GST Search, Inspection & Seizure — Section 67 & Section 70 Powers

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment in *Ashok Parasuram Uthale vs The Intelligence Officer*. *** ### **Judgment Summary** **Case Title:** Ashok Parasuram Uthale vs The Intelligence Officer **Court:** High Court of Kerala at Ernakulam **Judge:** Hon'ble Mr. Justice Bechu Kurian Thomas **Date of Judgment:** 20th February 2025 **Citation:** 2025:KER:14819 --- #### **1. Outcome** The writ petition was **dismissed**. However, the Court preserved the petitioner's liberty to seek the provisional release of the seized goods by availing the remedy provided under **Section 130(2) of the GST Act** during the pendency of the confiscation proceedings. #### **2. Core Issue** Whether a taxpayer is entitled to the mandatory provisional release of seized goods under **Section 67(6) of the GST Act** on the ground that the six-month period for issuing a show-cause notice has expired, especially when the tax authorities have already initiated confiscation proceedings under **Section 130** of the Act. #### **3. Key Facts** * **Petitioner:** A traditional goldsmith engaged in job work in Varkala, Kerala. * **Search and Seizure:** On 28.12.2023, GST intelligence officers searched the petitioner's shop and residence, seizing 3522.14 grams of gold and certain records under Section 67 of the GST Act. * **Petitioner's Claim:** The petitioner argued that since six months had passed from the date of seizure and no show-cause notice was issued, the goods were liable to be released provisionally upon furnishing a bond as per Section 67(6). * **Department's Action:** The Intelligence Officer issued a show-cause notice (SCN) dated 26.12.2024 under Section 130 of the GST Act, proposing to confiscate the seized gold. * **Allegations in SCN:** The department alleged that the petitioner had carried out unregistered sales of old gold worth ₹47.73 Crores and supplied gold to a jewellery store without valid tax invoices or documents. #### **4. Arguments** * **Petitioner's Arguments:** 1. The six-month statutory period under Section 67 for the retention of seized goods without a show-cause notice had expired. 2. Consequently, the petitioner was legally entitled to the provisional release of the seized gold upon furnishing a bond and security. 3. The confiscation notice under Section 130 was challenged. * **Respondents' (GST Department's) Arguments:** 1. The time limit for completing the investigation under Section 67 was validly extended by an order of the Joint Commissioner of State Tax on 22.06.2024, as permitted by the proviso to Section 67. 2. Therefore, the petitioner's claim based on the expiry of the time limit is legally untenable. 3. Since confiscation proceedings under Section 130 have already been initiated, the remedy of provisional release under Section 67(6) is no longer available. #### **5. Court’s Reasoning** 1. **On the Limitation Period:** The Court found the petitioner's contention regarding the expiry of the six-month period to be legally untenable. It accepted the department's submission that the time limit for the investigation had been validly extended under the proviso to Section 67 of the Act. 2. **On the Applicability of Section 67(6):** The Court held that the stage for seeking provisional release under Section 67(6) was "already over." Once confiscation proceedings under Section 130 are initiated by issuing a show-cause notice, the specific remedy under Section 67(6) is no longer available. The Court noted that the petitioner had not sought to avail this benefit before the Section 130 notice was issued. 3. **Validity of Confiscation Proceedings:** The Court observed that the initiation of proceedings under Section 130 could not be considered *prima facie* without authority, given the serious allegations of large-scale unregistered sales. It is for the petitioner to participate in these proceedings and present his case. 4. **Alternative Statutory Remedy:** The Court pointed out that the petitioner is not without a remedy. The GST Act itself provides a mechanism for the provisional release of goods even during confiscation proceedings. This remedy is available under **Section 130(2)**, which allows the owner of the goods to pay a redemption fine in lieu of confiscation. The petitioner was given the liberty to pursue this statutory remedy. #### **6. Statutory References** * **Central Goods and Services Tax Act, 2017 / State Goods and Services Tax Act, 2017 (the GST Act)** * **Section 67:** Power of inspection, search, and seizure. * **Section 67(6):** Provision for the release of seized goods on a provisional basis upon execution of a bond if no notice is issued within six months of the seizure. * **Proviso to Section 67:** Allows for the extension of the six-month period by a proper officer. * **Section 130:** Confiscation of goods or conveyances and levy of penalty. * **Section 130(2):** Provides an option to the owner of the goods to pay a fine in lieu of confiscation. #### **7. Precedents Cited** None cited in the provided text of the judgment.

