M/S Agrawal Oil Mill Thr. vs. The State Of Madhya Pradesh

Held

The High Court held that the writ petitions were not maintainable and dismissed them in limine. The court found that the petitioner was afforded due and sufficient opportunity to produce relevant documents. The authority's apprehension that providing copies of seized documents could lead to interpolations to reduce tax liability, thereby affecting revenue, was considered a reasonable basis for exercising discretion under Section 67(5) of the CGST Act. The court concluded that the competent authority judiciously exercised its discretion, and there was no jurisdictional error in the impugned order. Given the reasonable exercise of discretion and the availability of an alternative statutory remedy of appeal, the court found no reason to interfere. Therefore, the denial of copies was deemed justified, and the proceedings were not in violation of natural justice or statutory provisions.

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 liability, interest, and penalty for the assessment years 2017-18, 2018-19, and 2019-20. The petitioner argued that the orders were passed in violation of natural justice because copies of seized documents were denied, preventing them from adequately defending themselves. The denial was based on Section 67(5) of the CGST Act. The search and seizure occurred on May 29, 2019. A show-cause notice was issued on July 8, 2020. The petitioner repeatedly requested copies of seized documents, seizure memos, and scrutiny reports, but these were denied by the authority, who apprehended that providing copies would allow for interpolation of computer-maintained accounts. The petitioner failed to produce all demanded documents, leading the authority to proceed ex parte.

Key Issues

1. Whether the denial of supply of copies/extracts of seized documents to the petitioner by the competent authority, under Section 67(5) of the CGST Act, 2017, constitutes a violation of the principles of natural justice and the statutory right to defend oneself? Petitioner's Arguments: The petitioner contended that Section 67 of the CGST Act mandates the supply of copies/extracts of seized documents. The only exception is if the authority forms an opinion that such supply would prejudicially affect the investigation. The petitioner argued that once all documents were seized, providing copies could not enable manipulation or interference with the investigation. They relied on decisions from the Bombay High Court (High Ground Enterprises Ltd. Vs. Union of India & another), Kerala High Court (M/s Mozart Global Furniture Vs. The State Tax Officer and another), and Supreme Court (M/s Filterco vs. Commissioner of Sales Tex Madhya Pradesh and M.G.Abrol, Addl. Collector of Customs Bombay Vs. M/s. Shantilal Chhotelal and Co.). Revenue's Arguments: The revenue did not explicitly record arguments in the judgment, but the court's reasoning implies their stance was that the denial was justified.