Order Date – 07 December 2023

Parties: Bhagat Ram Om Prakash Argo Private Limited & Anr. Vs The Commissioner of Central Tax GST Delhi – East

Facts –

• The Petitioner, Prem Shankar Verma had  purchased a property from one Mr. Rajesh Kumar Anand for a sum of  ₹50,00,000/-. Mr. Rajesh Kumar Anand deposited the said consideration in a Fixed Deposit Receipt and  furnished the FDR as a collateral for securing bail of one of the accused  in another matter pending before the learned Special Judge.
• The learned Special Judge suspected the source of the  funds that were furnished, in the form of a FDR, as a security. Accordingly, the learned Special Judge by order dated 05.04.2023 had directed the Income Tax Department, GST  Department and Enforcement Directorate to check the source of ₹50,00,000/- received by the petitioners.

Issue –

• Whether the search autorization issued by the learned Special Judge is proper and valid?

Order –

• The Court observed that apart from the directions issued in  terms of the order dated 05.04.2023, there were no reasons for the  respondent to initiate the search against the petitioners under Section  67(1) of the CGST Act. The authorization issued is thus, patently  erroneous as none of the grounds as set out in the said authorization are  borne out from the information or material on the record of the  respondent. Concededly, the inspection was conducted pursuant to the order dated 05.04.2023, passed by the learned Special Judge.
• The Court has serious reservations as to whether any such directions could have been issued by the Special Judge for conducting a roving  and fishing inquiry by the GST authority. It is clear that the said  directions were given without reference to the statutory provisions of the CGST Act and without being cognizant of the powers of the GST authorities to conduct inspection, search and seizure operations under  the said Act.
• Insofar as the petitioners’ prayer that the documents be returned to the petitioners, is concerned, it is stated on behalf of the respondent that no documents have been seized, however, certain photocopies of the documents / documents were collected. Clearly, since the conditions for inspection under Section 67(1) of the CGST Act were not satisfied, the said documents are required to be returned to the petitioners.
• Accordingly the writ petition is disposed off and it is clarified that no further inquiries or action is required to be conducted or taken by the GST authorities, for complying with the order dated 05.04.2023 passed by the Special Judge.