TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 655
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....n 27.08.2017 be declared arbitrary, malicious, motivated and illegal, being contrary to the provisions of the Central Excise Act, 1944 (for short 'the Act of 1944') and also without jurisdiction. It is further prayed that the respondents be directed to return all the documents including original sale/title deeds of various immovable properties taken away on 27.08.2017 during the aforesaid search and Respondent No. 1, Union of India be directed to take action against the officers of the DGGSTI, in particular against Respondent No. 3, Mr. Rajesh Verma for indulging in vexatious search in the premises of the petitioner. Review Petition No. 269/2018 has been filed by Respondent No. 2, DGGSTI and Review Petition No. 270/2018 has been filed by Respondent No. 3, Mr. Rajesh Verma, seeking review of order dated 09.08.2018 passed by Division Bench of this Court whereby the Central Government was directed to act pursuant to prayer clause (C) of the writ petition, i.e. to take action against the officers of Respondent No. 2 and against Respondent No. 3, in terms of Service Rules, for indulging in vexatious search in the premises of the petitioner and not to take any coercive action against t....
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....y seized many original documents, which were neither sealed nor paginated, nor specific description of the documents was mentioned in the panchnama. Moreover, at Serial No. 26 and 31 of Annexure-A to the panchnama dated 27.08.2017, the entries were left blank and the respondents in their counter affidavit sought to justify this by terming the same as an inadvertent error. As per the respondents, rest of the documents were photo copies of their originals. Even this assertion turned out to be incorrect. Contention of the respondents that there is no provisions in the Act of 1944 to seal the resumed documents as they have evidentiary value and need to be checked over and over again during the course of investigation, is liable to be rejected. If this argument is accepted, there will be no authenticity of the documents taken away by the respondents during search. The respondents could even change or interpolate the documents. It is argued that as per panchnama dated 27.08.2017 at various places, particularly on pages 26, 39 and 46, and the respondents in their counter affidavit admitted that the documents were "resumed" while the law only permits that the documents which are found re....
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....tate immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or re-appealed by a competent Legislature or by other competent authority or until expiry of one year from such commencement, whichever is earlier. While the Central Goods and Service Tax Act, 2017 (for short 'the Act of 2017') came into force w.e.f. 01.07.2017, therefore, even on the basis of aforesaid transactional provisions contained in Section 19, the respondents on or after 01.07.2017, could not have exercised the power under the Act of 1944. There being no saving clause in the amending Act of 2016, the power under the Act of 1944 ceased to exist as the saving clause under the General Clauses Act, 1897 does not apply to Constitution of India. The argument therefore is that the search conducted on 27.08.2017 under Section 12F of the Act of 1944 is without jurisdiction. The officers who conducted the search are admittedly the officers appointed under the Act of 2017 vide notification no. 14/2017-Central Tax, dated 01.07.2017 issued under Section 3 read with Section 5 of the Act of 2017 and these of....
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....of duty is illegal. It is argued that there is no alternate remedy in the law to challenge the validity of search and action of the respondents and it is settled law that writ petition against such challenge is maintainable. Law is settled that there should be 'reason to believe' and not 'reason to suspect' at the time of authorization of search by the competent officer. Reliance has been placed on the judgment of the Supreme Court in ITO Vs. M/s Seth Brothers & Others, 1969 (74) ITR 836 and judgment of Calcutta High Court in Bishnu Krishna Shrestha Vs. UOI & Others, 1987 (27) ELT 369 (Cal.). It is argued that saving clause under Section 174 of the ACT of 2017 only applies to pending proceedings and does not permit initiation of fresh proceedings. Reliance in support of this argument has been placed on the judgment of the Supreme Court in Kolhapur Canesugar Works Ltd. & Anr. Vs. Union of India & Anr., (2002) 2 SCC 536 and Ambalal Sarabhai Enterprises Ltd. Vs. Amrit Lal & Co. & Anr., (2001) 8 SCC 397. Learned counsel denied suggestion that the prayer made in Writ Petition No. 9956/2017 and Criminal Writ Petition No. 3532/2017 filed before Delhi High Court by Mr. Natwar Lal Sharda, f....
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....and Section 174(2)(e) of the Act of 2017. During the investigation, it was found that Mr. Natwar Lal Sharda is one of the Directors of M/s. Sanwaria Sweets Private Limited, J-6, 2nd Floor, Himmat Nagar, Tonk Road, Jaipur, Rajasthan and the said premises is also a common registered premises of more than a dozen companies, in which Mr. Natwar Lal Sharda and/or his family members are Directors/Partners/Proprietors. Therefore, a search at M/s. Sanwaria Sweets Pvt. Ltd. was carried out on 27.08.2017 on the reasonable belief of the competent authority that the documents/things pertaining to the case have been secreted at above place. Relying on the judgment of Karnataka High Court in British Physical Laboratories India Ltd. Vs. Assistant Collector, Directorate of Revenue Intelligence Anti Evasion (Central Excise) and Another, 1983 (14) ELT 2270, it is argued that if department is able to produce reasonable evidence of such belief, "reasons to believe" cannot be doubted in writ proceedings. Learned counsel further relied on the judgment of the Supreme Court in R.S. Seth Gopikisan Agarwal Vs. R.N. Sen, Assistant Collector of Customs & Central Excise, Raipur and Others, 1983 (13) ELT 1434....
