The Delhi High Court has invalidated the special judge's directive for a roving inquiry by the GST department, citing the absence of statutory provisions. In a case overseen by Justice Vibhu Bakhru and Justice Amit Mahajan, the court highlighted a lack of justification for initiating a search under Section 67(1) of the CGST Act against the petitioners, except for the directions from the order dated April 5, 2023, issued by the Special Judge.
The court emphasized that the authorization for the search, dated August 22, 2023, was inherently flawed, as none of the grounds specified in the authorization were supported by information or material on the respondent's record. The inspection carried out was a result of the Special Judge's order from April 5, 2023.
The petitioners, seeking the recall and annulment of the search authorization dated August 22, 2023, contested the summons under Section 70 of the CGST Act and the subsequent proceedings. Additionally, they requested the return of documents and photocopies collected during the August 22, 2023, search and inspection.
The Special Judge (P.C. Act) had directed the Income Tax Department, GST Department, and Enforcement Directorate to investigate the source of Rs. 50,00,000 received by the petitioners.
The assessee argued that there was no evidence of further investigation before authorizing the inspection under Section 67(1) of the CGST Act. On August 22, 2023, the Commissioner, Central Tax GST, issued an authorization (in FORM GST INS-01) for inspections under Section 67(1) of the CGST Act at the petitioners' premises.
The court ruled that as the conditions for inspection under Section 67(1) of the CGST Act were not met, the documents must be returned to the petitioners. It clarified that this decision does not prevent GST authorities from pursuing or initiating proceedings in accordance with the provisions of the CGST Act. If the department possesses information requiring an inquiry against the petitioners, they are free to proceed accordingly.
In essence, the court's decision revolved around the procedural shortcomings in the authorization and the lack of justifiable reasons for initiating the search. It underscored the importance of adherence to statutory provisions and the necessity for a valid basis before conducting inquiries or searches under relevant legal frameworks.
The court's stance promotes accountability and due process, ensuring that government authorities act within the confines of the law. By quashing the flawed authorization and emphasizing the need for proper justification, the court upholds the principles of fairness and legal integrity in the investigative process.
TAGS: Delhi High Court Special Judge roving inquiry GST department statutory provisions Section 67(1) CGST Act
