2018 (10) TMI 254 - HC - GST

Sealing of Business Premises - petitioner s grievance is that the sealing of its business premises on behalf of the Delhi Goods and Services Tax (DGST), ostensibly under Section 67 of the Central Goods and Services Tax Act, 2017, is illegal - It is claimed that the authorization does not name the assessee; it only lists the two premises i.e. the business premises at Netaji Subhash Place and the DSIDC Unit at Narela. Held that - Given the plain text of the statute i.e. especially Section 69(4), which merely authorizes the concerned officials to search the premises and if resistance is offered, break-open the lock or any other almirah, electrical device, box, etc. containing books and documents, the complete sealing of the premises, in the opinion of the court is per se illegal. Even if it were assumed that the respondents temporarily restrained the petitioner from using its premises, for a few hours, till the books of accounts are made available in order to secure the evidence available in the premises, that could not have assumed the life on its own , at least indefinitely. In these given circumstances, this petition has to succeed. Since the premises have been in the possession of the respondents for over a month, a direction is issued to remove the seal forthwith within the next 12 hours and hand over the premises to the petitioner. Petition allowed.

Summary

Issues:
Sealing of business premises by DGST under Section 67 of CGST Act, 2017.

Analysis:
The petitioner, a registered dealer trading in PVC raisins and food items, challenged the sealing of its business premises by DGST officials under Section 67 of the Central Goods and Services Tax Act, 2017. The petitioner alleged that despite seeking time to produce documents during a visit by Revenue authorities, its premises were completely sealed the next day. The DGST argued that the petitioner's non-cooperation led to the sealing and that the premises could be de-sealed upon cooperation. The relevant Section 67 empowers the proper officer to inspect and seize goods or documents if tax evasion is suspected. The court noted that the authorization for inspection or search did not name the assessee but listed the premises, making the complete sealing of premises illegal per se. The court held that temporary restraint for securing evidence is different from indefinite sealing. Thus, the petition succeeded, and a direction was issued to remove the seal and hand over the premises to the petitioner within 12 hours.

This judgment highlights the importance of statutory compliance and limits on the power of tax authorities to seal business premises. It emphasizes the need for proper authorization and proportionality in enforcement actions to prevent undue hardship on businesses. The court's interpretation of Section 67 underscores the requirement for clear legal grounds and procedural fairness in such cases. The decision serves as a reminder for tax authorities to exercise their powers judiciously and in accordance with the law to protect the rights of taxpayers.