GST inspection authorization under Section 67(1) quashed for lacking supporting grounds and material evidence

Delhi HC held that GST inspection authorization under Section 67(1) CGST Act was patently erroneous as grounds specified in authorization were not supported by available information or material on record. Court found that apart from directions issued by Special Judge, no reasons existed to initiate search against petitioners. HC directed return of documents/photocopies collected during inspection since conditions for inspection were not satisfied. Regarding summons under Section 70, court clarified GST authorities not precluded from continuing proceedings under CGST Act provisions but no further action required for complying with Special Judge's order. Petition disposed.

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Issues:
The issues involved in the judgment are the validity of the search authorization under Section 67(1) of the Central Goods & Services Tax Act, 2017, and the return of documents seized during the search.

Validity of Search Authorization:
The petitioners challenged the search authorization issued by the respondent under Section 67(1) of the CGST Act. The inspection was conducted based on directions from a Special Judge regarding the source of funds received by the petitioners. The Court found that the authorization was erroneous as it lacked grounds specified in the form for initiating the search. The inspection was solely based on the Special Judge's directions without proper statutory basis for GST authorities to conduct such operations.

Legal Basis of Search Authorization:
The inspection authorization was issued without valid grounds as required by FORM GST INS-01. The Court noted that the Special Judge's directions did not align with statutory provisions of the CGST Act. The lack of proper reasons for initiating the search rendered the authorization erroneous, solely relying on the Special Judge's order without meeting the necessary criteria under the Act.

Return of Documents:
The petitioners requested the return of documents seized during the search. The Court confirmed that no documents were seized, only photocopies were collected. Since the conditions for inspection under Section 67(1) were not met, the Court directed the return of the documents to the petitioners.

Conclusion:
The Court held that the search authorization lacked valid grounds as per the CGST Act, being solely based on the Special Judge's directions. It directed the return of documents to the petitioners as no seizure was justified. The judgment clarified that no further action was required by GST authorities based on the Special Judge's order. The petition was disposed of without issuing any further orders.

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