GST seizure prohibitory order on goods challenged; writ declined until taxpayer seeks release u/s67(6) mechanism

The dominant issue was whether a prohibitory order issued under the first proviso to s.67(2) CGST/WBGST Act could be interfered with in writ jurisdiction without the taxable person first invoking the statutory release mechanism. Relying on SC authority that release of seized goods must be sought under the Act, the HC held that the petitioner's failure to apply under s.67(6) disentitled it to immediate writ relief; while noting that s.67(7) prevents indefinite continuation of prohibition orders, the court declined interference at that stage. The writ was disposed of with liberty to apply under s.67(6), directing the proper officer to consider such application in accordance with law.

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Issues:
The issues involved in the judgment are the quashing of the order of prohibition dated 25th March, 2023 issued under Section 67(2) of the CGST/WBGST Act, 2017, and the request for release of seized goods covered under the prohibitory order.

Quashing of Prohibition Order:
The petitioners filed a writ petition seeking the quashing of the prohibition order issued under Section 67(2) of the GST Act. A search and seizure procedure was initiated at the petitioners' registered place of business, followed by the issuance of a prohibitory order on 25th March, 2023. The petitioners participated in the proceedings and requested the release of the seized stock of timber. The respondent's office, in response, informed about the issuance of a show-cause notice under Section 122 of the GST Act without addressing the release request.

Legal Arguments - Petitioners' Counsel:
The petitioners' advocate highlighted Section 67(2) of the GST Act, empowering the proper officer to search and seize goods. He also referred to the first proviso to Section 67(2), allowing for the issuance of prohibitory orders. Citing Section 67(7), he argued that goods seized must be returned if no notice is given within six months. Relying on legal precedents, including judgments by the Supreme Court and the High Court of Delhi, the advocate contended that the goods should be returned due to the delayed show-cause notice.

Legal Arguments - Respondents' Counsel:
The respondents' advocate referred to Section 67(7) and Section 67(6) of the GST Act. He argued that the provision for return of goods applies only if no seizure notice is issued within six months. He pointed out that the petitioners did not seek provisional release of goods as per Section 67(6) and did not approach the respondents for the same.

Judgment and Observations:
The Hon'ble Court noted the prohibitory order passed under Section 67(2) and the petitioners' failure to request the release of goods under Section 67(6) of the GST Act. Citing a Supreme Court judgment, the Court emphasized that the assessee must follow the prescribed mechanism for seeking release of goods. Referring to a Delhi High Court judgment, the Court stated that the prohibitory order cannot continue indefinitely, but since the petitioners did not approach the respondents under Section 67(6), there was no basis for interference. The Court disposed of the writ petition with no costs, directing that any future application by the assessee for release of goods under Section 67(6) shall be considered in accordance with the law.

Conclusion:
The judgment primarily focused on the procedural aspects of seeking release of seized goods under the GST Act, emphasizing the need for compliance with the prescribed mechanisms. The Court highlighted the importance of following legal provisions and mechanisms for the release of goods, as outlined in the relevant sections of the GST Act.

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