GST UPDATE

Whether proceedings under SGST Act can be initiated in the case where .

Writ Petition No.:Civil. W.P. (DB) No. 5848/2026

Court: High Court of Rajasthan (Jaipur Bench)

Case Title: M/s Murliwala Pigment v. Union of India (Adjudication)

Outcome: The writ petition filled by the petitioner was dismissed.

Judgement Date: 28.04.2026

BRIEF FACTS OF THE CASE:

Revenue Department conducted search operations at the five premises of M/s Murliwala Pigment [petitioner] and seized the goods lying at different premises along with sealing of the four business premises. Later on, bank account of the business was also provisionally attached under Section 83 of CGST Act. During the search, memo was prepared which stated that petitioner was not present throughout the proceedings and the petitioner himself avoided to participate in the proceedings. Consequently, summons were issued to the petitioner. However, petitioner failed to appear as required in response to summons issued which led to passing order in the FORM DRC-22 of sealing of the business premises and the bank accounts of the appellant. Being aggrieved, petitioner preferred a writ petition before the Hon’ble Court praying for the de-sealing of premises and removal of attachment of bank account.

QUESTION BEFORE THE HIGH COURT:

Hon’ble Court observed the following key questions:

Whether the sealing of business premises and provisional attachment of bank accounts, under Sections 67(2), 67(4) and 83 of the CGST Act, 2017, in the absence of a Show Cause Notice, was legally sustainable?
Whether the Petitioner's reliance upon Section 6(2)(b) of the CGST Act, to the effect that no coercive action could be initiated prior to formal commencement of adjudicatory proceedings by issuance of a Show Cause Notice, was applicable to the facts and circumstances of the present case?
Whether the Writ Petition under Article 226 of the Constitution by the petitioner was correct action when alternative statutory remedies existed under Sections 67(4), 67(6) read with Rules 140 and 141 of the CGST Rules, 2017, and Section 83 of the CGST Act?
Whether the non-cooperation of the Petitioner with the investigating authority, including persistent non-appearance in response to summons issued under Section 70 of the CGST Act, disentitled the Petitioner from seeking extraordinary relief under Article 226?

BRIEF ARGUMENTS BY PETITIONER:
Petitionersubmitted following contentions: -

Placed reliance upon the Hon'ble Supreme Court's judgment in M/s Armour Security (India) Ltd. v. Commissioner, CGST Delhi, East Commissionerate and Ors. and contended that upon non-appearance of the Petitioner in response to summons, the only permissible coercive action allowed is to ensure the attendance of the noticee and that at the most a show cause notice can be served upon the petitioner. Sealing of business premises is not a valid coercive measure.
Section 6(2)(b) of CGST Act provides that the adjudication proceedings commence formally only after issuance of show cause notice.
Section 67 of the CGST Act does not vest any power to seize premises and freeze bank accounts and the entire exercise conducted by department officials amounted to no more than unnecessary harassment and an abuse of statutory power and that the proceedings were without jurisdiction.
Revenue Department did not consider the detailed objections submitted by petitioner and initiated action.
Petitioner was not left with any another alternate remedy and had to prefer a writ petition before the court.
It was contended that the petitioner be granted liberty to operate from the premises after de-sealing the premises and the attachment should be limited up to stock lying in the premises only and the action of the department has led to hinderance in the day-to-day operations of the business activities.
Reliance was placed upon the judgment of the Delhi High Court in M/s Napin Impex Private Ltd. v. Commissioner of DGST Delhi and Ors., wherein the court directed de-sealing of premises sealed under Section 67(4) of the CGST Act.
Furthermore, circular no. CEBC-20/16/05/2021-GST/359 dated 23.02.2021 was referred to in which guidelines for provisional attachment of property under Section 83 of CGST Act is provided with.
It was also submitted that the goods lying in the compound may continue to remain under seal, the entire business operations cannot be stalled on account of the actions of the Respondents, and the Petitioner must be permitted to operate from the premises.

BRIEF ARGUMENTS BY REVENUE DEPARTMENT:

Revenue Department made the following key arguments:

The premises were sealed and the bank accounts were frozen strictly in exercise of powers conferred under Section 67 of the CGST Act.
The non-cooperative behaviour of the petitioner related to the summons led to this action which was in accordance with law and that the petitioner has adequate and effective alternative statutory remedy in the form of submitting explanations and recording the same before the GST authorities, however, writ petition under Article 226 is not maintainable in such case. For this reliance was placed upon the judgement give by this Hon’ble Court in the case of Ankush Jain vs Union of India and others.

