Subhash Joshi & another v. Director General of GST Intelligence (DGGI) & Ors
[Citation -2020-LL-0703-39]

Citation 2020-LL-0703-39
Appellant Name Subhash Joshi & another
Respondent Name Director General of GST Intelligence (DGGI) & Ors.
Court HIGH COURT OF MADHYA PRADESH AT INDORE
Relevant Act CGST
Date of Order 03/07/2020
Judgment View Judgment
Keyword Tags search and seizure operation • goods and services tax • input tax credit • supply of goods • issue of notice • payment of tax • tax evasion • evade tax • penalty


1 WP No.9184/2020 HIGH COURT OF MADHYA PRADESH WP No.9184/2020 Subhash Joshi & another Vs. Director General of GST Intelligence (DGGI) & Ors. Indore, Dated:03.07.2020 Shri Sunil Jain, learned Sr. Counsel with Shri Kushagra Jain, learned counsel for petitioner. Shri Prasanna Prasad, learned counsel for respondent. Shri Shailesh Kumar Mehta, Sr. Intelligence Officer also present in person. Heard through Video Conferencing. ORDER As per Prakash Shrivastava, J:- By this petition, petitioner has challenged notice dated 20th June, 2020 whereby premises of petitioner has been sealed under provisions of Central Goods and Services Tax Act, 2017 (for short GST Act ). [2] case of petitioner is that petitioner is manufacturer of sweet betel nut and which has all necessary licenses and permissions for this purpose and is regularly paying GST. Further case of petitioner is that Plot No.15-A/B-1, Sector-B, Industrial Area, Sanwer Road, Indore belongs to Shri Kishore Wadhwani and petitioner has taken this plot on lease from Shri Kishore Wadhwani and petitioner is running manufacturing unit on this plot. further case of petitioner is that apart from above, it has no connection with Shri Kishore Wadhwani. Earlier in year 2011 Excise Department had taken certain action against petitioner but nothing incriminating was found. On 20 th June, 2020, by impugned notice factory premises of petitioner has been sealed. Petitioner apprehends that since action was 2 WP No.9184/2020 initiated against Shri Kishore Wadhwani for evasion of tax, therefore, premises of petitioner has been sealed. According to petitioner, on 20 th June, 2020 he was out of station, and, therefore, petitioner had sent notice dated 26/6/2020 for demand of justice and, thereafter present petition has been filed. [3] Learned counsel for petitioner submits that though action relating to search and seizure u/S.67 of GST Act has been taken, but requisite procedure has not been followed. He has submitted that petitioner apprehends that search and seizure may not be carried out in fair manner and confession of petitioner may be recorded under pressure, therefore, direction be issued for carrying out search in present of Advocate. He has further submitted that as per requirement of Sec.67, two independent reputed witnesses of locality are necessary, but respondents want to carry out search by keeping their own pocket witnesses. [4] Learned counsel for respondents has submitted that officials of respondents had approached factory premises of petitioner on 20 th June, 2020 for purpose of search and seizure by following due procedure in accordance with Sec.67 of Act, but since premises was found locked, therefore, option was either to break open lock and carry out search or to seal premises and thereafter carry out search of premises in presence of petitioner. He submits that officials of respondents had adopted second option of sealing premises and now they want to carry out search in petitioner s presence. He further submits that there is no provision in law allowing petitioner s prayer for presence 3 WP No.9184/2020 of Advocate during search and seizure. He has also submitted that two independent witnesses will be kept as required by law and procedure prescribed in law will be duly followed in true letter and spirit. [5] We have heard learned counsel for parties and perused record. Sec.67 of GST Act reads as under:- 67. Power of inspection, search and seizure (1) Where proper officer, not below rank of Joint Commissioner, has reasons to believe that (a) taxable person has suppressed any transaction relating to supply of goods or services or both or stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of provisions of this Act or rules made thereunder to evade tax under this Act; or (b) any person engaged in business of transporting goods or owner or operator of warehouse or godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of taxable person or persons engaged in business of transporting goods or owner or operator of warehouse or godown or any other place. (2) Where proper officer, not below rank of Joint Commissioner, either pursuant to inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Provided that where it is not practicable to seize any such