2021 (3) TMI 854 - HC - GST

Validity of search order and summons issued - reasons to believe of suppression of facts present or not - Section 67 of the CGST Act, 2017 - HELD THAT - The respondents are directed to produce the record in order to enable the Court to examine as to whether the condition precedent of recording the 'reasons to believe' is present in the instant case - Upon the production of the documents, the respondent authorities may assess the tax payable by the petitioner. If the tax payable can be assessed the petitioner may deposit the tax with the authorities for securing a release of the goods under Section 67(6) of the Act of 2017. List on 22.03.2021.

Summary

Issues:
1. Challenge to search order and summons under Section 67 of the Central Goods and Services Tax Act, 2017.
2. Requirement of 'reasons to believe' prior to inspection, search, and seizure.
3. Agreement to deposit tax for release of perishable goods under Section 67(6) of the Act.

Analysis:
1. The petitioners, who are dealers of arecanuts, challenged the search order and summons issued under Section 67 of the CGST Act, 2017. The counsel for the petitioner contended that the respondents must have 'reasons to believe' that a taxable person has committed specific violations before conducting such actions. The court directed the respondents to produce records to verify if the condition of 'reasons to believe' was met in this case.

2. The counsel for the petitioner highlighted the absence of recorded 'reasons to believe' as a condition precedent before inspection, search, and seizure under Section 67 of the Act. The court acknowledged this argument and ordered the respondents to provide evidence to ascertain whether the necessary reasons were documented before the said actions were taken.

3. In consideration of the perishable nature of the goods involved, the petitioner expressed willingness to deposit the tax payable to secure the release of the goods under Section 67(6) of the Act. The GST department's counsel stated that the tax amount must be determined before any release of perishable goods. It was agreed that the petitioner would visit the GST office with required documents for tax assessment on a specified date. If the tax amount is assessed, the petitioner can deposit it for the release of goods.

Overall, the court directed the parties to follow the procedure for tax assessment and potential deposit for the release of goods, emphasizing the importance of producing all relevant documents during the process. The case was listed for further proceedings on a specific date.