Business premises unlawfully sealed under GST Act; Court orders removal, emphasizes proper authorization

The court held in favor of the petitioner, a registered dealer, challenging the sealing of its business premises by DGST officials under Section 67 of the Central Goods and Services Tax Act, 2017. The court found the complete sealing of premises illegal as the authorization for inspection did not name the assessee. Emphasizing the need for proper authorization and proportionality in enforcement actions, the court directed the removal of the seal and return of the premises to the petitioner within 12 hours. This decision underscores the importance of statutory compliance and fair enforcement practices by tax authorities.

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Issues:
Sealing of business premises by DGST under Section 67 of CGST Act, 2017.

Analysis:
The petitioner, a registered dealer trading in PVC raisins and food items, challenged the sealing of its business premises by DGST officials under Section 67 of the Central Goods and Services Tax Act, 2017. The petitioner alleged that despite seeking time to produce documents during a visit by Revenue authorities, its premises were completely sealed the next day. The DGST argued that the petitioner's non-cooperation led to the sealing and that the premises could be de-sealed upon cooperation. The relevant Section 67 empowers the proper officer to inspect and seize goods or documents if tax evasion is suspected. The court noted that the authorization for inspection or search did not name the assessee but listed the premises, making the complete sealing of premises illegal per se. The court held that temporary restraint for securing evidence is different from indefinite sealing. Thus, the petition succeeded, and a direction was issued to remove the seal and hand over the premises to the petitioner within 12 hours.

This judgment highlights the importance of statutory compliance and limits on the power of tax authorities to seal business premises. It emphasizes the need for proper authorization and proportionality in enforcement actions to prevent undue hardship on businesses. The court's interpretation of Section 67 underscores the requirement for clear legal grounds and procedural fairness in such cases. The decision serves as a reminder for tax authorities to exercise their powers judiciously and in accordance with the law to protect the rights of taxpayers.

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