goods, proper officer, or any officer 4 WP No.9184/2020 authorised by him, may serve on owner or custodian of goods order that he shall not remove, part with, or otherwise deal with goods except with previous permission of such officer: Provided further that documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act. (3) documents, books or things referred to in sub-section (2) or any other documents, books or things produced by taxable person or any other person, which have not been relied upon for issue of notice under this Act or rules made thereunder, shall be returned to such person within period not exceeding thirty days of issue of said notice. (4) officer authorised under sub-section (2) shall have power to seal or break open door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in presence of authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in opinion of proper officer, prejudicially affect investigation. (6) goods so seized under sub-section (2) shall be released, on provisional basis, upon execution of bond and furnishing of security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as case may be. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of seizure of goods, goods shall be returned to person from whose possession they were seized: Provided that period of six months may, on sufficient cause being shown, be extended by proper officer for further period not exceeding six months. (8) Government may, having regard to perishable or hazardous nature of any goods, 5 WP No.9184/2020 depreciation in value of goods with passage of time, constraints of storage space for goods or any other relevant considerations, by notification, specify goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by proper officer in such manner as may be prescribed. (9) Where any goods, being goods specified under sub-section (8), have been seized by proper officer, or any officer authorised by him under sub- section (2), he shall prepare inventory of such goods in such manner as may be prescribed. (10) provisions of Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to modification that sub-section (5) of section 165 of said Code shall have effect as if for word Magistrate , wherever it occurs, word Commissioner were substituted. (11) Where proper officer has reasons to believe that any person has evaded or is attempting to evade payment of any tax, he may, for reasons to be recorded in writing, seize accounts, registers or documents of such person produced before him and shall grant receipt for same, and shall retain same for so long as may be necessary in connection with any proceedings under this Act or rules made thereunder for prosecution. (12) Commissioner or officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from business premises of any taxable person, to check issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of business premises shall refund amount so paid towards goods after cancelling any tax invoice or bill of supply issued earlier. [6] In terms of sub-section 10 of Sec.67, provisions of search and seizure as contained in Cr.P.C are applicable. Sub-section (4) of Sec.100 Cr.P.C provides as under:- (4)- Before making search under this Chapter, officer or other person about to make it shall call 6 WP No.9184/2020 upon two or more independent and respectable inhabitants of locality in which place to be searched is situate or of any other locality if no such inhabitant of said locality is available or is willing to be witness to search, to attend and witness search and may issue order in writing to them or any of them so to do. [7] In terms of above sub-section presence of two or more independent and respectable inhabitants of locality is necessary as witness to search. [8] search is yet to take place in present case and counsel for respondents has duly assured this court that aforesaid provision will be complied with therefore no direction in this regard at this stage is required. [9] Another submission of counsel for petitioner is that search should be carried out in presence of Advocate, but counsel for petitioner has failed to point out any statutory provision or any such legal right in favour of petitioner. [10] Some what similar issue had come up before Supreme Court in matter of Poolpandi and others Vs. Superintendent, Central Excise & Ors. (1992) 3 SCC 259 wherein during investigation and interrogation under provisions of Foreign Exchange Regulations Act 1973 and Customs Act, prayer was made for assistance of lawyer. Hon. Supreme Court denying such prayer had held that:- 11- We do not find any force in arguments of Mr. Salve and Mr. Lalit that if person is called away from his own house and questioned in atmosphere of customs office without assistance of his lawyer or his