2022 (8) TMI 751 - HC - GST

Search and seizure - Seeking mandamus for a direction to the respondents to refund of amount collected from his residence - direction to the respondents to initiate proceedings for assessment under Section 73/74 of the Central Goods and Services Tax Act, 2017 - section 67 of CGST Act. It is the petitioner s case that, on a combined reading of Section 67(2), second proviso and Section 67(3), the amount of Rs.9.39 lakhs collected from the petitioner s residence on 14.03.2019 would have to be returned, since it has not been appropriated towards the demand quantified under show cause notice dated 31.07.2021. HELD THAT - The provisions of Section 67(2) authorise search and seizure of premises by the authorised officials, who upon conduct of such search, may seize such documents, books or things as may be, in their opinion, necessary to determine the duty in a particular case. The second proviso protects the interest of the assessee by stating that such documents/books/things referred to in sub-section (2) or any other document/books/things relied upon by a taxable person or any other person that have not been relied upon for the issue of notice under this Act shall be returned within a period of 30 days from date of issue of notice. The use of the phrase relied upon is wide and in this context, my attention has been drawn to the show cause notice itself, which at paragraphs 2.2.1.2(vii) and 4.3.6(i) thereof, makes specific reference to the amount of Rs.9.30 lakhs that has been seized. It is correct that the aforesaid amount has not been appropriated towards the liability - however, such appropriation is not a condition under Section 67(2) or (3) and the condition is only that the asset seized must be relied upon by the authorities for issue of show cause notice. Thus, in the present case, the references to the amount in the course of the show cause notice would, in my considered view, justify the retention of the amount till proceedings for adjudication are complete. The direction of the Division Bench is to complete the proceedings within a time frame of four months. The petitioner appears to have made a request for cross examination of certain parties which request shall be considered by the respondent in accordance with law. The proceedings, including consideration of request of cross examination and grant of request if the respondent believe that such request is to be granted, shall be completed within a period of 6 weeks from date of issuance of this order. Petition dismissed.

Summary

Issues:
1. Mandamus for refund of seized amount
2. Compliance with timelines set by Division Bench
3. Interpretation of Section 67 of the Central Goods and Services Tax Act, 2017

Analysis:
1. The petitioner sought a mandamus for the refund of an amount seized from his residence, which was collected without any show cause notice or assessment order. The company, where the petitioner is a Director, also filed related Writ Petitions seeking assessment proceedings under the CGST Act and refund of the collected amount. The court directed completion of assessments within a fixed time frame and held the refund subject to anticipated assessment.

2. The revenue filed Writ Appeals against the order, which were partially allowed by extending the time limit for proceedings. Contempt Petitions were filed for non-compliance with timelines, attributed to delays caused by the Covid Pandemic. The Division Bench granted an extended time limit for assessment proceedings, emphasizing cooperation between parties to adhere to timelines.

3. The main issue revolved around the interpretation of Section 67 of the CGST Act concerning the powers of Inspection, Search, and Seizure. The petitioner argued for the return of the seized amount, while the respondents contended that retention was necessary until completion of proceedings. The court analyzed the provisions of Section 67(2) and (3), emphasizing the term "relied upon" in the context of the show cause notice.

4. The court held that the seized amount need not be appropriated towards liability immediately and could be retained until the completion of adjudication proceedings. The language of the second proviso of Section 67 supported this interpretation, allowing the department to retain assets until the conclusion of proceedings. Consequently, the mandamus for the refund was rejected.

5. The court directed completion of proceedings within a specified time frame, addressing the petitioner's request for cross-examination. Both parties assured cooperation in adhering to timelines. It was clarified that upon conclusion of adjudication, the seized amount would be refunded unless appropriated in accordance with the law. The Writ Petition was dismissed, with no costs incurred.