M/S. R.J. Trading Co. vs. Commissioner Of CGST, Delhi North & Ors.

Held

The Court held that the authorization for conducting the search and seizure at RJT's premises on March 5, 2021, was legally untenable. The Additional Commissioner, CGST Delhi North Commissionerate, exercised powers without independent application of mind, merely acting upon a request from the Joint Commissioner (AE), Gautam Budh Nagar, to ascertain RJT's existence as an L2 supplier. The Court emphasized that the power of search and seizure is intrusive and must be wielded with utmost care, requiring 'reasons to believe' as per Section 67(2) of the CGST Act. The Court found that the jurisdictional ingredients for issuing the authorization were absent. Consequently, the search and seizure conducted by the CGST Delhi North Commissionerate were declared unlawful. Both the order of seizure and prohibition dated March 5, 2021, were set aside. The subject documents were ordered to be released to RJT at the earliest, with liberty granted to the concerned officer to retain copies for further investigations. The Court did not delve into the argument that the inspector exercised power without proper authority, as the authorization itself was found to be invalid. The application for provisional release of goods was also rendered moot by this decision.

Facts

M/s. R.J. Trading Co. (RJT), a registered entity dealing in cigarettes, filed a writ petition challenging the search and seizure of its goods. The Directorate General of Goods and Services Tax Intelligence (DGGI) conducted a search on February 13, 2021, and seized documents. A subsequent search on March 5, 2021, by officers from CGST Commissionerate, Gautam Budh Nagar, authorized by the Additional Commissioner, CGST Delhi North Commissionerate, led to the detention of goods. RJT contended that the search and seizure were illegal as they did not comply with Section 67 of the CGST Act, 2017. The petitioner claimed to have complied with GST provisions, including filing returns and depositing taxes. The dispute centers around the validity of the authorization for the search and seizure conducted on March 5, 2021, and the subsequent detention of goods.

Key Issues

1. Whether the authorization for conducting search and seizure at RJT's premises on March 5, 2021, was issued in compliance with the prerequisites stipulated in Section 67(2) of the CGST Act, 2017? Petitioner's Arguments: RJT argued that the search and seizure were illegal because the authorization for the search on March 5, 2021, was not based on independent application of mind by the proper officer, but rather a mechanical exercise based on a request from another authority. They contended that the Additional Commissioner, CGST Delhi North Commissionerate, lacked the jurisdictional ingredients to issue the authorization. RJT also asserted that the goods seized were supported by valid invoices, e-way bills, and transporter challans, and that a significant consignment was received during the search itself. Revenue's Arguments: The revenue contended that the search and seizure were conducted in accordance with the law. While not explicitly detailed in the provided text, their defense would likely involve asserting the validity of the authorization and the necessity of the search based on information available to them. They also made a bald assertion that the documents seized were not relevant, but did not elaborate or provide supporting evidence.