GST inspection and seizure invalid where independent witnesses were absent and the seizure record was tampered with, quashing the demand.

A GST inspection and seizure were found invalid where the record did not show the mandatory presence of two independent witnesses under the applicable procedure, and the seizure memo was found to have been tampered with by the officer who prepared it. The court treated the later attempt to identify other persons as independent witnesses as an afterthought and held the seizure record unreliable. Because the demand under GST was founded entirely on this defective inspection and seizure, it could not survive once the foundational proceedings were held unlawful. The impugned demand was therefore quashed.

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Issues: (i) Whether the inspection and seizure conducted under the GST law were vitiated for want of independent witnesses and for tampering of the seizure record; (ii) whether the demand order issued under the GST law could survive when it was founded on such inspection and seizure.

Issue (i): Whether the inspection and seizure conducted under the GST law were vitiated for want of independent witnesses and for tampering of the seizure record.

Analysis: The inspection was required to conform to the procedure prescribed under Section 67 of the Central Goods and Services Tax Act, 2017 and the corresponding State GST law, read with the witness requirement under Section 100(4) of the Code of Criminal Procedure, 1973. The inspection report did not reflect two independent witnesses, since the persons shown were connected with the petitioner and therefore could not satisfy the statutory requirement of independence. The seizure record was also found to have been tampered with by the officer who prepared it, which rendered that document unreliable. The attempt to later project other persons as independent witnesses was treated as an afterthought and the seizure record was held invalid.

Conclusion: The inspection and seizure were held to be vitiated and unsustainable in law.

Issue (ii): Whether the demand order issued under the GST law could survive when it was founded on such inspection and seizure.

Analysis: The demand order under Section 74(9) of the Central Goods and Services Tax Act, 2017 and the corresponding State GST law rested entirely on the defective inspection and seizure. Once the foundational proceedings were held to be unlawful and the seizure record unreliable, the demand order could not stand independently.

Conclusion: The demand order was liable to be set aside.

Final Conclusion: The writ petition succeeded and the impugned demand was quashed because the inspection process was not in conformity with the mandatory statutory procedure and the seizure record was tainted by interpolation.

Ratio Decidendi: A demand founded on an inspection and seizure conducted without the mandatory independent witnesses, and supported by a tampered seizure record, cannot be sustained.

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