2020 (9) TMI 686 - HC - GST

Principles of Natural Justice - denial of supply of copies/extracts of the seized documents - denial of reasonable opportunity to defend - Section 67(5) of the CGST Act, 2017 - HELD THAT - From order sheets as detailed, ever since conduction of search till passing of the impugned order, it is evident that due and sufficient opportunity was afforded to petitioner to produce the remaining relevant documents which had not been recovered during search. The explanation given by petitioner for not producing documents sought by Revenue was that the same are maintained in soft copy in computer while in regard to other documents sought by the Revenue, there was no explanation. This obviously gives an impression that the remaining relevant documents which could not be seized during search are still in possession of petitioner and therefore supply of copies or extracts of the seized documents to petitioner can enable the petitioner to carry out interpolations for reducing or depressing tax liability and with corresponding loss to the Revenue. The formation of this opinion is founded upon reasonable apprehension in the mind of the competent authority that supply of copies/extracts of seized documents can lead to adversely affecting the investigation. Once it is held that discretion available to the competent authority u/S. 67(5) of the CGST Act had been reasonably exercised while refusing to accede to the request for supply of copies/extracts of seized documents, it cannot be said that the competent authority has travelled beyond it's jurisdictional purviews prescribed by law and therefore in the absence of jurisdictional error in the order impugned, no interference is called for, especially in the face of unavailed alternative statutory remedy of appeal. Petition dismissed.

Summary

Issues involved:
Petitions assailing tax liability, interest, and penalty for different assessment years due to denial of copies of seized documents under Sec. 67(5) of the CGST Act.

Analysis:
1. Denial of Copies of Seized Documents:
- Petitioner challenged tax liability, interest, and penalty for different assessment years due to denial of copies of seized documents, alleging violation of principles of natural justice.
- Search conducted at petitioner's firm led to seizure of certain documents, with some handed over and some seized by official respondents.
- Petitioner requested copies of seized documents but was denied by competent authority under Sec. 67 of the CGST Act, citing concerns of potential manipulation or interference with investigation.
- Despite multiple opportunities, petitioner failed to produce all required documents, leading to an ex parte decision by the competent authority on tax liability.

2. Legal Arguments and Precedents:
- Petitioner relied on legal precedents from Bombay High Court, Kerala High Court, and Supreme Court to argue that Sec. 67 of the CGST Act obliges the competent authority to supply copies of seized documents unless it prejudicially affects the investigation.
- Emphasized that the supply of copies would not enable manipulation or interference once documents are seized by the authority during the search.

3. Court's Decision:
- The court declined admission to the petitions, finding that the competent authority had exercised discretion judiciously in withholding copies of seized documents to prevent potential manipulation.
- Reasoned that the authority's opinion on adverse effects on the investigation was reasonable, and no jurisdictional error was found in the impugned order.
- Since the statutory appeal remedy was available but unavailed, the court dismissed all three petitions at the admission stage without costs.

In conclusion, the High Court upheld the competent authority's decision to deny copies of seized documents, considering the potential risks of manipulation and interference. The court emphasized the authority's judicious exercise of discretion under Sec. 67(5) of the CGST Act and the availability of statutory appeal as an alternative remedy, leading to the dismissal of the petitions challenging tax liability, interest, and penalty for different assessment years.