Mohmmad Hanif Mohmmad Ismail Shaikh vs. Commissioner State Taxes

Held

The High Court disposed of the writ application by granting the writ applicant liberty to make an appropriate application under Section 76(6) of the Act for the provisional release of the seized goods. This release would be subject to the execution of a bond and furnishing of security. The Court directed that if such an application is preferred, the competent authority shall consider it and pass an appropriate order in accordance with the law. The Court did not explicitly rule on the legality of the sealing action itself but provided a procedural recourse for the applicant to seek the release of goods.

Facts

The writ applicant, Mohmmad Hanif Mohmmad Ismail Shaikh, engaged in the business of scrap under the name M/s. Nisha Scrap Traders, filed a writ application challenging the action of the respondent authorities in affixing a seal on his principal place of business, a warehouse. Proceedings had been initiated for the confiscation of goods stored therein, and criminal prosecution had been instituted against the applicant's brothers, who were in judicial custody. The applicant argued that the sealing of the warehouse was unjustified, as an order restraining the removal of goods or documents would have sufficed. The respondent authorities contended that the authorised officer had the power to affix a seal under the relevant provisions of the Act, and their action was not illegal given the ongoing criminal proceedings.

Key Issues

1. Whether the affixing of a seal on the warehouse premises by the authorised officer, under Section 67 of the Goods and Services Tax Act, 2017, was a justified action, or if an alternative measure like restraining the removal of goods would have been appropriate? Petitioner's argument: The petitioner argued that while Section 67 of the Act permits search and seizure of goods or documents, there was no sufficient reason for the authorities to affix a seal on the warehouse. They contended that an order restraining the removal of goods or other articles from the premises would have been a more appropriate measure. Revenue's argument: The respondent authorities argued that the officer authorised under Section 76(2) of the Act possesses the power to affix a seal. They further pointed out that criminal prosecution had been initiated, and the petitioner's brothers were in judicial custody, implying that the action taken was not illegal.