Roving Inquiry As Per Order Of Special Judge (PC Act) By GST Dept. Delhi High Court Quashes Order

The Delhi High Court has quashed the special judge's directions for conducting a roving inquiry by the GST department in the absence of any statutory provisions.

The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that apart from the directions issued in terms of the order dated April 5, 2023, there were no reasons for the respondent to initiate the search against the petitioners under Section 67(1) of the CGST Act. The authorization issued is thus patently erroneous, as none of the grounds set out in the said authorization are borne out of the information or material on the record of the respondent. Concededly, the inspection was conducted pursuant to the order dated April 5, 2023, passed by the Special Judge.

The petitioners/assessees sought that the records of the search authorization dated August 22, 2023, issued by the respondent for conducting the search at the premises of the petitioner be re-called and quashed. The petitioners assailed the summons issued under Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the consequent proceedings. The petitioners have sought the direction of the respondent or department to return the documents belonging to the petitioner company along with the photocopies, which were collected during the search and inspection conducted on August 22, 2023.

The inspection was conducted pursuant to the order passed by the Special Judge (P.C. Act). The Special Judge had directed the Income Tax Department, GST Department, and Enforcement Directorate to check the source of the Rs. 50,00,000 received by the petitioners.

The assessee contended that the record does not indicate that any further investigation was conducted prior to 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 conducting inspections under Section 67(1) of the CGST Act at the premises of the petitioners.

The court held that since the conditions for inspection under Section 67(1) of the CGST Act were not satisfied, the documents are required to be returned to the petitioners.

The court stated that the GST authorities are not precluded from continuing or initiating proceedings in accordance with the provisions of the CGST Act. Thus, if any information is available with the Department that requires an inquiry to be conducted against the petitioners, the respondent authorities are not impeded from doing so.

Counsel For Petitioner: Avi Singh

Counsel For Respondent: Atul Tripathi

Case Title: Bhagat Ram Om Prakash Agro Private Limited Versus The Commissioner Central Tax Gst Delhi- East

Citation: 2023 LiveLaw (Del) 1281

Case No.: W.P.(C) 12304/2023

Click Here To Read The Order