As a Senior GST Legal Analyst, I have summarized the judgment of Kesar Jewellers vs Union Of India: --- **1. Outcome** The High Court set aside the impugned provisional attachment order issued under Section 83 of the CGST Act, 2017, and consequently directed the defreezing of the petitioner's bank accounts. The writ petition was disposed of. **2. Core Issue** The core issue was the legality and validity of a provisional attachment order of bank accounts issued under Section 83 of the CGST Act, 2017, specifically whether it met the statutory preconditions of (a) formation of opinion based on tangible material for protecting government revenue, (b) disclosure of reasons in the order, and (c) proper consideration of the taxpayer's objections. **3. Key Facts** * **Petitioner:** Kesar Jewellers, a proprietary concern engaged in trading Gold Bullion and Gold Jewellery since 2008, registered under GST, and claiming to have filed returns and paid taxes. * **Investigation:** * Summons issued by DGGI under Section 70 on 26.06.2023. * Petitioner's business premises searched on 30.06.2023 and 18.01.2024, leading to seizure of documents, electronic devices, gold bars, and cash. * Another summons issued under Section 70. * **Arrest:** Petitioner arrested on 19.01.2024 and remanded to judicial custody. * **Bail & Attachment:** Bail was granted on 13.02.2024. On the very same day, the impugned provisional attachment order in Form DRC-22 dated 13.02.2024 was issued, attaching the petitioner's bank accounts. * **Petitioner's Objections:** Petitioner sent letters dated 24.05.2024, 31.05.2024, 03.06.2024, and 07.06.2024 requesting the lifting of the attachment, which were not considered by the respondent. **4. Arguments** **Taxpayer (Petitioner):** * The impugned order is without jurisdiction as it lacks tangible material to form an opinion that provisional attachment is necessary to protect government revenue under Section 83. * There is no "live link" between any material and the necessity for attachment. * The order is bad for want of disclosed reasons, contrary to the Supreme Court's mandate in **Radha Krishan Industries**. * The absence of reasons renders the opportunity to file objections under Rule 159(5) illusory, as the petitioner is unaware of the case to meet. * The respondent failed to consider the petitioner's repeated requests to lift the attachment, demonstrating non-application of mind. **Revenue (Respondent):** * Intelligence indicated the petitioner's involvement in clandestine removal of gold bullion without invoices and fraudulent availment of ITC. * The petitioner allegedly admitted to clandestine removal and fraudulent ITC in a statement dated 19.01.2024. * Searches revealed alleged fictitious/non-existent dealers (e.g., M/s. Diva Trading) through whom fraudulent transactions were conducted. * Petitioner allegedly operated from undeclared premises and availed fraudulent ITC from bogus entities. * The petitioner failed to file objections in the prescribed Form GST DRC-23 within 7 days under Rule 159(5), hence the letters were not considered. * Reasons for the attachment were not disclosed in Form DRC-22 because the GST portal/form had inadequate space/facility to upload them. **5. Court’s Reasoning** The Court meticulously analyzed the case against the principles laid down by the Supreme Court in **Radha Krishan Industries v. State of H.P. (2021) 6 SCC 771** and other High Court judgments: * **Draconian Nature of Section 83:** The Court reiterated that the power under Section 83 is draconian and must be exercised with extreme caution and restraint, only as a last resort, when it is *necessary* (not merely expedient) to protect revenue, implying that no other measure would suffice. * **Condition Precedent: Tangible Material & Formation of Opinion:** The Commissioner must form an opinion based on *tangible material* demonstrating a "live link" to the necessity of provisional attachment. The impugned order merely reproduced the words of Section 83 without disclosing any such material or demonstrating a reasoned opinion. The Court held that mere initiation of proceedings under relevant chapters does not automatically warrant Section 83 invocation. * **Requirement of Disclosed Reasons:** The order of provisional attachment must contain reasons. Reasons are essential links between material and conclusions, preventing arbitrary decisions and informing the affected party. The impugned order failed to disclose any reasons. * **Rejection of Respondent's Justifications:** * The argument that Form DRC-22 or the portal lacks space for reasons was unequivocally rejected. The Court stated that the "cardinal principle of 'giving reason'" cannot be sacrificed due to form inadequacy or perceived urgency. Alternative modes of communication under Section 169 could have been used. * The respondent's refusal to consider the petitioner's objections because they were not in Form DRC-23 was deemed a "technical approach" violating natural justice principles. The respondent should have guided the petitioner regarding the correct form. * **Jurisdictional Fact:** The existence of tangible material and the formation of