard to the two categories mentioned therein, namely, goods liable to be confiscated and documents relevant to a proceeding under the Act. No doubt, the power can be abused. But that is controlled by other means. Though under the section the Assistant Collector of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the order of prohibition is not in accordance with section 67 of the Act, as there is nothing to indicate even prima facie that the goods were secreted. The word "secreted" in clause (2) needs to be understood. 5.15. The Supreme Court in the case of Gian Chand Versus State of Punjab, reported in [1962] Supp. 1 S.C.R. 364 had an occasion to consider the meaning of the word "secreted" within the meaning of section 105 of the Customs Act. The Supreme Court in the said decision has observed and held as under :- "....It cannot be said that the documents have not been 'secreted within the meaning of S.105 of the Customs Act unless they are hidden or concealed. In the context of the section the word means 'documents which are not kept in the normal or usual place' or it may even mean 'documents or things which are likely to be secreted'; in other words documents or things which a person is likely to keep out of the way or to put in a place where the officer of the law cannot find it. [1005 F-G]. The power to search granted under S.105 of the Customs Act is a power of general search and it is not necessary for its exercise that the authorisation should s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther different. However, in the case on hand, it appears from the stance of the respondent No.4, as indicated in the Affidavit-inreply that the Assistant Commissioner of State Tax was authorised by the office of the Commissioner of State Tax (Enforcement) to inspect and carry out the search and seizure. To this extent, the orders of prohibition and seizure / Form - GST-INS-02 as well as the Form GST-INS-03 appears to be defective.
5.18. We would not like to go any further into the factual aspects of the matter. We have confined our adjudication only with regard to the legality and validity of the order of prohibition and in our opinion, the same is in accordance with law.
5.19. We permit the writ applicant to invoke clause (6) of section 67 of the GST Act and prefer an appropriate application before the appropriate authority for release of the seized goods on provisional basis upon execution of a bond and furnishing a security to the satisfaction of the concerned authority. If such an application is filed, the same shall be considered expeditiously, on its own merits and in accordance with law.
6.00. With the above, this writ application is disposed of. X X X X Extracts X X X X X X X X Extracts X X X X
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