M/S Agarwal Oil Mill Shivpuri Through Its Proprietor Narendra Kumar Gupta vs. The State Of Madhya Pradesh

Held

The High Court declined to admit the petitions, holding that the competent authority had judiciously exercised its discretion under Section 67(5) of the CGST Act. The court found that the petitioner had been given ample opportunity to produce relevant documents that were not recovered during the search. The petitioner's explanation for not producing soft-copy documents (maintained on computer) and lack of explanation for others created an impression that these documents were still with the petitioner and could be manipulated if copies of seized documents were provided. This formed a reasonable apprehension in the mind of the authority that providing copies could adversely affect the investigation. Therefore, the court concluded that the authority had not acted beyond its jurisdiction and that the alternative statutory remedy of appeal was available. Consequently, the petitions were dismissed in limine.

Facts

The petitioner, M/s Agrawal Oil Mill, filed three writ petitions challenging orders passed by the Assistant Commissioner, State Tax, Shivpuri. These orders, dated August 11, 2020, imposed tax liabilities, interest, and penalties for the assessment years 2017-18, 2018-19, and 2019-20. The petitioner argued that the orders were passed in violation of natural justice due to the denial of copies/extracts of seized documents during a search conducted on May 29, 2019. The petitioner contended this denial prevented them from adequately defending themselves, citing Section 67(5) of the CGST Act. The revenue argued that the denial was justified as the petitioner had failed to produce crucial documents, and providing seized documents could lead to interpolations and prejudice the investigation.

Key Issues

1. Whether the denial of supply of copies/extracts of seized documents by the competent authority, despite a search and seizure operation, violates the principles of natural justice and the provisions of Section 67(5) of the Central Goods and Services Tax Act, 2017, thereby vitiating the impugned orders? Petitioner's arguments: The petitioner contended that Section 67 of the CGST Act mandates the supply of copies/extracts of seized documents, with the only exception being if the competent authority believes it would prejudicially affect the investigation. They argued that once documents are seized, providing copies cannot enable manipulation. They relied on decisions from the Bombay High Court (W.P.8075/19), Kerala High Court (WP(C) 34457/19), and Supreme Court (M/s Filterco vs. Commissioner of Sales Tax Madhya Pradesh, M.G.Abrol, Addl. Collector of Customs Bombay Vs. M/s. Shantilal Chhotelal and Co.). Revenue's arguments: The revenue argued that the petitioner was afforded sufficient opportunity to produce documents. The denial of seized documents was based on the apprehension that the petitioner intended to interpolate their computer-maintained records, which could reduce tax liability and harm revenue. This apprehension was considered a reasonable basis for exercising discretion under Section 67(5) to protect the investigation.