FINDINGS & JUDGEMENT:

Following are the key findings and judgement of the Tribunal:

Section 67(2) was referred to and it was observed that Chapter XIV of the CGST Act deals with the provision relating to inspection, search, seizure and arrest. Proper officer not below the rank of Joint Commissioner can authorize in writing any other officer to inspect, if “he has reason to believe”. Reason to believe means to have knowledge of facts which although not amounting to direct knowledge would cause a reasonable person owing the same facts to reasonably conclude the same thing.
The search was conducted and when the memos were prepared, petitioner did not participate when summons were issued and served upon him which is evident from the date of events mentioned by the petitioner itself.
Section 67(4) specifically states that the authorized officer shall have the duty to seal or break open the door of any premises where access is denied and that no application had been filed by the Petitioner under Sections 67(4) and 67(6) of the CGST Act read with Rules 140 and 141 of the CGST Rules, 2017. Furthermore, there is no defect found in the attachment conducted by the officer as per the guidelines stated by the circular (supra) for attachment of property under Section 83. Bank account was attached to protect the interests of the revenue and was within the powers conferred under Section 83 of CGST.
Judgement given in the case of M/s. Armour Security (India) Ltd. Vs. Commissioner, CGST Delhi, East Commissionerate and Ors was referred in which Section 6(2)(b) was referred and it was observed that the petitioner has only placed reliance upon the expression that initiation of any proceedings refers to formal commencement of adjudicatory proceedings by way of issuance of show cause notice and it does not encompass the process of summons or conduct of any search or seizure. However, petitioner failed to mention any specific fact to show that the investigation was conducted by any authority on similar grounds including for ITC claims. Section 6(2)(b) of the CGST Act is applicable only when a proper officer under SGST Act has initiated any proceedings on a matter of search conducted by the officers of CGST Act.
Reliance was placed upon Supreme Court judgement in the case of The State of Uttar Pradesh and Ors. Vs. M/s Kay Pan Fragrance Pvt. Ltd. along with Rule 140 and 141 of CGST rules in which it was held that the assessee who is the owner of the seized goods must take recourse to the mechanism already provided for in the act and the rules for release of goods on provisional basis upon execution of a bond and furnishing of a security in such manner and on such quantum as may be prescribed.
Or he can pay the applicable taxes, interest and penalty payable as prescribed under Section 67(6) of CGST Act.
There is no action conducted by the department officer which are contrary to the provisions of law. And the department official which initiated the attachment, was very well authorized.
The filing of the writ petition, bypassing the statutory mechanism, was therefore not maintainable.
Petitioner was neither present at the time of search nor he appeared and attended the proceedings during the process of search. Further, when the summons were issued, petitioner sought time. However, as soon as the bank account was attached, petitioner filed a reply to the attachment order.
However, when petitioner filed the reply to the summons. He, again failed to appear before the authority to produce documents and evidence under Section 70 of CGST Act. This shows, petitioner’s non-cooperation in the investigation.
Hence, placing reliance by the petitioner on the judgements in the case of M/s Armor Security (India) Limited (supra) and M/s Napin Impex Private Ltd. Vs. Commissioner of DGST Delhi and Ors. benefit of the judgement shall not be extended to the petitioner as the facts of the case are not applicable to the petitioner.

Thus, the writ petition filled by the petitioner was dismissed along with all pending applications, if any. No order as to costs was passed.

Various Sections, Rules, Circulars, Notifications and case laws referred in the instant GST Update:

Section 67(1), Section 67(2), Section 67(4), Section 67(6) of CGST Act 2017.

Section 6(2)(b) Section 83 of CGST Act 2017

Rule 140 and 141 of CGST Act 2017

M/s. Armour Security (India) Ltd. Vs. Commissioner, CGST Delhi, East Commissionerate and Ors [2025 (96) G.S.T.L. 10 (Del.) / (2025) 27 Centax 329 (Del.)]

State of Uttar Pradesh and Ors. Vs. M/s Kay Pan Fragrance Pvt. Ltd.[2019 (31) G.S.T.L. 385 (S.C.)]

M/s Napin Impex Private Ltd. Vs. Commissioner of DGST Delhi and Ors.[2018 (19) G.S.T.L. 578 (Del.)]

Ankush Jain vs Union of India and others. [2026:BHC-AS:11463-DB]

Comments

GST update /2026-27/0037

GST UPDATE

BRIEF FACTS OF THE CASE:

QUESTION BEFORE THE HIGH COURT:

BRIEF ARGUMENTS BY REVENUE DEPARTMENT:

FINDINGS & JUDGEMENT:

Various Sections, Rules, Circulars, Notifications and case laws referred in the instant GST Update:

Opinion

Author’s Comment:

Post a Comment

Query