a reasoned opinion based on it are "jurisdictional facts." Their absence or erroneous assumption vitiates the order, as an authority cannot confer jurisdiction upon itself wrongly. * **Conclusion:** The Court found that the impugned order miserably failed to satisfy the parameters laid down by the Supreme Court, as it lacked disclosed tangible material, reasons, and a proper application of mind that provisional attachment was the *only* necessary measure. **6. Statutory References** * **Constitution of India:** Article 226 * **Central Goods and Services Tax Act, 2017 (CGST Act, 2017):** * Section 5(3) (Delegation of powers - referenced in a precedent summary) * Section 62, 63, 64 (Chapters XII, XIV, XV - types of proceedings under which Section 83 can be invoked) * Section 67 (Power of inspection, search, and seizure - investigation initiated under this) * Section 70 (Power to summon persons) * Section 73, 74 (Chapters XIV, XV - types of proceedings under which Section 83 can be invoked) * Section 83 (Provisional attachment to protect revenue) - Sub-sections (1) and (2) directly quoted. * Section 107(1) (Appeals - referenced in a precedent summary) * Section 122 (1A) (Penalty for certain offences - referenced in Section 83(1) text) * Section 169 (Service of notice and orders) * **Central Goods and Services Tax Rules, 2017 (CGST Rules, 2017):** * Rule 159(5) (Objections to provisional attachment and opportunity of hearing) * **Income Tax Act, 1961:** * Section 147 ("Reason to believe" in context of reopening assessment - referred in a precedent) **7. Precedents Cited** * **Radha Krishan Industries v. State of H.P., (2021) 6 SCC 771** (Supreme Court) - *Primary and most significant precedent*, outlining the scope, safeguards, draconian nature, conditions precedent (tangible material, formation of opinion, necessity), and the requirement of a reasoned order for objections under Section 83. * **CIT v. Kelvinator of India Ltd., (2010) 2 SCC 723** (Supreme Court) - Cited for the principle of "tangible material" and "live link" for forming belief/opinion, in the context of Income Tax Act Section 147. * **CIT v. Techspan (India) (P) Ltd., (2018) 6 SCC 685** (Supreme Court) - Followed the principle established in Kelvinator of India Ltd. * **Adil Trading in W.P. No. 30818 of 2023** (Telangana High Court) - Emphasized that Section 83 orders must disclose the grounds/reasons/circumstances compelling the provisional attachment. * **M/s. Anjani Impex v. State of Gujarat** (Gujarat High Court) - Reaffirmed that Section 83 is a drastic power to be used sparingly, on weighty grounds, not for harassment, and attachment of bank accounts should be a last resort. Cited Valerius Industries. * **Valerius Industries vs. Union of India, Special Civil Application No. 13132 of 2019** (Gujarat High Court) - (cited within Anjani Impex) reiterated that provisional attachment requires credible material, should be used sparingly, and not as a tool to harass. * **Sree Meenakshi Industries v. The Additional Chief Secretary / Commissioner of Commercial Tax and others in W.P. 3079 of 2022** (Madras High Court) - Applied Radha Krishan Industries principles, finding that merely stating "to protect the interest of Revenue" without tangible material or reasoned opinion was insufficient. * **Shrisht Dhawan (Smt) v. Shaw Bros., (1992) 1 SCC 534** (Supreme Court) - Explains "jurisdictional fact" and its importance; an error in it vitiates the order. * **Raza Textiles Ltd. v. ITO, (1973) 1 SCC 633** (Supreme Court) - Held that a court/tribunal cannot confer jurisdiction on itself by wrongly deciding a jurisdictional fact. * **Arun Kumar v. Union of India, (2007) 1 SCC 732** (Supreme Court) - Further defined "jurisdictional fact" as a sine qua non or condition precedent for exercising power. ---

Here is a summary of the judgment: **1. Outcome** The High Court rejected the petitioner's Special Civil Application, upholding the provisional attachment orders of the petitioner's bank accounts. The Court found no grounds to interfere with the orders as the petitioner was prima facie involved in a large-scale GST fraud and the attachments were necessary to protect revenue. **2. Core Issue** The core issue was the legality of provisional attachment orders (and their subsequent "renewal" or fresh issuance) under Section 83 of the Gujarat Goods and Services Tax Act, 2017 (GGST Act), challenged on grounds of: a. Lack of territorial jurisdiction of the issuing officer. b. Expiry of the statutory one-year period for provisional attachments under Section 83(2). c. Absence of fresh material or satisfaction for "renewal" orders, rendering them illegal. d. Non-adjudication of the petitioner's objections and denial of proper opportunity for hearing. e. Illegality of an initial attachment made under the repealed Gujarat Value Added Tax Act, 2003 (GVAT Act). **3. Key Facts** * The petitioner, Kesari Nandan Mobile, is a sole proprietorship engaged in dealing with mobile phones, registered under GST since 2017. * On 17.10.2023, the respondent authority initiated a search under Section 67 of the GST Act based on intelligence regarding the petitioner's