2019 (2) TMI 390 - HC - GST

Jurisdiction - power of respondent to seal the business premises - access to the business premises was not denied by the petitioner - software stopped functioning all of a sudden along with internet connection abruptly. - seeking co-operation from the assessee for inspection/search of the computer system and other records available in the premises - Held that - Section 67 4 of the Act contemplates that the officer authorized under Sub-section 2 shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle 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. This Court is of the considered view that the justice would be sub-served in directing the Revenue to unseal the premises in question on 05.02.2019 at 11.00 a.m., which is convenient to the petitioner and the petitioner shall co-operate for inspection/search of the premises in question, including the computer system - the date is fixed on 11.02.2019 at 11.00 a.m., to unseal the premises in question - petition allowed.

Summary

Issues:
1. Validity of the order passed under Section 67[4] of the Karnataka Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017.
2. Authority of the respondent No.2 to seal the business premises.
3. Denial of access to the computer system leading to the invocation of Section 67[4].
4. Resolution regarding unsealing of the premises.

Analysis:
1. The petitioner challenged the order passed by respondent No.2 under Section 67[4] of the Act. The petitioner, a private limited company, contended that the authorization for search lacked proper empowerment, as suspicion alone is insufficient for such authorization. However, the Revenue presented the original authorization issued by the Additional Commissioner of Commercial Taxes, validating the search. The court noted that the authorization was in prescribed format GST INS-1, thereby dismissing the petitioner's argument regarding the authorization's validity.

2. The respondent argued that Section 67[4] empowers authorized officers to seal premises where access is denied. The Revenue contended that denial of access to the computer system, crucial for verifying business transactions stored in tally software, justified sealing the premises. The petitioner had not addressed the sudden disruption in the computer system, hindering the verification process. The court acknowledged the denial of access to the computer system as a valid reason for invoking Section 67[4] to seal the premises.

3. The Additional Government Advocate, representing the respondent No.2, agreed to unseal the petitioner's premises for inspection and search of records, including the computer system, upon the petitioner's cooperation. The court accepted this submission, directing the Revenue to unseal the premises on a specified date convenient to the petitioner for inspection. The order was subsequently revised based on the petitioner's request, setting a new date for unsealing the premises.

4. The court disposed of the writ petition by directing the Revenue to unseal the premises on the revised date for inspection, emphasizing the need for cooperation from the petitioner during the process. The resolution aimed at ensuring justice and facilitating the inspection/search of the premises, including the computer system, in question.

This detailed analysis of the judgment from the Karnataka High Court addresses the issues raised by the petitioner regarding the validity of the order, authority to seal the premises, denial of access to the computer system, and the subsequent resolution for unsealing the premises for inspection.