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2023 (12) TMI 292 - HC - GSTSearch and seizure - reasons to believe - whether the inspection carried out by the respondent authorities is illegal for want of reasons to believe that the conditions as set out in Section 67(1)(a) of the CGST Act are satisfied? - HELD THAT - The interpretation of the expression reasons to believe in Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I Calcutta Anr. 1960 (11) TMI 8 - SUPREME COURT is instructive in interpreting the said expression as used in Section 67 of the CGST Act as well. The sufficiency of the reasons is not amenable to judicial review. So long as there is material or information, which supplies a rational basis for forming a belief that the conditions as stipulated under Section 67(1) of the CGST Act are satisfied, the search or inspection authorized under the said section cannot be faulted. In the present case, the information that the petitioner had purchased the goods from a supplier, which was found to be nonexistent at his principal place of business, has a direct link in forming the belief that the petitioner wrongfully availed of the ITC - there are no ground to declare any search or inspection conducted on 12.11.2022 as illegal or vitiated on the ground that there was no reason to believe that the petitioner had wrongfully availed the ITC. Thus, there are no merit in the petitioner s contention that the inspection conducted by the central officers were illegal. The provisions of Section 6(2)(b) of the CGST Act do not preclude the central officers from conducting an inspection for concluding an ongoing investigation merely because a prior inspection or search was conducted by the DGST authorities - the respondents are directed to refund the sum of ₹10,00,000/- deposited by the petitioner in FORM GST DRC-03 on 12.11.2022. Petition disposed off.
Issues Involved:
1. Legality of the search conducted under Section 67 of the CGST Act. 2. Whether the petitioner was coerced into depositing Rs. 10,00,000. 3. Entitlement to a refund of the deposited amount. 4. Supply of FORM GST INS-01 and other documents. Summary: Issue 1: Legality of the Search The petitioner challenged the search conducted on 12.11.2022 under Section 67 of the CGST Act on two grounds: the authorization was issued mechanically without "reasons to believe" as required under Section 67(1)(a), and the search was illegal due to prior similar proceedings by the Delhi Goods & Services Tax Authorities, invoking Section 6(2)(b) of the CGST Act. The court referred to the interpretation of "reasons to believe" from *Calcutta Discount Co. Ltd. v. Income Tax Officer* and concluded that the information about the petitioner's transactions with non-existent suppliers provided a rational basis for the belief that the petitioner wrongfully availed ITC. Hence, the search was not illegal or vitiated. Issue 2: Coercion into Depositing Rs. 10,00,000 The petitioner claimed he was coerced into depositing Rs. 10,00,000 during the search. The court noted that the deposit was made in FORM GST DRC-03 from the laptop carried by the visiting team and the petitioner claimed coercion immediately by a letter dated 14.11.2022. The court found this issue covered by previous decisions in *Vallabh Textiles v. Senior Intelligence Officer* and *Lovelesh Singhal v. Commissioner, Delhi Goods & Service Tax*. Hence, the court directed the respondents to refund the amount. Issue 3: Entitlement to Refund The court directed the respondents to refund the sum of Rs. 10,00,000 deposited by the petitioner, clarifying that this order would not preclude the respondents from taking necessary steps to protect the interest of the Revenue, including actions under Section 83 of the CGST Act or Rule 86(A) of the CGST Rules if conditions are satisfied. Issue 4: Supply of Documents The petitioner's request for a copy of FORM GST INS-01, Panchnama, and recorded statement was deemed unnecessary as the respondents affirmed that no statement was recorded and no goods or documents were seized under Section 67(2) of the CGST Act. Conclusion: The petition was disposed of with directions to refund the deposited amount, while allowing the respondents to take further steps to protect revenue interests if necessary.
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