M/S Universal Dyechem Private Limited vs. Union Of INDIA

Facts

M/s Universal Dyechem Private Limited and its director filed a writ application seeking a mandamus to direct Respondent No. 3 (an officer of DGGST) to release documents seized during search and seizure operations at their Jodhpur and Surat branches on February 14, 2020, and February 6, 2020, respectively. The applicants stated that over ten months had passed since the seizure, and neither the original documents nor photocopies had been returned, despite numerous written requests. They argued that these documents were essential for their daily business operations, including audit and filing of returns. The applicants also contended that the seized documents were not part of the show-cause notice issued, suggesting they were not considered in the proceedings.

Held

The Court held that once a show-cause notice is issued, documents or records that have not been relied upon for the issuance of that notice should be returned to the party from whom they were seized. This principle is supported by a master circular dated January 19, 2017, which mandates that only documents forming the basis of the show-cause notice should be served on the assessee for adjudication proceedings. Documents not relied upon are to be returned under proper receipt. The Court directed Respondent No. 2 to immediately review the petitioner's representation dated December 21, 2020, and take an appropriate decision in accordance with the law within one week. If the respondent decided against returning the documents, cogent reasons must be provided in writing to the petitioner. The Court expressed hope that the matter would be resolved without further litigation.

Key Issues

1. Whether the Respondent No. 3 is obligated to return documents seized under Section 67 of the GST Act, which are not relied upon in the show-cause notice issued to the petitioner? The Petitioner argued that the seized documents were crucial for their business operations and that the prolonged retention, without providing photocopies, was causing hardship. They contended that since these documents were not part of the show-cause notice, they should be returned. The Petitioner relied on representations made to Respondent No. 3 and impliedly on the principles of natural justice and administrative efficiency. The Revenue did not record any specific arguments in the judgment regarding the return of documents not relied upon in the show-cause notice. However, the Court's decision implies that the Revenue's action of retaining such documents was under scrutiny.