GST Update No 343 on retention period of seized goods by GST authorities

It is well known that the matter as regards to inspection, search and seizure has been under spotlight since erstwhile GST regime. There had been catena of cases in the past as well wherein the Courts have highlighted the importance of existence of “reason to believe” before initiating any inspection, search and seizure proceedings. However, yet again, another point of dispute regarding period of retention by departmental authorities came before the DELHI HIGH COURT in the case of DHRUV KRISHAN MAGGU vs PRINCIPAL DIRECTOR GENERAL, DGGI (HQRS.), RK PURAM, NEW DELHI & ANR. The decision imparted in this case is subject matter of our present update.

The petitioner seeks return of laptop, computer, documents and other things which were seized by the authorities. In the present case, the DGGI received communication regarding high level transaction of IGST refund credited to four bank accounts to the tune of Rs. 10,32,21,718/- which were newly opened and the refund amount was withdrawn immediately. It was observed that address of all the firms was same. Upon making further enquiries, it was observed that the firms were in fact non-functional and non-existing. The statement of proprietor was recorded wherein it was revealed that some of them were not aware of the transactions and only ID were provided by them along with singing various documents. Upon further investigation, it was observed that there were total of 23 firms opened and IGST refund of Rs. 63 crores were siphoned. FIRs were registered in this respect. The petitioner therefore seeks for release of seized goods and documents. Further, defreezing of account was also sought and reliance in this respect was placed on decision of Micra Overseas V/s Directorate of GST Intelligence & Anr. It was submitted that despite substantial time period having lapsed, the seized goods were not released. Reference was drawn to section 67 of CGST Act, 2017 wherein a time period of 6 months is prescribed by statue for release of seized goods. Furthermore, since the authorities have already taken up the backup of the data, the main laptop should be released.

The counsel of revenue referred to provisions of Section 67 of CGST Act, 2017 and stated that the present section shall not be applicable in the present case as there were no goods which were seized. Presently, there was confiscation of goods which was governed by provisions of Section 67 of CGST Act, 2017. Furthermore, reference was also drawn to provisions of Section 74 of CGST Act, 2017 which demonstrates that the retention period has not lapsed.

The Court observed that there is distinction in case of inspection, seizure and search of “documents or books or things” as compared to that of “goods”. In case of documents the same can be retained by officers for a longer period of time while in case of seized goods, the same is to be returned to the person within a period of 6 months of seizure of goods. The present case is covered under provisions of Section 74 of CGST Act, 2017. By referring to the provisions of the Act, it was observed that as per said sections, documents or books or things can be retained for a maximum period of 4.5 years within which period the notice has to be issued. In the present situation, this period had not yet lapsed and hence, it cannot be directed to release the computer, laptop, documents etc. seized. Therefore, this writ petition is dismissed.

As per the above judgement given against the aggrieved assessee, from now onwards the taxpayers need to be extra cautious and vigilant failing which their necessary documents will come under seizure radar for a period of 4.5 years resulting into halting of business.

Comments

GST Update No 343 on retention period of seized goods by GST authorities

Post a Comment

Query