Paresh Nathalal Chauhan vs State Of Gujarat on 25 October, 2019

Judgment Summary: Paresh Nathalal Chauhan vs State Of Gujarat

Date of Order: 25 October, 2019
Court: High Court of Gujarat
Bench: Hon'ble Ms. Justice Harsha Devani & Hon'ble Ms. Justice Sangeeta K. Vishen

1. Outcome

This is an interim order. The Court directed the Commissioner of State Tax, Ahmedabad, to conduct a formal inquiry into the actions of the GST officers involved in the search. A report on this inquiry was ordered to be submitted to the Court by November 13, 2019. The Court also directed that a copy of the order be sent to the Chief Secretary of the State to ensure such incidents of overreach are not repeated. The matter was scheduled for a subsequent hearing.

2. Core Issue

The central legal issue was whether the power of "search and seizure" granted to authorized officers under Section 67(2) of the Central Goods and Services Tax (CGST) Act, 2017, extends to continuously occupying a person's residential premises for several days after the initial search is concluded, monitoring the family's phone calls, and interrogating family members.

3. Key Facts

• Pursuant to an authorization under Section 67(2) of the CGST Act, GST officers conducted a search at the petitioner's residential premises.
• The officers stayed at the premises continuously for eight days, from October 11, 2019, to October 18, 2019.
• A confidential report of the proceedings revealed that the initial search and gathering of account records, passbooks, and cheque books were completed on the first day (October 11).
• Despite completing the search, teams of officers, along with panchas, stayed at the residence in rotation.
• During this extended stay, the officers monitored and recorded the phone calls of the family members and recorded their statements, allegedly to determine the whereabouts of the petitioner (the taxable person).
• The petitioner’s mother, wife, and young daughter were present in the house throughout this period.

4. Arguments

• Petitioner (Inferred): The petition challenged the legality of the GST officers' actions, contending that their prolonged stay at the residence, monitoring communications, and coercive questioning of family members were beyond the statutory authority granted under Section 67 of the CGST Act and constituted an abuse of power and harassment.
• Respondent (State of Gujarat): The State submitted a confidential report detailing the proceedings carried out at the premises, presumably to justify their actions as a necessary part of the investigation.

5. Court’s Reasoning

• The Court analyzed the scope of powers under Section 67 of the CGST Act and found that it empowers officers to search for and seize goods, documents, books, or things.
• It held that the statute does not authorize officers to:
  • Stay at the premises after the search and seizure are concluded.
  • Record statements from family members using force or coercion.
  • Monitor or record private phone conversations of family members.
  • Use such coercive measures to locate the taxable person.
• The Court found the officers' actions from October 12 to 18 to be "totally without any authority of law" and a "total abuse of the powers vested in them."
• It expressed shock that male officers, along with a CRPF officer, stayed day and night in a residence with three female family members.
• The Court strongly deprecated the conduct of the officers, terming it a "flagrant disregard of the provisions of the Act," and concluded that a proper inquiry into their actions was necessary.

6. Statutory References

• Central Goods and Services Tax Act, 2017 (CGST Act):
  • Section 67: The primary section concerning the power of Inspection, Search, and Seizure.
  • Section 67(2): Specifically grants the power to an authorized officer to search any place and seize goods, documents, books, or things believed to be secreted.
• Code of Criminal Procedure, 1973:
  • Mentioned in Section 67(10) of the CGST Act, which makes its provisions relating to search and seizure applicable to GST proceedings, with certain modifications.

7. Precedents Cited

None. The Court's reasoning was based on a direct interpretation of the statutory provisions of the CGST Act, 2017.