Rahul Dubey vs. Principal Commissioner Of Central Goods And Services Tax Bhopal

Held

The Court held that the writ petitions could not be granted. The Court reasoned that the petitioner had not made out a case for exercising its jurisdiction under Article 226 of the Constitution. While the petitioner challenged the legality of the search and seizure, the respondents had issued a show cause notice under Section 74(1) and 74(5)(a) of the CGST Act, 2017, indicating that proceedings were ongoing. The Court also noted the respondents' submission that they were ready to release the seized goods subject to the production of valid documents, which the petitioner had failed to do. Therefore, the Court found no grounds to interfere with the ongoing proceedings or grant the relief sought by the petitioner. The issue of the sufficiency or inadequacy of the reasons to believe recorded for the search was not explicitly decided, but the Court referenced principles of judicial restraint in administrative action and the Wednesbury Principle of Reasonableness.

Facts

The petitioners, proprietors of businesses including M/s Avi Enterprises, filed writ petitions challenging search and seizure operations conducted by Central GST authorities on October 18-19, 2024. The searches covered business premises, residential addresses, and godowns. The petitioner contended that the searches were illegal, conducted without a Magistrate's warrant, and that the seized documents, including accounting records and stock statements, were accounted for in Tally-ERP software and declared in GST returns. The authorities allegedly pressured the petitioner to deposit Rs. 40-50 Lakhs voluntarily. The respondents filed a preliminary reply stating the petition was premature as a show cause notice under Section 74(1) and 74(5)(a) of the CGST Act, 2017, had been issued on July 2, 2025, calling for the petitioner's reply and participation in proceedings.

Key Issues

1. Whether the search and seizure proceedings conducted by the Central GST authorities on October 18-19, 2024, were illegal, null, and void, and consequently, whether all consequential proceedings should be quashed, and seized documents returned, as argued by the petitioner. The petitioner contended that the searches were conducted without a Magistrate's warrant, despite Section 67(2) of the CGST Act, 2017, and that the seized goods were accounted for and declared. The petitioner relied on the principle that only the principal place of business requires registration and that goods in godowns were duly accounted for. The respondents argued that the petition was premature as a show cause notice under Section 74(1) and 74(5)(a) of the CGST Act, 2017, had been issued, requiring the petitioner to participate in the proceedings. The respondents also stated they were ready to release goods upon production of valid documents, which the petitioner had not provided.