Order Date – 05 December 2023

Parties: Santhosh Kumar Gupta Prop. Mahan Polymers Vs Union of India Through Secretary & Ors.

Facts –

• The Petitioner, Santhosh Kumar Gupta Prop. Mahan Polymers, was compelled to deposit an amount during the course of the search conducted under Section 67 of the CGST Act pursuant to the authorization issued in FORM GST INS-01 dated 11.11.2022.
• The petitioner claims that he was neither given the copy of the authorization nor was he informed of the reasons as to why the search was being conducted. The petitioner also claims that his statement was recorded but he was neither provided a copy of the statement nor the punchnama.
• Thus the petitioner claimed refund of the amount collected illegally.

Issue –

• 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 

Order –

• The Divisional Bench of Hon’ble High Court observed that 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 non-existent at his principal place of business, has a direct link in forming the belief that the petitioner wrongfully availed of the ITC. Hence there is 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.
• It is also not disputed that FORM GST DRC-03 had been submitted from the laptop carried by the visiting team. Thus, 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.