2023 (9) TMI 1178 - HC - GST

Legality of Search Authorisation - it is alleged that the same was issued without the proper officer having any reason to believe that the conditions as specified under Section 67(1) of the Central Goods Services Tax Act 2017 were complied with - HELD THAT - There are serious reservations whether any such roving and fishing inquiry under the Central Goods and Services Act 2017 could have been directed to be conducted by the Special Judge. Further the proper officer can authorise the search only if the conditions specified in Section 67 of the Act are fulfilled. Issue notice - List on 17.10.2023.

Summary

Issues involved: Impugning search authorization u/s 67(1) of the Central Goods & Services Tax Act, 2017; Legality of search authorization; Directions issued by Special Judge for inquiry.

Impugning search authorization u/s 67(1) of the Central Goods & Services Tax Act, 2017:
The petitioners challenged the search authorization dated 22.08.2023, contending it was illegal as the proper officer lacked the requisite reason to believe conditions u/s 67(1) of the Act were met. The search was prompted by Special Judge's directions to various departments to investigate the source of funds received by the petitioners. Petitioner no. 2's property purchase for Rs. 50,00,000 raised suspicions, as the funds were linked to a bail collateral. The Court expressed doubts on the legitimacy of such a broad inquiry and emphasized that the proper officer's search authorization hinges on meeting the Act's specified conditions.

Legality of search authorization:
The Court raised concerns regarding the legality of the search authorization issued without proper compliance with u/s 67(1) of the Act. It questioned the validity of the search conducted based on directions from the Special Judge, emphasizing the necessity for the proper officer to adhere strictly to the Act's provisions before authorizing a search. Notice was issued to the respondent, who agreed to respond and requested time to prepare a counter affidavit within two weeks.

Directions issued by Special Judge for inquiry:
The search stemmed from directions by the Special Judge (P.C. Act) to investigate the origin of Rs. 50,00,000 received by the petitioners. The funds were traced to a property purchase and used as bail collateral, prompting further scrutiny. The Court highlighted the need for the respondent to provide relevant files containing the search directives, and proceedings following the search were stayed until the next hearing scheduled for 17.10.2023.