friends his constitutional right under Article 21 is violated. argument proceeds thus : if person who is used to certain comforts and convenience is asked to come by himself to Department for answering question it amounts to mental torture. We are unable to agree. It is true that large majority of persons 7 WP No.9184/2020 connected with illegal trade and evasion of taxes and duties are in position to afford luxuries on lavish scale of which honest ordinary citizen of this country cannot dream of and they are surrounded by persons similarly involved either directly or indirectly in such pursuits. But that cannot be ground for holding that he has constitutional right to claim similar luxuries and company of his choice. Mr. Salve was fair enough not to pursue his argument with reference to comfort part, but continued to maintain that appellant is entitled to company of his choice during questioning. purpose of enquiry under Customs Act and other similar statutes will be completely frustrated if whims of persons in possession of useful information for departments are allowed to prevail. For achieving object of such enquiry if appropriate authorities be of view that such persons should be dissociated from atmosphere and company of persons who provide encouragement to them in adopting non- cooperative attitude to machineries of law, there cannot be any legitimate objection in depriving them of such company. relevant provisions of Constitution in this regard have to be construed in spirit they were made and benefits thereunder should not be "expanded" to favour exploiters engaged in tax evasion at cost of public exchequer. Applying just, fair and reasonable test' we hold that there is no merit in stand of appellant before us. [11] same issue came up before Delhi High Court in reference to GST Act in matter of Sudhir Kumar Aggarwal Vs. Directorate General of GST Intelligence 2019 SCC OnLine Del 11101 and Delhi High Court placing reliance upon earlier judgments of Supreme Court on this point has held that:- 21- Perusal of above case law reveals that presence of lawyer cannot be allowed at time of examination of person under Customs Office. petitioner in present case has been summoned by Officers under GST Act who are 8 WP No.9184/2020 not Police Officers and who have been conferred with power to summon any person whose attendance they consider necessary to give evidence or to produce document. presence of lawyer, therefore, is not required during examination of petitioner as per law laid down by Hon ble Supreme Court in Pool Pandi s case (supra). So far as apprehension of petitioner that he may be physically assaulted or manhandled is concerned, this Court is of opinion that it is well settled law now that no inquiry/investigating officer has right to use any method which is not approved by law to extract information from witness/suspect during examination and in case it is so done, no one can be allowed to break law with impunity and has to face consequences of his action. order dated 20.09.2019 which is against judgment passed by Hon; ble supreme Court in Pool Pandi V. Superintendent, Central Excise (1992) 3 SCC 259 : 1992 AIR 1795 (SC), therefore, stands modified and it is clarified that presence of lawyer cannot be allowed to petitioner at time of questioning or examination by officers of respondent. [12] Having regard to above position in law and fact that no such legal right has been pointed out, submission of counsel for petitioner to carry out search and seizure operation in presence of petitioner cannot be accepted. [13] Counsel for petitioner has placed reliance upon judgment of Punjab & Haryana High Court dated 15/11/2019 in CWP No.24195/2019 in case of Akhil Krishan Maggu & another Vs. Dy. Director, Directorate General and GST Intelligence and others, but part of judgment relied upon by counsel for petitioner relates to need for arrest whereas in present case, there is no issue of arrest is involved nor any action of respondents relating to arrest of petitioner has been questioned. 9 WP No.9184/2020 [14] Having regard to aforesaid analysis, we are of opinion that no case for interference in present writ petition at this stage is made out. petition is accordingly dismissed. (Prakash Shrivastava) (Ms.Vandana Kasrekar) Judge Judge vm Digitally signed by Varghese Mathew DN: c=IN, o=High Court of Madhya Varghese Pradesh Bench Indore, postalCode=452001, st=Madhya Pradesh, 2.5.4.20=b06e85e8115fd7cc0bb34a088 Mathew 8d1d430f979382d4c898692d55d8dbb4 d9b937e, serialNumber=4e90d922e5a5064a0914 c5bc5199c144bc261ee38c4cbe410b3b 325ebd82325a, cn=Varghese Mathew Date: 2020.07.03 16:45:18 +05'30' Subhash Joshi & another v. Director General of GST Intelligence (DGGI) & Or
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