involvement in circular trading/bogus billing as part of a larger nationwide economic scam involving bogus refunds by exporting high-end mobile phones (estimated Rs. 360 crore in Gujarat). * Provisional attachments of bank accounts and immovable properties were made on 17.10.2023 and 26.10.2023 under Section 83. * The petitioner filed objections under Rule 159 on 01.05.2024, which remained unadjudicated. * A previous Special Civil Application (SCA 15725/2024) challenging the initial attachments was disposed of on 18.11.2024, with the Court noting that the attachments had become infructuous as the one-year period under Section 83(2) expired on 17.10.2024. * Subsequently, the respondent issued new provisional attachment orders (termed "renewal" by the petitioner) on 13.11.2024 (for one ICICI bank account) and 18.12.2024 (for three other bank accounts), along with satisfaction notes. * The Revenue alleged a specific modus operandi: purchasing cheaper mobile phones by electronic payment, selling them for cash without invoices, using this unaccounted cash to buy high-end phones without invoices, and then issuing B2B invoices for the high-end phones by utilizing Input Tax Credit (ITC) accumulated from the cheaper phones, thus evading GST. * The petitioner's statement recorded on 21.10.2023 admitted to fraudulent activity. * An intimation of tax ascertained as being payable (Form GST DRC 01A) was issued on 04.12.2024, quantifying an estimated liability of Rs. 12,33,58,313/- for FY 2021-22, with a total estimated liability of Rs. 18,97,59,041/- for the period 2021-2023-24. * One bank account (YES Bank) was initially attached under Section 45 of the Gujarat VAT Act, 2003, by an order dated 17.10.2023. **4. Arguments (Taxpayer vs Revenue)** **Taxpayer (Petitioner):** * The respondent officer at Vadodara lacked territorial jurisdiction to issue attachment orders for the petitioner, who is based in Ahmedabad, citing a Commissioner's order dated 17.12.2018. * The original provisional attachment orders ceased to have effect after one year (i.e., on 17.10.2024) as per Section 83(2) of the GST Act. Therefore, no valid "renewal" was possible thereafter. * The "renewal" satisfaction notes dated 13.11.2024 and 18.12.2024 were verbatim reproductions of the original 17.10.2023 note, without demonstrating any fresh justification or steps taken, violating the principles laid down in *Radha Krishan Industries*. * The petitioner's objections filed on 01.05.2024 under Rule 159 were never adjudicated, and the subsequent notice dated 18.12.2024 providing only one day for objections violated the right to be heard. * The attachment of the YES Bank account under Section 45 of the Gujarat VAT Act, 2003, on 17.10.2023 was illegal as the Act was repealed, and thus its subsequent "renewal" under the GST Act was void. * The provisional attachments failed the test of proportionality. * Distinguished *Dhanlaxmi Metal Industries* based on factual differences (proprietor's arrest, challenge within one year). * Relied on *RHC Global Exports Private Limited* and *Mahakali Enterprises* for the principle that attachments cease after one year. **Revenue (Respondent):** * The respondent officer had jurisdiction to conduct the search and subsequent assessment proceedings as authorized by the Additional Commissioner of State Tax (2), Enforcement, Ahmedabad, supported by CBIC circulars dated 05.10.2018 and 22.06.2020 on concurrent jurisdiction. * The provisional attachments were justified due to the petitioner's involvement in a clear modus operandi of GST evasion through bogus billing, claiming ineligible ITC, and defrauding the exchequer, as explained in the satisfaction notes and affidavit. * The "renewal" orders dated 13.11.2024 and 18.12.2024 were, in effect, fresh provisional attachment orders, passed after further investigation, quantification of estimated tax liability (DRC 01A issued 04.12.2024), and recording of fresh satisfaction. * The investigation is ongoing, complex, and involves a large-scale scam, necessitating provisional attachment to protect revenue. * The petitioner's admission of fraudulent activity in the 21.10.2023 statement further justified the action. * Relied on *M/s. Shree Dhanlaxmi Metal Industries* (Gujarat HC) where similar fraudulent activities justified provisional attachment. * Distinguished *Radha Krishan Industries* and *RHC Global Exports Private Limited*, arguing that in those cases, either there was no fresh satisfaction or the factual matrix differed significantly (e.g., *Radha Krishan* involved a recipient of bogus invoices with goods, whereas the petitioner here issued bogus invoices and availed fraudulent ITC). **5. Court’s Reasoning** * The Court found a strong prima facie case against the petitioner, noting the detailed modus operandi of circular trading, bogus billing, and fraudulent ITC utilization, which was also admitted by the petitioner in a statement. The estimated tax liability of Rs. 18.97 crore for the petitioner, as part of a larger Rs. 360 crore scam, justified the revenue protection measures. * On jurisdiction, the Court accepted the Revenue’s argument that the officer was duly authorized