High Court sets aside Prohibition order under CGST Act, stresses need for proper authorization

The High Court allowed the Writ Petition, setting aside the order of Prohibition issued by the Deputy Assistant Commissioner under Section 67(2) of the CGST Act. The Court emphasized the necessity of written authorization by an officer not below the rank of Joint Commissioner for inspection and seizure activities. The decision was based on the authority's lack of competency rather than the merits of the case, highlighting the importance of adhering to statutory provisions to ensure the validity of orders related to search, seizure, and confiscation under the Act.

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Issues:

1. Jurisdiction of the authority to pass an order of Prohibition under Section 67(2) of the Central Goods and Services Tax Act, 2017.

Analysis:

Jurisdiction of the Authority:
The writ petition challenged the order of Prohibition issued by the Deputy Assistant Commissioner, questioning the competence of the officer to pass such an order under Section 67(2) of the CGST Act. The petitioner argued that the order of prohibition, confiscating goods, was unsustainable as the authority passing it should not be below the rank of Joint Commissioner as per the Act. The Government Pleader for Commercial Tax, while opposing the prayer, agreed to adjudicate the case on merits. The High Court noted that the issue of jurisdiction regarding the authority in the matter of search, seizure, and confiscation was not explicitly addressed in the impugned order, but it was a legal issue that could be decided on merits. The Court analyzed the relevant provisions of Section 67(1) and (2) of the Act, emphasizing the requirement that the officer, not below the rank of Joint Commissioner, may authorize in writing any other officer for inspection and seizure purposes.

Interpretation of Section 67(1) and (2) of the Act:
The Court interpreted Section 67(1) to empower an officer not below the rank of Joint Commissioner to authorize another officer for inspection in cases of suspected tax evasion or contravention of the Act. Similarly, under Section 67(2), if an officer has reasons to believe that goods are liable for confiscation, he may authorize in writing another officer for search and seizure. The Court highlighted the necessity of written authorization for inspection and seizure activities under the Act. In the case at hand, the order of Prohibition issued by the Deputy Assistant Commissioner lacked the required written authorization from the competent officer specified in Section 67(2), rendering it illegal and without jurisdiction. Consequently, the Court set aside the order, clarifying that the decision was based on the authority's competency and not the merits of the case.

Conclusion:
The High Court allowed the Writ Petition, emphasizing the importance of adherence to the statutory provisions regarding the authority's jurisdiction in matters of search, seizure, and confiscation under the CGST Act. The Court's decision focused on the procedural aspect of written authorization by the competent officer, highlighting the necessity for compliance with legal requirements to ensure the validity of orders issued under the Act.

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