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....d that the writ petitioner has heavily relied upon page no. 25 and 26 of the Annexure-A to panchnama but has conveniently ignored to point out recovery of incriminating material from the drawer of the table in the cabin of Mr. Natwar Lal Sharda, Managing Director of the petitioner-company, which proves that he is the real owner of the unregistered factory and actual beneficiary of the business in Village Belinga, District Bastar, Chhattisgarh and is the mastermind of the entire fraudulent operation resulting into robbing India of more than Rs. 63 crores by indulging in clandestine manufacturing and removal of excisable goods. We have given our anxious consideration to rival submissions and carefully perused the material on record. So far as prayer clause (B) of the writ petition is concerned, the same does not survive as pursuant to order of this Court dated 26.09.2018, the petitioner has already received all the documents including those files which contained original sale deeds/title deeds etc. As regards the main relief which has been prayed for in the writ petition that action of the officials of the respondent-DGGSTI formerly known as DGCEI in conducting search in the premis....
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....imately be found not to be useful for or relevant to the proceeding under the Act will not by itself vitiate the search, nor will it entitle the aggrieved person to an omnibus order releasing the documents seized. But the circumstance that the large number of documents have been seized is not a ground for holding that all documents seized are irrelevant or the action of the officer is mala fide. The Supreme Court in M/s. S. Ganga Saran & Sons (Pvt.) Ltd. Calcutta Vs. Income Tax Officer & Others, (1981) 3 SCC 143 held that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under Section 147(a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income Tax Officer would be without jurisdiction. The important words under Section 147(a) are "has reason to believe" and these words are stronger than the wo....
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....sserted that Mr. Natwar Lal Sharda also happens to be one of the Directors of the petitioner-company. They also asserted that he filed two writ petitions before Delhi High Court. In Writ Petition No. 9956/2017, he has prayed that action of the officers of respondents in conducting search on 30.01.2017 and 26.08.2017 at his residential premises be declared arbitrary, malicious, motivated and illegal. Order dated 10.11.2017 passed by Delhi High Court in that writ petition, which has been reproduced by Respondents No. 1 and 2 in para 6 of their counter affidavit, indicates that Mr. Natwar Lal Sharda was already granted bail and the respondent-department had applied for cancellation of the bail. Delhi High Court on being informed that the respondents had filed an application for cancellation of bail observed that pendency of the aforesaid writ petition would not come in the way of the Magistrate/Sessions Court while deciding the application for cancellation of bail. It was clarified that the respondents can record the statements of the petitioner and his wife in that case, who would also cooperate with the respondents. In Writ Petition (Crl.) No.3532/2017 filed by Mr. Natwar Lal Sharda....
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....ar' brand, suppliers of the raw materials including supari and menthol, the owner of 'Nazar' brand Mr. Ashish Sharda, nephew of Mr. Natwar Lal Sharda and Mr. Natwar Lal Sharda himself. This resulted in huge loss to the Central Government of Central Excise duty of more than Rs. 63 crores. It has been further stated that during the course of investigation, incriminating messages both text and Whatsapp exchanged between the raw material supplier and Mr. Natwar Lal Sharda with regard to payments through hawala were found and admitted by Mr. Natwar Lal Sharda. He has used the hawala route for making and receiving large amount of payments in gross contravention of the relevant rules, which is also subject matter of investigation by the Enforcement Directorate. Para 22 of the counter affidavit states that during search on 27.08.2018 at J-6, Himmat Nagar, Tonk Road, Jaipur, from the cabin of Managing Director, Mr. Natwar Lal Sharda, in one of the drawers of his table, certain small rolls of packing materials which contained particulars printed thereon as "VACHAN" Premium Pan Masala, Mfd. by SS Industries, SP2033, Ramchandrapura, RICCO Industrial Area, Jaipur, Rajasthan-302022 MRP Rs. 4/-....
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.... Floor, Himmat Nagar, Tonk Road, Jaipur, Rajasthan were in continuation of the proceedings already initiated prior to enforcement of the Act of 2017, which is evident from the fact that the respondents had already on receipt of intelligence conducted simultaneous search operations at various places at Bastar, Indore and Jaipur on 30.01.2017 after following the due procedure under Section 12F read with Section 18 of the Act of 1944. So far as the question of relevance of the documents seized by the respondents, most of which were original title deeds/sale deeds of the immovable properties, is concerned, we find that certain incriminating material was found from drawer of the table in the cabin of Mr. Natwar Lal Sharda, Managing Director of the petitioner-company, which shows that he is the real owner of the unregistered factory and actual beneficiary of the business in Village Belinga, District Bastar, Chhattisgarh. Merely because some of the files that were seized by the search team contained original sale/title deeds of the immovable properties and the same were eventually returned back would not be sufficient to vitiate the entire action of the respondents because the material su....