to conduct the search and subsequent assessment, therefore possessing the necessary jurisdiction despite the petitioner's location. * Regarding the one-year expiry under Section 83(2), the Court acknowledged that the original orders ceased to have effect on 17.10.2024. However, it held that there is *no embargo* on the respondent issuing a *fresh* provisional attachment order if fresh satisfaction is recorded. * The Court accepted the Revenue's contention that the impugned orders of 13.11.2024 and 18.12.2024, though termed "renewal," were effectively fresh provisional attachment orders. This was supported by the recording of fresh satisfaction and the issuance of Form GST DRC 01A quantifying the estimated liability in the interim period. * The Court distinguished the precedents cited by the petitioner (*Radha Krishan Industries* and *RHC Global Exports Private Limited*). It noted that *RHC Global* involved a case where no fresh satisfaction was recorded at the time of renewal, and there was a substantial time gap without specific action, unlike the present case where fresh satisfaction was recorded after quantification of liability. It distinguished *Radha Krishan Industries* on facts, stating that the petitioner here was involved in issuing bogus bills and fraudulently availing ITC, unlike the appellant in *Radha Krishan* who received bogus invoices with goods. The Court found the facts of the present case to be similar to *Dhanlaxmi Metal Industries*, where provisional attachment was upheld due to fraudulent invoice transactions. * The Court emphasized that Section 83 is intended to safeguard revenue, and given the magnitude of the fraud and tax evasion, the continued provisional attachment of bank accounts was necessary. * While not explicitly addressing the legality of the initial VAT Act attachment for the YES Bank account in detail, the Court's overall finding implicitly validated its continuation under the fresh GST Section 83 orders. * The Court did not extensively dwell on the non-adjudication of earlier objections or the one-day notice period for new objections, prioritizing the substantial evidence of fraud and the need to protect revenue. **6. Statutory References** * **Constitution of India:** Article 226 * **Gujarat Goods and Services Tax Act, 2017 (GGST Act):** * Section 16 (Input Tax Credit) * Section 67 (Power to Inspection, Search and Seizure) * Section 67(2) * Section 70(1) (Power to Summon persons to give evidence and produce documents) * Section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts) * Section 74(5) * Section 83 (Provisional attachment to protect revenue in certain cases) * Section 83(1) * Section 83(2) * **Gujarat Goods and Services Tax Rules, 2017 (GGST Rules):** * Rule 159 (Provisional attachment of property) * Form GST DRC 22 (Order for Provisional Attachment) * Form GST DRC 01A (Intimation of Tax Ascertained as Being Payable) * **Gujarat Value Added Tax Act, 2003 (GVAT Act):** * Section 45 **7. Precedents Cited** * **By Petitioner and Distinguished by Court:** * *Radha Krishan Industries v. State of HP* [(2021) 6 SC 771] (Hon'ble Supreme Court) * *RHC Global Exports (P) Ltd. v. Union of India* [(2024) 166 taxmann.com 730 (SC)] (Hon'ble Supreme Court) * *Mahakali Enterprises v. Union of India* [(2022) 142 taxmann.com 315 (Gujarat)] (Gujarat High Court) * **By Revenue and Applied by Court:** * *M/s. Shree Dhanlaxmi Metal Industries v. State of Gujarat and others* (Special Civil Application No.1084 of 2024, decided on 14.06.2024) (Gujarat High Court)

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment. *** ### **Judgment Summary: M/S D.S. Enterprises vs Principal Commissioner Of Central Goods and Services Tax** **1. Outcome** This is an interim order. The High Court has not quashed the impugned order but has adjourned the matter to 13th November 2025, with the following directions: * **For the Petitioner:** To place on record proof of their business existence at the current registered address, along with details of the promoters and their movable/immovable assets. * **For the GST Department:** To produce the physical verification report that formed the basis for the cancellation of the Petitioner's registration. **2. Core Issue** The central issue is the legality of the retrospective cancellation of the Petitioner's GST registration (effective from 15th September 2017) based on the allegation that the firm was "non-existent" at its registered premises, especially when the physical verification report forming the basis of this conclusion was allegedly never shared with the Petitioner. **3. Key Facts** * The Petitioner, M/s D.S. Enterprises, faced a series of actions from the GST department regarding its registration. * **First Cancellation & Revocation:** An initial Show Cause Notice (SCN-1) dated 15th April 2021 was issued with a vague reason ('Others'), leading to registration cancellation. This cancellation was later revoked on 24th September 2021. * **Address Change:** The Petitioner successfully amended its principal place of business to a new "current address" on 1st February 2023. * **Second SCN:** A second SCN (SCN-2) was issued on 27th