The Allahabad High Court, in a significant ruling, has slammed the GST officials for seizing the goods inside the godown without jurisdiction.
The assessee, a manufacturer of PVC pipes, stores its raw materials and manufactured goods at a godown located on the same premises. Undisputedly, the assessee was not found involved in any transaction of transportation of any goods whether raw materials or finished goods. However, on 07.08.2018, the business premises of the petitioner was subjected to a search and seizure operation by Special Investigation Branch of the Commercial Tax Department, Agra. Arising therefrom, a Panchnama dated 07.08.2018 was drawn mentioning therein, amongst others, allegation of shortage of physical stock as compared to that recorded in the stock registers. On the next date i.e. 08.08.2018, the assessee moved an application to the S.I.B. authorities disputing the allegation of shortage of stock. According to the assessee, stock reconciliation could be made by taking into account the stock of raw materials and finished goods stored at its other godown that was not subjected to search and seizure proceedings, on 07.08.2018.
Thus, both authorities proceeded to issue separate show cause notices to the assessee under Section 129(3) of the Act with respect to the same search and seizure operation conducted by the Special Investigation Branch of the Commercial Tax Department, at the business premises of the petitioner, on 07.08.2018. Pursuant to the above notices, seizure orders have been passed. Tax and penalty has been demanded.
Justice Saumitra Dayal Singh observed that the provision of Section 129(3) of the Act could not be invoked to subject a godown premises to search and seizure operation unmindful of the Act that no action was taken or contemplated under Section 67 of the Act, as that would have mandated existence of “reasons to believe”, to subject that premise to search and seize goods or documents found therein.
“They not only closed their eyes to the power and jurisdiction that never existed but they deliberately described the vehicle being checked as “UPGODOWN02” and “GODOWON” (as has been noted above). That description was given by them, deliberately. Therefore, they cannot deny that they were aware that the subject search was not directed at any vehicle but at an immovable property namely a godown premise,” the Court said.
Criticizing the action of the officials, the Court held that “the Court does not wish to go deeper into the intention of the officers concerned in issuing such notices and drawing up such proceedings for which they had no jurisdiction as that would entail calling of personal affidavits of the officers at the cost of precious time of the Court. However, the officers are accountable for their acts. Therefore, let this order be communicated to the Commissioner Commercial Tax UP to look into the matter, call for explanation and take appropriate action commensurate to the misconduct, if any, that may be found committed by the erring officers and to take consequential and corrective action to avoid such occurrences, in future.”
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