2019 (2) TMI 389 - HC - GST

Jurisdiction - power of respondent to seal the business premises - access to the business premises was not denied by the petitioner - software stopped functioning all of a sudden along with internet connection abruptly. - seeking co-operation from the assessee for inspection/search of the computer system and other records available in the premises - Held that - Section 67 4 of the Act contemplates that the officer authorized under Sub-section 2 shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. This Court is of the considered view that the justice would be sub-served in directing the Revenue to unseal the premises in question on 04.02.2019 at 11.00 a.m., which is convenient to the petitioner and the petitioner shall co-operate for inspection/search of the premises in question, including the computer system - the date is fixed on 08.02.2019 at 11.00 a.m., to unseal the premises in question - petition allowed.

Summary

Issues:
1. Validity of the order passed under Section 67[4] of the Karnataka Goods and Services Tax Act, 2017 / Central Goods and Services Tax Act, 2017.
2. Authority of the respondent to seal the business premises.
3. Denial of access to computer system leading to sealing of premises.
4. Unsealing of the premises and cooperation for inspection/search.

Analysis:

1. The petitioner challenged the order passed by respondent No.3 under Section 67[4] of the Act. The petitioner, a private limited company, contended that the authorization for search was based on mere suspicion without proper authority. However, the original file presented to the Court showed a valid authorization issued by the Additional Commissioner of Commercial Taxes, authorizing the inspection/search/seizure of the premises. The Court found the argument of the petitioner's counsel invalid based on the existence of the authorization.

2. Section 67[4] of the Act empowers the authorized officer to seal premises where access is denied. The Revenue contended that the computer system storing crucial business transaction data suddenly malfunctioned during the inspection, hindering the verification process. As a result, the officers invoked Section 67[4] to seal the premises due to denial of access to the computer system. The petitioner company directors were accused of not addressing the disruption promptly, leading to the sealing of the premises.

3. The learned Additional Government Advocate, representing the respondent No.3, agreed to unseal the premises in the presence of the petitioner, subject to cooperation for the inspection/search of the computer system and other records. The Court acknowledged this agreement and directed the Revenue to unseal the premises on a specified date convenient to the petitioner for the inspection/search, emphasizing cooperation from the petitioner during the process.

4. Before finalizing the order, the petitioner's counsel requested a revised date for unsealing the premises, which was accepted by the learned Additional Government Advocate. Consequently, a new date was fixed for unsealing the premises, ensuring compliance with the inspection/search process. The Court disposed of the writ petition with these directives, emphasizing the importance of cooperation between the parties during the inspection/search of the premises.