June 2023, but the proceedings were dropped after the Petitioner's reply. * **Third SCN & Final Cancellation:** A third SCN (SCN-3) was issued on 19th October 2023, alleging the Petitioner was non-existent at its current address based on a physical verification. This led to a retrospective cancellation of registration (effective from 15th Sept 2017) by an order dated 11th December 2023. * **Revision Application Rejected:** The Petitioner's revision application against this cancellation was rejected via the impugned order dated 8th August 2025. * The Petitioner has filed the current writ petition challenging this rejection. **4. Arguments** **Petitioner's Arguments (as advanced by Sr. Counsel):** * The Petitioner challenges the retrospective cancellation of its GST registration. * The physical verification report, which is the primary evidence for the cancellation, was never provided to the Petitioner, constituting a violation of the principles of natural justice. * The Show Cause Notices did not mention the said physical verification report. * The Petitioner continues to conduct business from the registered "current address". **Respondent's Arguments (inferred from actions):** * The Petitioner was found to be non-existent/non-functional upon physical verification conducted at their registered premises. * This is a valid ground for cancelling the GST registration under the CGST Act. **5. Court’s Reasoning** * The Court observed a repeated pattern of Show Cause Notices being issued against the Petitioner on different grounds. * The Court identified the physical verification report as the genesis of the dispute but noted a significant procedural lapse: the SCNs did not mention this verification, and the report itself was not provided to the Petitioner. * The Court took "judicial notice" of another related case (*Rishi Enterprises*, W.P.(C) 4374/2025) involving an order against the Petitioner for fraudulent availment of Input Tax Credit (ITC). This indicates the Court is aware of a broader context of potential non-compliance. * Before deciding the matter, the Court deemed it necessary to verify the claims of both parties by seeking documentary evidence of the Petitioner's existence and the department's verification report. **6. Statutory References** * **Constitution of India:** Article 226 (invoked for filing the writ petition). * **Central Goods and Services Tax Act, 2017 (CGST Act):** Section 67 (The physical verification was purportedly conducted under this section, which deals with the power of inspection, search, and seizure). **7. Precedents Cited** * The Court took judicial notice of its own order in **W.P.(C) 4374/2025 titled *Rishi Enterprises through its proprietor Rajeev Kumar Goel v. Additional Commissioner Central Tax Delhi North***, disposed of on 20th August 2025. This case is noted to be in respect of fraudulent ITC availment by the Petitioner.

Of course. As a Senior GST Legal Analyst, here is a structured summary of the judgment in M/S Kashish Optics Ltd. vs The Commissioner, Cgst Delhi West & Ors. *** ### **Judgment Summary** **Case Title:** M/S Kashish Optics Ltd. vs The Commissioner, Cgst Delhi West & Ors. **Date of Judgment:** 3 March, 2025 **Court:** High Court of Delhi **Coram:** Hon'ble Mr. Justice Yashwant Varma & Hon'ble Mr. Justice Harish Vaidyanathan Shankar --- #### **1. Outcome** The Writ Petition was **allowed**. The Court directed the Respondents (GST Department) to: * **Release the seized goods** upon the Petitioner depositing the valued amount. * **Release all seized documents and electronic devices** (laptops, mobile phones, etc.) after making copies of the data, within four weeks. * Permit the Petitioner to take photocopies of all seized physical documents. * Conclude any pending proceedings regarding the alleged violation within six weeks. #### **2. Core Issue** Whether the continued seizure of goods under Section 67(2) of the CGST Act, 2017 is legally valid when the initial six-month period is extended by the proper officer without providing prior notice and an opportunity of being heard to the person from whom the goods were seized. #### **3. Key Facts** * **Search & Seizure:** The GST Department conducted a search at the Petitioner's premises on 22/23 October 2020 and seized goods, documents, and electronic devices vide a seizure order dated 23 October 2020. * **Initial Seizure Period:** As per Section 67(7) of the CGST Act, the initial period for which goods can be held is six months, which was set to expire on 22 April 2021. * **Extension of Seizure:** On 16 April 2021, the department internally approved an extension of the seizure period for another six months, up to 21 October 2021. This extension was granted without giving any notice or hearing to the Petitioner. * **Show Cause Notice (SCN):** A Show Cause Notice for confiscation of goods under Section 130 of the CGST Act was issued on 20 October 2021. The department claimed it was served on the same day by affixation, as the premises were locked and the proprietor was unreachable. * **Writ Petition:** The Petitioner challenged the continued retention of goods, arguing it was illegal due to the