Officers Who Investigate Cannot Also Judge: Critical Separation of Powers Prevents Procedural Bias in Tax Enforcement Actions

The HC addressed jurisdictional bias in a tax case, finding procedural irregularities in a search and seizure operation. The court stayed the original order due to potential bias from the same officer conducting both investigation and adjudication. The HC directed fresh proceedings under new guidelines, setting aside the initial order and requiring a revised show cause notice, effectively providing procedural relief to the petitioner.

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Issues:
1. Jurisdictional bias due to the same officer conducting search and seizure and adjudication proceedings.
2. Validity of the order passed under Section 74 of the Delhi Goods and Services Tax Act, 2017.
3. Compliance with the Circular dated 20.09.2022 regarding inspection, search, and seizure guidelines.

Analysis:
1. The writ petition challenged an order dated 11.03.2022 passed by the Assistant Commissioner under Section 74 of the Delhi Goods and Services Tax Act, 2017. The petitioner contended bias as the same officer, Mr. Chunni Lal Roy, who conducted the search and seizure, also passed the impugned order. The High Court noted a likelihood of bias due to the same person conducting both operations and stayed the impugned order pending further proceedings.

2. The matter was listed again on 11.05.2022, allowing parties to file written submissions. The interim order dated 05.04.2022 was made absolute during the pendency of the writ petition. The respondent expressed a willingness to align with the Central Government's position on central tax matters. Subsequently, the respondent filed a Circular dated 20.09.2022, modifying guidelines for tax authorities regarding inspection, search, and seizure.

3. The petitioner raised jurisdictional issues at the outset, leading the court to set aside the impugned order dated 11.03.2022. The court directed the revenue to commence fresh proceedings in line with the guidelines provided in the Circular dated 20.09.2022. Consequently, the court disposed of the writ petition, requiring the issuance of a new show cause notice adhering to the updated guidelines. The pending interlocutory application was also closed as part of the judgment.

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