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2019 (7) TMI 471
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.... the petitioner is allowed to represent their case before appropriate authority. c. Such other and further relief as deemed just and expedient be granted. d. Your Lordships be pleased to issue a writ mandamus or in the nature of mandamus quashing and setting aside the instruction issued wide letter dtd. 23-05-2019 by Respondent No. 4 bearing No.SARAVEKMI (1) ANVESHAN/V-3/ GANDHINAGAR /2019-20/Ja: dated 23-05-2019." 2.00. The case of the writ applicant in his own words, as pleaded in the writ application, is as under :- "1. The Petitioner says and submits that the petitioner is engaged in processing of raw cotton classifiable under chapter 52 of the Schedule to the Goods and Service Tax Act, 2017 and is holder of Registration Certificate bearing No.24AAKFG9023B1ZR and are under the control of State Tax Officer, Ghatakt 93, Range-l, Rajkot. The Petitioner says and submits that they were holding registration under the provisions of Gujarat Value Added Tax Act and on introduction of Goods and Service Tax Act, has migrated as per the procedure prescribed under the law. 2. The Petitioner says and submits that they are following all the procedure pre....
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....g the petitioner from dealing with the goods lying in stock worth Rs. 2,50,00,000/- vide order dated 05-12-2018. 10. The petitioner says and submits that the respondents are served with the notice and are in the knowledge of the fat that the petitioner has challenged the order of prohibition issued under Section 67(2) of the CGST Act, 2017 has issued instructions that the time limit of the said order is further extended by six months." 2.01. Thus, it appears from the materials on record that an order of seizure dated 5/12/2018 came to be passed by the Assistant Commissioner of State Tax (Enforcement Division-3), Gandhinagar. In the order it has been indicated that the goods as well as the Books and other documents have been seized. It also appears that thereafter an order of prohibition came to be passed under Rule 139(4) with respect to the goods in the nature of cotton seeds and bales. The Seizure Order reads thus :- "FORM GST INS-O2 ORDER OF SEIZURE [See rule 139 (2)] Whereas an inspection under sub-section (1)/search under sub-section (2) of Section 67 was conducted by me on 04/12/2018 at __ AM/ PM in the following premise(s): SURVEY No-50, DHOK....
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....ing witness (es):- 1. DINESHBHAI PARSTOMBHAI PATEL 5/ ROYAL PARK, KALAVAD ROAD, 201/SANKHESHVAR APPARTMENT, RAJKOT. 2. AMRUTLAL CHANGANLAL RAMKABIR POST DHOKALIYA, TA-PADDHARI, DlST-RAJKOT. And on Scrutiny of the books of accounts, registers, documents/papers and goods found during the inspection/search, I have reasons to believe that certain goods liable to confiscation and/or books and/or documents and/or things useful for or relevant to proceedings under this Act are secreted in place(s) mentioned above. Therefore, in exercise of the powers of the conferred upon me under sub-section (2) of section 67, I hereby order that you shall not / shall not cause to remove, part with, or otherwise deal with the goods except without the previous permission of the undersigned. Sr No Description of goods Quantity or units Make/make or model Remarks 1 2 3 4 5 1 COTTON, COTTON SEEDS AND BALES. - - Rs. 2,50,00,000 Place : Dhokaliya. Date : 05-12-2018 Sd/- Illegible. Assistant Commissioner of State Tax Enforcement) Div.3, Vadodara." Signature of the Witnesses : Sr. No. Name and....
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....action is a condition precedent, according to Mr.Sheth, for the purpose of exercising powers under section 67 of the Act. 3.04. The grounds of challenge raised in the memo of the writ application are as under :- "(A). The petitioner says and submits the order passed by the proper officer is improper and unjustified inasmuch as the order passed is in clear violation of principles of natural justice and is in excess of the powers conferred under the provisions of Section 67(2) of Goods and Service Tax Act, 2017? (B). The petitioner says and submits that the order passed by the proper officer is premature and is in contravention to the provisions of Central goods and Service Act, inasmuch as the department has neither determined any liability by following the adjudication proceeding nor has issued any assessment order determining any liability as contemplated under the law. (C). The petitioner says and submits that the order of prohibition passed by the roper officer without considering the fact that the goods under consideration are duly accounted for and are utilized in manufacturing of final product which are cleared with payment of tax and the liabili....
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....cer or the authorized officer may serve on the owner or the custodian of the goods, an order of prohibition in firm GST INS-03 that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer". The said form is also issued to the partner of M/s Golden Cotton Industries, which is annexed at Annexure-D to the memorandum of the application. 7. It is respectfully submitted that, upon issuance of such form under Rule-139 of the Gujarat Goods and Services Act, 2017, the petitioner was also served with the copy of show cause notice under form GST DRC 01 dated 05.12.2018, showing as to cause the petitioner did not produce related documents of purchase like Lorry receipt, Delivery Chalan, Gate Pass, weigh receipt. 8. It is respectfully submitted that pursuant there to a criminal complaint was filed before the Hon'ble Additional Chief Metropolitan Magistrate, Ahmedabad bearing Criminal Case no. 111714 of 2018, wherein as accused no.22 one Mr. Nitin Chaganbhai Sirza, accused No.23 namely Bharatbhai Chaganbhai Sirza who are the partners of M/s Golden Cotton Industries and accused no. 24 M/s. Golden Cotton Indus....
