Judicial Review Challenges Validity of GST Search Warrant Citing Insufficient Procedural Grounds Under Section 67(1)

HC scrutinized search authorization under GST Act, challenging the legality of a search based on Special Judge's directions. The Court raised concerns about the proper officer's justification for the search, questioning whether statutory conditions under Section 67(1) were genuinely met. Proceedings were stayed, with notice issued to respondents to provide detailed justification for the search authorization.

---

---

Issues involved: Impugning search authorization u/s 67(1) of the Central Goods & Services Tax Act, 2017; Legality of search authorization; Directions issued by Special Judge for inquiry.

Impugning search authorization u/s 67(1) of the Central Goods & Services Tax Act, 2017:
The petitioners challenged the search authorization dated 22.08.2023, contending it was illegal as the proper officer lacked the requisite reason to believe conditions u/s 67(1) of the Act were met. The search was prompted by Special Judge's directions to various departments to investigate the source of funds received by the petitioners. Petitioner no. 2's property purchase for Rs. 50,00,000 raised suspicions, as the funds were linked to a bail collateral. The Court expressed doubts on the legitimacy of such a broad inquiry and emphasized that the proper officer's search authorization hinges on meeting the Act's specified conditions.

Legality of search authorization:
The Court raised concerns regarding the legality of the search authorization issued without proper compliance with u/s 67(1) of the Act. It questioned the validity of the search conducted based on directions from the Special Judge, emphasizing the necessity for the proper officer to adhere strictly to the Act's provisions before authorizing a search. Notice was issued to the respondent, who agreed to respond and requested time to prepare a counter affidavit within two weeks.

Directions issued by Special Judge for inquiry:
The search stemmed from directions by the Special Judge (P.C. Act) to investigate the origin of Rs. 50,00,000 received by the petitioners. The funds were traced to a property purchase and used as bail collateral, prompting further scrutiny. The Court highlighted the need for the respondent to provide relevant files containing the search directives, and proceedings following the search were stayed until the next hearing scheduled for 17.10.2023.

---