Prohibition and seizure under GST lose lawful basis where assessment is quashed for limitation; impugned orders quashed.

Whether prohibition and seizure orders under GST may be continued where the related assessment was quashed insofar as limitation on input tax credit: court applied the statutory scheme governing inspection, seizure/prohibition and input tax credit limitation, noting absence of any confiscation proposal and no fresh de novo orders on remand; consequence is that prohibition/seizure lacked lawful basis once the assessment was quashed for limitation. Outcome: the impugned Prohibition Order and Seizure Order were quashed and relief granted to the assessee.

---

---

Issues: Whether the impugned Prohibition Order in Form GST INS-03 dated 07.02.2024 and Seizure Order in Form GST INS-02 dated 27.02.2024 can be continued in view of the remand proceedings and the prior order quashing the assessment insofar as limitation under Section 16(4) of the Central Goods and Services Tax Act, 2017.

Analysis: The orders under challenge arise from an inspection and subsequent seizure/prohibition under Section 67 of the GST enactments, while the assessment order challenging belated availment of input tax credit was quashed insofar as limitation under Section 16(4) of the Central Goods and Services Tax Act, 2017 and within the period under Section 16(5) of the said Act. There is no proposal for confiscation under Section 67(2). In the absence of any confiscation proposal and given the quashing of the assessment insofar as limitation, the statutory scheme does not permit continuance of prohibition/seizure measures without lawful basis. No de novo orders have been passed after remand that would sustain the impugned prohibition or seizure.

Conclusion: The impugned Prohibition Order dated 07.02.2024 in Form GST INS-03 and Seizure Order dated 27.02.2024 in Form GST INS-02 are quashed; relief is granted in favour of the assessee.

---