2020 (4) TMI 629 - HC - GST

Jurisdiction - Validity of order of prohibition - confiscation of goods - authority competent to pass the prohibition order - Section 67(2) of CGST Act - It is urged that the authority competent to pass the order should not be below the rank of Joint Commissioner while the order impugned has been passed by the Deputy Assistant Commissioner, who is not competent to pass the order of Prohibition. HELD THAT - As per the provisions of Section 67(1) of the Act, power of inspection is specified to an officer not below the rank of joint commissioner. The said officer for the purpose of search as specified in Section 67(1) (a) and (b) may authorize in writing any other officer of Central Tax for inspection of any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown, as the case may be. Similar is the provision of Section 67(2) of the Act. In this view of the matter and looking to the order of prohibition so passed in GST INS 03, the said order passed by respondent No. 1, without reference to the order of authorisation in writing, is illegal and without jurisdiction. Therefore, it is hereby set aside - Petition allowed.

Summary

Issues:

1. Jurisdiction of the authority to pass an order of Prohibition under Section 67(2) of the Central Goods and Services Tax Act, 2017.

Analysis:

Jurisdiction of the Authority:
The writ petition challenged the order of Prohibition issued by the Deputy Assistant Commissioner, questioning the competence of the officer to pass such an order under Section 67(2) of the CGST Act. The petitioner argued that the order of prohibition, confiscating goods, was unsustainable as the authority passing it should not be below the rank of Joint Commissioner as per the Act. The Government Pleader for Commercial Tax, while opposing the prayer, agreed to adjudicate the case on merits. The High Court noted that the issue of jurisdiction regarding the authority in the matter of search, seizure, and confiscation was not explicitly addressed in the impugned order, but it was a legal issue that could be decided on merits. The Court analyzed the relevant provisions of Section 67(1) and (2) of the Act, emphasizing the requirement that the officer, not below the rank of Joint Commissioner, may authorize in writing any other officer for inspection and seizure purposes.

Interpretation of Section 67(1) and (2) of the Act:
The Court interpreted Section 67(1) to empower an officer not below the rank of Joint Commissioner to authorize another officer for inspection in cases of suspected tax evasion or contravention of the Act. Similarly, under Section 67(2), if an officer has reasons to believe that goods are liable for confiscation, he may authorize in writing another officer for search and seizure. The Court highlighted the necessity of written authorization for inspection and seizure activities under the Act. In the case at hand, the order of Prohibition issued by the Deputy Assistant Commissioner lacked the required written authorization from the competent officer specified in Section 67(2), rendering it illegal and without jurisdiction. Consequently, the Court set aside the order, clarifying that the decision was based on the authority's competency and not the merits of the case.

Conclusion:
The High Court allowed the Writ Petition, emphasizing the importance of adherence to the statutory provisions regarding the authority's jurisdiction in matters of search, seizure, and confiscation under the CGST Act. The Court's decision focused on the procedural aspect of written authorization by the competent officer, highlighting the necessity for compliance with legal requirements to ensure the validity of orders issued under the Act.