2022 (9) TMI 1212 - HC - Central Excise

Rejection of de-sealing of the machine and DG sets - non-filing of fresh declaration in compliance with Trade Notice 04/2020-2021 dated 18.01.2021 - HELD THAT - The contents of the Panchnamas filed as Annexure-P/1 to P/4 along with the writ petition clearly reveal that these panchanamas were pasted at the front gate of the factory premises. The security guard was also present at the time of the search therefore, it cannot be believed that the petitioner did not know about these searches. Even otherwise, after a lapse of two years challenging the panchanamas is of no consequence when show cause notice has been issued to the petitioner. The petitioner may raise all the available grounds in reply to the show cause notice before the adjudicating authority. Shri Malhotra learned Counsel for the petitioner has failed to point out any prejudice caused to the petitioner for the aforesaid searches on various dates which have culminated into the issuance of show cause notice. Panchanamas are part of the search and investigation in the factory of the petitioner. The petitioner will have a complete opportunity to dispute the contents of the panchanamas in the adjudicating proceedings. Petition dismissed.

Summary

Issues:
Challenge to the validity of panchnamas dated 15.06.2020, 17.06.2020, 04.07.2020, and 06.07.2020 under CGST Act, 2017.

Analysis:

Issue 1: Challenge to Panchnamas
The petitioner, a company engaged in cigarette manufacturing, challenged the panchnamas dated 15.06.2020, 17.06.2020, 04.07.2020, and 06.07.2020 conducted by GST authorities. The petitioner alleged that the authorities sealed the generator sets and manufacturing machines citing non-functionality and reduced production capacity. The petitioner sought de-sealing, which was denied for non-compliance with Trade Notice No.04/2020-2021. The petitioner approached the court challenging the denial and the validity of the Trade Notice.

Issue 2: Violation of CGST Act
The petitioner contended that multiple inspections/searches conducted on various dates post-receipt of the show cause notice on 08.06.2022 were in violation of Section 67(1) & (2) of the CGST Act. The petitioner argued that these actions should be set aside. The petitioner had filed writ petitions earlier without disclosing the subsequent show cause notice. After the disposal of the writ petitions, the petitioner filed the present petition on similar grounds, supported by judgments of the Apex Court in related cases.

Judgment
The court noted that the petitioner had the opportunity to challenge the panchnamas during the adjudication process initiated by the show cause notice. The court found no demonstrated prejudice to the petitioner due to the searches conducted, which led to the issuance of the show cause notice. Emphasizing that the petitioner could raise all available grounds in response to the notice, the court dismissed the present petition as lacking substance and merit, without issuing notice to the other party.