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...., 18, 20, 22 and 23 (accused Nos.1 to 6 are under judicial custody) and after trial punished them according to law. 11. It is respectfully submitted that there is a subjective satisfaction on the part of the respondent authority in issuing the prohibition order under Rule 139(4) for the reason that being that, the petitioner is engaged in the business of processing of raw cotton material, whereas subjective satisfaction is that the petitioner has engaged into sham/bogus billing transaction with three firms namely Srinath Refoils, Gopinath Trading Company and Radharaman Enterprise. It is further respectfully submitted that, these three firms are being run by sole proprietorship and are accused nos. 10, 15 and 16 in the criminal complaint filed before Hon'ble Additional Chief Metropolitan Magistrate, Ahmedabad. It further respectfully submitted that, the three firms are engaged in the business of edible and non-edible oils and cakes. 12. It is respectfully submitted that, as far as subrule 4 and Rule-139 is concerned. It is further respectfully submitted that, sub-rule-4 of the Rule 139 reads as under; "Sub-Rule 4 and Rule 139 : "Where it is not practica....
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....elow the rank of Joint Commissioner had reasons to believe that the writ applicant had indulged in contravention of the provisions of the Act to evade tax. Secondly, it could be said that the proper officer had reasons to believe that the goods were liable to confiscation and such goods were likely to be secreted at a particular place. In such circumstances, the proper officer authorised the Assistant Commissioner of Sales Tax (Enforcement), Division-3, Gandhinagar to carry out the search and seize such goods, documents or books or things. One another aspect of which we take note of is that the confiscation proceedings have been initiated against the writ application by issuing notice under section 73 and section 74 of the Act. This is suggestive of the fact that pending the confiscation proceedings, action has been taken under section 67 of the Act with regard to the search, seizure and prohibition. 5.02. Section 67 of the GST Act reads thus : "Section 67 :(1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that- (a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the....
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....acle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) The person from whose custody any documents are seized under sub-section (2 ) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation. (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the period of six months may, on suffic....
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....fficer not below the rank of Joint Commissioner. The Proper Officer should have reasons to believe that a taxable person has suppressed any transaction relating to supply of goods or services or both. 5.04. In Pukhraj Versus D. R. Kohli, reported in AIR 1962, SC 1559 at page 1563, the Supreme Court observed as follows: "After all, when we are dealing with a question as to whether the belief in the mind of the officer who effected the seizure was reasonable or not, we are not sitting in appeal over the decision of the said officer. All that we can consider is, whether there is ground which prima facie justifies the said reasonable belief." 5.05. If the information is such as leads the Proper Officer to believe that the articles of search are secreted in a place, he may thereby have 'reasons to believe' as contemplated under Section 67 of the Act and authorise in writing any other officer to search and seize such goods. All that the court can consider is, whether there is ground which prima facie justifies the reasonable belief. 5.06. In Durga Prasad's case, AIR 1966 SC 1209 it has been held by the Supreme Court that the power of search granted under Sec....
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....ection 105 : 105. (1) If the Assistant Collector of Customs, or in any area adjoining the land frontier or the coast of India an officer of customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act, are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things. (2) The provisions of the Code of Criminal Procedure, 1898, relating to searches shall, so far as may be, apply to searches under this section Subject to the modification that subsection (5) of section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the words "Collector of Customs" were substituted." The Supreme Court, thereafter proceeded to observe as under :- "According to the appellant the power of seizure under s.105 of the Customs Act cannot be exercised unless the Assistant Collector had reason to believe that the documents were secreted. It was argued that the word "secreted" is used in s. 105 in....
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.... that the power of search granted under S.105 of the Customs Act is a power of general search. But it is essential. that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied-that is, officer concerned must have reason to believe that any documents or things, which in his opinion are relevant for any proceeding under the Act, are secreted in the place searched. We have already mentioned the reasons for holding that this condition has been satisfied in the present case." 5.10. We may also refer to a decision of the Supreme Court in the case of R. S. Seth Gopikisan Agarwal's case reported in AIR 1967 SC 1298. The Supreme Court in the said decision observed as follows :- "Section 105 of the Act confers an unguided and arbitrary power on the Assistant Collector of Customs to make a search, the only condition being of the facts mentioned therein. It is said that the said belief is practically a subjective satisfaction and the section neither lays down any policy nor imposes any effective control on his absolute discretion. So stated the argument is attractive, but a deeper scrutiny of the provisions indicates not on....
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.... of such officer. Clause (6) provides that the goods so seized under sub-section (2) can be released on a provisional basis upon execution of a bond and furnishing a security in such manner and on such quantum as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. 5.13. Thus, even at this stage, the authority concerned is empowered to release the seized goods on a provisional basis upon asking the writ applicant to execute a bond and also furnishing security of a particular quantum. 5.14. We are not impressed by the submission of Mr.Sheth, the learned counsel appearing for the petitioner that the order of prohibition is not in accordance with section 67 of the Act, as there is nothing to indicate even prima facie that the goods were secreted. The word "secreted" in clause (2) needs to be understood. 5.15. The Supreme Court in the case of Gian Chand Versus State of Punjab, reported in [1962] Supp. 1 S.C.R. 364 had an occasion to consider the meaning of the word "secreted" within the meaning of section 105 of the Customs Act. The Supreme Court in the said decision has observed and held as under :- "....It cannot be sa....