M/S. Sri Kamakshi Textiles vs. The Assistant Commissioner (State Tax)

Held

The Court held that the respondents cannot now claim that a second authorization under Section 67(2) of the SGST Act was given, as it was previously held in an identical case (W.P.No.41408 of 2018) that the revenue's contention regarding such authorization did not inspire confidence. The Court found that the entire seizure proceedings, initiated on February 7, 2018, and all subsequent actions, including the show cause notice for confiscation, were in violation of Section 67(2) of the SGST Act. The Court reasoned that the order of seizure did not satisfy the procedural safeguards mandated by the Act. Consequently, the impugned seizure order dated February 7, 2018, was declared unconstitutional and violative of Section 67(2) of the SGST Act. All consequential orders were deemed unsustainable. The Court allowed the writ petition, stating that the respondents are at liberty to initiate fresh action, if advised, strictly in accordance with the procedure established by law. No issue was expressly left undecided.

Facts

The petitioner, a registered dealer under the CGST and SGST Acts, is engaged in the business of readymade garments. The first respondent, not being the petitioner's jurisdictional Assessing Authority, conducted an inspection of the petitioner's business premises on February 7, 2018, based on an authorization under Section 67(1) of the SGST Act granted by the second respondent. During this inspection, which extended late into the night, the first respondent seized readymade garments valued at Rs. 12,30,888/-, along with all books of accounts and records. The petitioner contends that this seizure was made without a further authorization under Section 67(2) of the SGST Act from the second respondent. Subsequently, the first respondent issued a show cause notice on July 30, 2018, proposing confiscation of the seized goods and imposition of tax and penalty. The petitioner challenges the seizure order and all consequential proceedings, including the show cause notice, as being without jurisdiction.

Key Issues

1. Whether the order of seizure dated February 7, 2018, and all subsequent proceedings, including the show cause notice dated July 30, 2018, are without jurisdiction and illegal, in violation of Section 67(2) of the SGST Act? The petitioner argued that the seizure was made without the requisite authorization under Section 67(2) of the SGST Act, rendering the seizure order and all consequential actions illegal and unsustainable. The petitioner relied on a previous order of the High Court in W.P.No.41408 of 2018, where similar antedated authorizations were not found to inspire confidence, and the court held that such authorizations did not meet the statutory requirements. The petitioner asserted that based on these prior findings, their contentions merit consideration and they are entitled to the reliefs sought. The respondents, through the learned Government Pleader, contended that even if the required authorization under Section 67(2) was not initially provided, the jurisdictional officer is required to perform the necessary exercise, and therefore, the matter should be remanded to the jurisdictional authority. They cited the decision in Dekars Fires & Security Systems Pvt. Ltd. Hyd. Vs. The Deputy Commissioner (CT), Secunderabad Division, Hyderabad and others.