procedural lapses in extending the seizure period. #### **4. Arguments** **Petitioner (M/S Kashish Optics Ltd.):** * **Mandatory Return of Goods:** Under Section 67(7) of the CGST Act, goods must be returned if no notice is given within six months of seizure. * **Illegal Extension:** The extension of the seizure period was invalid as it was done without providing the Petitioner prior notice or an opportunity to be heard, violating the principles of natural justice. * **Pari Materia Provision:** Section 67(7) of the CGST Act is *pari materia* (on the same subject) with Section 110(2) of the Customs Act, 1962. Therefore, Supreme Court precedents holding that a hearing is mandatory before extending seizure under the Customs Act are directly applicable. * **Insufficient Cause:** The internal note sheets do not show any "sufficient cause" for the extension; rather, they reveal the department's own inefficiencies. * **Delayed SCN:** The SCN for confiscation was effectively served only in March 2022, well beyond the maximum permissible seizure period of 12 months. **Respondents (GST Department):** * **Statutes Not Pari Materia:** Section 67 of the CGST Act is different from Section 110 of the Customs Act, so the Supreme Court judgments do not apply. * **No Hearing Required:** The language of Section 67(7) does not explicitly require a personal hearing before an extension is granted. * **Sufficient Cause Existed:** Internal file notings demonstrate that there was sufficient cause to extend the period, which was duly considered by the proper officer. * **Timely SCN:** The SCN was issued and served within the extended 12-month period via affixation, a valid mode of service under Section 169 of the CGST Act, as other methods were not possible. * **Provisional Release:** The Petitioner did not avail the option of provisional release of goods under Rule 140 of the CGST Rules, 2017. #### **5. Court’s Reasoning** * **Provisions are Pari Materia:** The Court rejected the department's argument and held that Section 67(7) of the CGST Act and Section 110(2) of the Customs Act are indeed *pari materia*. Both are fiscal statutes, deal with the seizure of goods based on a "reason to believe," and have serious repercussions for the assessee. The underlying principles are identical. * **Right to Notice is Fundamental:** Relying on the Supreme Court's decisions in *Charan Das Malhotra* and *I.J. Rao*, the Court affirmed that a person has a right to the return of their goods after six months. This valuable statutory right cannot be defeated unilaterally without notice and a hearing. The power to extend seizure is quasi-judicial and requires a judicial approach. * **"Sufficient Cause" Requires Due Process:** The phrase "on sufficient cause being shown" in Section 67(7) implies an objective consideration. It cannot be a reason known only to the department. The affected party must be informed of the reasons for the proposed extension and given an opportunity to present their case against it. * **Department's Inefficiency is Not "Sufficient Cause":** The Court examined the department's internal note sheets and found they did not constitute "sufficient cause." In fact, the notes revealed the department's own "shoddy performance," including improper valuation, failure to properly describe the goods, and misplacement of key documents like the panchnama. Such internal failures cannot be used to the detriment of the assessee. * **Irrelevance of SCN for Confiscation:** The Court noted that a notice for confiscation under Section 130 is distinct from the requirement under Section 67(7). The validity of the seizure and its extension must be judged independently of the subsequent confiscation proceedings. The core issue was the legality of the extension, not the timing of the SCN. #### **6. Statutory References** * **Central Goods and Services Tax Act, 2017 (CGST Act):** * **Section 67(2):** Power to search and seize goods. * **Section 67(7):** Mandates return of goods if no notice is given within six months, with a proviso for a six-month extension on "sufficient cause being shown." * **Section 130:** Confiscation of goods or conveyances. * **Section 169:** Service of notice in certain circumstances. * **Central Goods and Services Tax Rules, 2017 (CGST Rules):** * **Rule 140:** Procedure for provisional release of seized goods. * **Customs Act, 1962:** * **Section 110(2):** Provision for seizure and extension, held to be *pari materia* with Section 67(7) of the CGST Act. * **Section 124:** Issue of show cause notice before confiscation of goods. #### **7. Precedents Cited** * **Assistant Collector of Customs v. Charan Das Malhotra, (1971) 1 SCC 697:** Established that the power to extend seizure is quasi-judicial and requires a hearing. * **I.J. Rao, Asst. Collector of Customs v. Bibhuti Bhushan Bagh, (1989) 3 SCC 202:** Affirmed the principles in *Charan Das Malhotra*, holding that the person from whom goods are seized is entitled to notice and a hearing before the seizure period is extended, as a valuable right to the return of goods is affected. * **Lokenath Tolaram v. B.N. Rangwani, (1974) 4 SCC 327:** Referenced in *I.J. Rao*.

