GST Officers must not abuse intrusive power of search & seizure conferred upon them: Delhi High Court

Read Judgement: M/S. R.J. TRADING CO v. COMMISSIONER OF CGST, DELHI NORTH & ORS 

LE Staff

New Delhi, July 23, 2021: The Delhi High Court has ruled that GST Officers concerned should bear in mind that the search and seizure power conferred upon them is an intrusive power which needs to be wielded with utmost care and caution. 

The Division Bench of Justice Rajiv Shakdher and Justice Talwant Singh while setting aside the orders of seizure and prohibition, observed that search and seizure conducted by CGST Delhi North Commissionerate were unlawful. 

The petitioner in the present case had sought relief of setting aside and quashing the order of prohibition whereby goods (Gold Flake Super Star cigarettes) inventoried in panchnama dated March 5, 2021 have been detained by the GST official. 

The petitioner had also sought costs and direction to release the goods detained under the prohibition order by declaring the search conducted on the premises of RJ Trading Co. as illegal since it did not align with the provisions of Section 67 of the CGST Act, 2017. 

The Division Bench opined that the Additional Commissioner, CGST Delhi North Commissionerate exercised his powers for according authorization to conduct search and seizure, at RJ Trading Co.’s premises, even though the jurisdictional ingredients were absent. 

“The request of Joint Commissioner (AE), Gautam Budh Nagar conveyed through the communication, was only to ascertain as to whether RJT, which was the L2 supplier of M/s Mridul Tobie Inc., was in existence. There was no independent application of mind by the Additional Commissioner, CGST Delhi North Commissionerate,” said the High Court. 

The Bench said that the officers concerned should bear in mind that the search and seizure power conferred upon them is an intrusive power, which needs to be wielded with utmost care and caution. The legislature has, therefore, consciously ring-fenced this power by inserting the controlling provision, i.e., “reasons to believe”, the HC held. 

Since the authorization accorded by the Additional Commissioner is legally untenable, as per the Bench, this facet of the case — order of prohibition and seizure — need not be dwelled upon any further, it said. 

At the same time, the High Court cautioned the officers to bear in mind in the future that prescribed forms i.e. GST IN – 02 and GST IN – 03 are for guidance, and that necessary modification is made while passing orders depending upon who is conducting search and seizure. 

For the very same reason, the application filed on behalf of the petitioner which inter alia seeks a direction for setting aside the order, directing the provisional release of goods, based on the terms contained therein, stood accepted by the High Court.