M/S Sanwaria Sweets Private Limited vs. Union Of INDIA Through Its Secretary

Held

The Court held that the respondents had sufficient material to form the requisite 'reason to believe' under Section 12F read with Section 18 of the Act of 1944 and Section 100(4)(5) of the Cr.P.C. to conduct the search. The Court found that the search and seizure proceedings were a continuation of earlier investigations initiated before the enforcement of the GST Act, 2017, and were thus saved by Section 174 of the GST Act. Regarding the relevance of seized documents, the Court noted that incriminating material was found from the Managing Director's cabin, linking him to an unregistered factory. The Court stated that merely because some documents, including original title deeds, were returned, it would not vitiate the entire action, as the officials acted bona fide. The use of the word 'resumed' instead of 'seized' was not considered sufficient to invalidate the action. The Court also held that an error in seizing documents that might ultimately be found irrelevant does not by itself vitiate the search, provided there were prima facie grounds to justify the belief of the searching officer. The Court declined to scrutinize the 'reason to believe' under a 'legal microscope' at this premature stage, as the seized documents would be subject to scrutiny during any future prosecution. Consequently, the writ petition was dismissed, and the review petitions were disposed of as they merged with the final judgment.

Facts

M/s. Sanwaria Sweets Private Limited (the petitioner) filed a writ petition challenging the search conducted by the Directorate General of Goods and Services Tax Intelligence (DGGSTI) on August 27, 2017, at its Jaipur premises. The petitioner alleged the search was arbitrary, malicious, and illegal, conducted without jurisdiction and in contravention of the Central Excise Act, 1944. The petitioner sought the return of seized documents, including original sale/title deeds of properties, and action against the DGGSTI officers. The DGGSTI and its officer filed review petitions against a previous court order directing action against the officers and restraining coercive action against the petitioner. The DGGSTI contended that the search was based on intelligence and relevant documents were seized. The petitioner argued that the seized documents, particularly title deeds, were not relevant to proceedings under the Act and that the procedure for seizure was not followed correctly, citing the use of the word 'resumed' instead of 'seized'.

Key Issues

1. Whether the search conducted by the DGGSTI officers on August 27, 2017, at the petitioner's premises was arbitrary, malicious, motivated, and illegal, being contrary to the provisions of the Central Excise Act, 1944, and without jurisdiction, particularly concerning the seizure of documents like title deeds of immovable properties (Section 12F and Section 18 of the Act of 1944 read with Section 100(4) and (5) of the Cr.P.C.)? 2. Whether the proceedings initiated prior to the enforcement of the Goods and Services Tax (GST) Act, 2017, were saved by Section 174 of the GST Act, 2017? Petitioner's arguments: The search was illegal as it went beyond the scope of Section 12F of the Act of 1944, which permits seizure only of documents 'useful for or relevant to any proceedings under this Act.' Seizing title deeds of immovable properties was not permissible. The procedure was flawed, with documents being 'resumed' instead of 'seized' as required by Section 100(5) of the Cr.P.C. The search also lacked the presence of independent witnesses as mandated by Section 100(4) of the Cr.P.C. The action was malicious and motivated. Respondents' arguments: The search was conducted based on intelligence and sufficient material to form a 'reason to believe' under Section 12F read with Section 18 of the Act of 1944. The seized documents were relevant to the investigation. The search was a continuation of prior intelligence gathering and simultaneous searches conducted on January 30, 2017. The use of the word 'resumed' instead of 'seized' was a minor procedural irregularity that did not vitiate the entire action. The court should not scrutinize the 'reason to believe' with excessive detail.