Sri Surendra Sharma vs. The State Of Assam And 3 Ors

Held

The Court held that the sealing of the Petitioner's office premises and keeping them sealed for four months was illegal, unauthorized, and contrary to the mandate of Section 67(4) of the Assam Goods and Services Tax Act, 2017. The Court reasoned that the power under Section 67(4) is to be exercised in conjunction with Section 67(2) for search and seizure, and crucially, only when access to the premises is denied. The materials on record did not indicate any denial of access by the Petitioner. Furthermore, the Court opined that the power under Section 67(4) is not for retaining seized goods as a store but is in furtherance of the power of search, ceasing to exist once search proceedings culminate with seizure. The Court also found the Order of Prohibition invalid as the goods listed were not liable for confiscation. The Court directed the de-sealing of the premises and handing over possession to the Petitioner. It also granted liberty to the Respondents to take custody of seized items if necessary, issuing a fresh Order of Seizure, and to consider providing copies of seized documents to the Petitioner.

Facts

The Petitioner, Sri Surendra Sharma, a tax consultant, challenged the sealing of his office premises by the Respondent Authorities. On April 1, 2026, Respondent No. 4, based on an authorization for search, inspected the Petitioner's office. During the search, documents, digital signatures, and electronic items were seized, and an Order of Seizure was issued. Subsequently, an Order of Prohibition was issued regarding specific office equipment. The Petitioner's office was then sealed. The Petitioner was arrested on April 2, 2026, in connection with a registered case, but later granted bail. The Petitioner submitted representations requesting the release of seized items, de-sealing of the office, and withdrawal of the prohibition order, which were not considered, leading to the present writ petition. The Respondents alleged the Petitioner was involved in passing fake Input Tax Credit (ITC) and tax evasion amounting to Rs. 6,68,77,172.44p, justifying the sealing to prevent tampering with evidence.

Key Issues

1. Whether the sealing of the Petitioner's office premises under Section 67(4) of the Assam Goods and Services Tax Act, 2017, was permissible when access was not denied during the search and seizure operations? (Question of law) 2. Whether the Order of Prohibition issued under FORM GST INS-03, pertaining to office equipment not involved in taxable supply, was valid? (Question of law) Petitioner's Arguments: - Section 67(4) of the Act of 2017 is not a standalone provision and is dependent on Section 67(2). The power to seal can only be exercised if access is denied during search and seizure. - The sealing of the office was a colourable exercise of power as no hindrance was caused by the Petitioner during the search. - The goods mentioned in the Order of Prohibition were office equipment and not goods liable for confiscation. Respondent's Arguments: - The Petitioner was involved in passing fake Input Tax Credit (ITC) on the strength of fake tax invoices without actual supply of goods or services, amounting to tax evasion. - The premises were sealed to prevent tampering of crucial evidence and to prevent the Petitioner from accessing computers, files, and documents until the investigation concluded.