Maa Bhagwati Spongiron PVT. LTD. vs. The Union Of INDIA

Facts

The petitioner filed a writ petition before the Patna High Court challenging the actions of GST authorities. The petitioner alleged that their accountant was forcibly made to sign a Panchnama on January 22, 2021, by respondent authorities. The Panchnama was prepared on the same day. The petitioner also questioned the legality of search and seizure operations conducted under Section 67 of the CGST Act, 2017, in light of a notice issued under Section 71 of the same Act. The petitioner sought expeditious disposal of the matter, asserting that the seized material was legitimately procured. The High Court noted that the averments in Paragraph 12 of the petition regarding the forced signing of the Panchnama could not be substantiated by cogent material on record.

Held

The High Court held that the power exercised under Section 67 of the CGST Act, 2017, for search and seizure is distinct, separate, and independent of the power to be exercised under Section 71 of the Act. The intent, purpose, and scope of both sections are independent and not subject to each other. While a notice under Section 71 was issued, the officer authorized to conduct search and seizure under Section 67 acted lawfully based on subjective satisfaction and reason to believe. The Court observed from the Panchnama that two independent witnesses were associated before the search and seizure operations commenced, and the search was conducted in their presence. The Court clarified that it was not expressing an opinion on the facts but only stating that the record did not reveal the search and seizure operations to be illegal, except for the observations made regarding the unsubstantiated averments. The Court disposed of the petition on mutually agreeable terms, directing the petitioner to cooperate with the competent authority, appear on a specific date, and allowing for virtual proceedings. The Court also provided a window for the petitioner to file an appeal within four weeks, with the issue of limitation not coming in the way.

Key Issues

1. Whether the search and seizure operations conducted under Section 67 of the Central Goods and Services Tax Act, 2017, were illegal, particularly in light of a notice issued under Section 71 of the Act. 2. Whether the averments made by the petitioner regarding their accountant being forcibly constrained to sign the Panchnama could be substantiated. Petitioner's arguments: The petitioner argued that the search and seizure operations were illegal and that their accountant was coerced into signing the Panchnama. They also contended that the seized material was legitimately procured and sought expeditious disposal of the matter. Revenue's arguments: The revenue authorities, represented by Dr. K.N. Singh, ASG, and Mr. Anshuman Singh, Advocate, did not explicitly record arguments on the specific issues raised by the petitioner. However, their presence and participation in the proceedings indicate their defense of the actions taken by the GST authorities.