2020 (2) TMI 529 - HC - GST

Stay on implementation and operation of the impugned sealing memos in relation to the Godown - the godown is used for the purpose of storing agricultural produce like cotton bales and cotton yarn - grievance of the writ applicant is that he, being the owner of the godown, the seal which has been affixed, cannot be for an indefinite period of time. HELD THAT - Section 67(2) and 67(4) of CGST Act makes it clear that if the proper officer, not below the rank of Joint Commissioner, either pursuant to a search carried out under sub-section (1) or otherwise has reasons to believe that any goods liable to confiscation or any documents or books, which in the opinion of the proper officer, may be useful or relevant to any proceedings which may be undertaken or such goods are liable to be secreted to any place, then the proper officer may authorize in writing any other officer of the State Tax to search and seize the goods, documents or books or things. Clause (4), referred to above, empowers the authorized officer to seal or break open the door of any premises where access to such premise is denied. In the case on hand, we have not been shown anything to indicate that the proper officer had any reasons to believe that the goods stored in the godown in question are liable to confiscation. However, for the time being, we are not going into this issue. We are trying to find a way out, by which, the seal can be removed without prejudice to the rights of the department to proceed against the dealers in accordance with law. Writ application is disposed off with certain directions issued.

Issues Involved:
1. Legality of the sealing memos issued by the GST authorities.
2. Authority of the GST officials to seal the godown.
3. Rights of the godown owner versus the actions of the GST authorities.
4. Duration and implications of the seal on the godown.
5. Compliance with procedural requirements under Section 67 of the CGST Act, 2017.

Issue-wise Detailed Analysis:

1. Legality of the Sealing Memos Issued by the GST Authorities:
The writ applicant sought relief to quash and set aside the sealing memos related to Godown No.14 situated at the Marketing Yard, Gondal. The memos dated 17th and 19th November 2018 indicated that the GST authorities sealed the godown due to reasons such as "authorized person not present," "to avail wrong ITC," "collected tax wrongly & not deposited to Govt. Treasury," "try to neglect searching team," and "non-cooperation in search process." The court noted that these reasons could be accusations against the dealers, but the writ applicant, being the godown owner, was not implicated in these accusations.

2. Authority of the GST Officials to Seal the Godown:
The GST authorities exercised their power under Section 67 of the CGST Act, 2017. Section 67(4) empowers the authorized officer to seal or break open the door of any premises where access is denied. The court acknowledged that the authorities had the power to seal the premises but questioned the indefinite duration of the seal without further action.

3. Rights of the Godown Owner Versus the Actions of the GST Authorities:
The writ applicant argued that as the godown owner, he had no involvement in the alleged contraventions by the tenants and that the seal should not be indefinite. The court agreed, noting that the owner should not suffer due to the actions of the tenants and that the authorities should have proceeded with the search and seizure of goods and documents if they believed them to be liable to confiscation.

4. Duration and Implications of the Seal on the Godown:
The court observed that the godown had been sealed since November 2018 without any further action by the authorities. The court found no justification for keeping the godown sealed for such a prolonged period, especially since the authorities had not undertaken any further search or seizure.

5. Compliance with Procedural Requirements Under Section 67 of the CGST Act, 2017:
The court examined Section 67(2) and Section 67(4) of the CGST Act, which outline the procedures for inspection, search, and seizure. The court noted that the proper officer must have reasons to believe that goods liable to confiscation or relevant documents are secreted in the premises. The court found no evidence that the proper officer had such reasons to believe in this case. The court directed the authorities to break open the seal, conduct the search, and seize any goods or documents liable to confiscation.

Conclusion:
The court disposed of the writ application with specific directions. The GST authorities were instructed to visit the godown, break the seal, and conduct a search on 10th February 2020. The writ applicant was directed to be present with ownership documents. The court emphasized that the authorities should focus on the goods and documents stored in the godown and not on the contractual relationship between the owner and the tenants. The writ application was disposed of with these directions, allowing the writ applicant to take over the possession of the godown after the search.

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