Devesh Radheshyamji Kabra vs. State Of Gujarat

Facts

The writ-applicant, Devesh Radheshyamji Kabra, filed a writ application before the Gujarat High Court challenging an order of prohibition dated July 4, 2019, passed by the State Tax Officer-4, Unit-18, Ahmedabad (Respondent No. 2). The order was issued under Section 67(2) of the GST Act, 2017. The petitioner sought to quash this order and stay further proceedings. The learned counsel for the petitioner was unable to join the video conference, but the learned AGP for the respondents provided an overview of the matter. The core of the dispute revolves around the seizure of goods and the subsequent inaction by the revenue authorities.

Held

The Court held that the impugned order of prohibition had outlived its life and was liable to be quashed and set aside. The reasoning was based on a plain reading of Sub-section (7) of Section 67 of the GST Act, which mandates that if no notice is given within six months of the seizure of goods under Sub-section (2), the goods shall be returned to the person from whom they were seized. The Court noted the proviso allowing for an extension of this period by the proper officer for a further period not exceeding six months on sufficient cause being shown. However, the learned AGP, upon instructions, made a statement to the Court that no notice had been issued till that date as contemplated under Sub-section (7) of Section 67, and there had been no extension of the time period. Therefore, the Court found that the conditions for the continued validity of the seizure and prohibition order were not met. The ratio decidendi is that failure to issue notice within the statutory period under Section 67(7) renders the seizure and any consequential prohibitory order invalid, requiring the return of the seized goods.

Key Issues

1. Whether the order of prohibition passed by the State Tax Officer under Section 67(2) of the GST Act, 2017, has become infructuous and liable to be quashed, considering that no notice was issued within six months of the seizure as stipulated by Section 67(7) of the Act? The petitioner argued that the order of prohibition, which was a consequence of a seizure under Section 67(2), should be quashed because the revenue authorities failed to issue a notice within the prescribed six-month period under Section 67(7). This failure, according to the petitioner, renders the continued effect of the prohibition order invalid. The revenue, represented by the learned AGP, conceded that no notice had been issued to the petitioner under Section 67(7) of the Act to date, nor had there been any extension of this time period as permitted by the proviso to Section 67(7).