Here is a summary of the judgment M/S Mansi Overseas vs Principal Commissioner Of Goods And ... on 24 January, 2025: --- ### 1. Outcome The Delhi High Court allowed the writ petition, quashing the impugned provisional attachment order dated 26 December 2024. The respondents were directed to immediately issue clarificatory directions for de-freezing the petitioner's bank account and communicate the same to the Branch Manager of the United Bank of India. ### 2. Core Issue The core issue was the legality and validity of the provisional attachment of the petitioner's bank account by the GST authorities under Section 83 of the Central Goods & Services Tax Act, 2017, specifically whether the conditions precedent for exercising such a "draconian" power were met. ### 3. Key Facts * The petitioner, M/S Mansi Overseas, challenged a provisional attachment order dated 26 December 2024, freezing its bank account with the United Bank of India, purportedly under Section 83 of the CGST Act, 2017. * This fresh attachment order followed a previous debit freeze order dated 12 May 2020, which had been quashed by the Delhi High Court on 28 October 2024 (in W.P.(C) 13720/2024) because it had exceeded the statutory 12-month period and no fresh Section 83 order had been issued. * The respondents justified the new attachment by stating that: * The original Show Cause Notice (SCN) had culminated in an Order-in-Original (OIO) on 20 December 2024, confirming penalties exceeding Rs. 1 crore. * The petitioner failed to respond to DRC-01, did not file a reply to the SCN, did not attend the personal hearing before the Adjudicating Authority, and was considered "non-cooperative" in a "fraud case". * These were deemed "material change of circumstances leading to confirmed demand and continuous non corporation of TP's in a fraud case," necessitating action to protect revenue interest. ### 4. Arguments (Taxpayer vs Revenue) * **Taxpayer (Petitioner):** Challenged the provisional attachment order, contending that the conditions for invoking the drastic power under Section 83 of the CGST Act were not met, and the reasons cited by the revenue were insufficient and did not justify the attachment. * **Revenue (Respondents):** Argued that the attachment was necessary due to the culmination of the SCN into a confirmed demand (Order-in-Original dated 20 December 2024 imposing over Rs. 1 crore in penalties) and the petitioner's alleged non-cooperation throughout the adjudication process (failure to respond to notices, not attending hearings). This was presented as a material change in circumstances requiring provisional attachment to protect government revenue. ### 5. Court’s Reasoning 1. **Strict Interpretation of Section 83:** The Court reiterated that the power under Section 83 of the CGST Act is "draconian," "drastic, and far-reaching," and must be exercised "sparsely and with extreme care and caution" based on a strict and punctilious observance of statutory preconditions. 2. **Reliance on *Radha Krishnan Industries*:** The Supreme Court's seminal decision in *Radha Krishnan Industries v. State of Himachal Pradesh and Others* (2021) 6 SCC 771 was heavily relied upon. This case established that: * Provisional attachment is "in aid of something else" and its purpose is to protect revenue, but only "in certain cases" where statutory conditions are fulfilled. * The Commissioner's opinion that attachment is "necessary so to do" for protecting revenue must be based on "tangible material" demonstrating a "proximate and live nexus" to this purpose. * There must be a reasonable apprehension that the assessee may default in payment or thwart collection efforts. * "Necessity" postulates a stringent requirement, not mere expediency, meaning revenue cannot be protected *without* provisional attachment. * The power should not be used to harass, cause irreversible detrimental effects on business, or as pre-emptive strikes. 3. **Inadequacy of Revenue's Reasons:** The Court found that the reasons adduced by the respondents (culmination of SCN into OIO, failure to respond to DRC-01/SCN, non-attendance of hearing, and alleged non-cooperation) "abjectly failed to meet the thresholds" for invoking Section 83. 4. **No Tangible Material:** The respondents failed to produce any material to show a reasonable apprehension that the petitioner was at risk of defaulting on payments or would defeat the interest of government revenue. Vague apprehensions or lack of cooperation alone cannot justify such a draconian action. 5. **Conclusion:** The Court concluded that the respondents had "abjectly failed to formulate any opinion which would lend credence" to the action under Section 83, as required by the law and the Supreme Court's pronouncements. ### 6. Statutory References * **Central Goods & Services Tax Act, 2017 (CGST Act):** * Section 83 (Provisional attachment to protect revenue in certain cases) * Section 122(1A), 159(2), 5(3), 107(1), 107(6), 107(7) * Sections 62, 63, 64, 67, 73, 74, 74(9) * **Himachal Pradesh Goods and Services Tax Act, 2017 (HPGST Act):** Section 83(1) * **Himachal Pradesh Goods and Services Tax Rules, 2017 (HPGST Rules):** Rule 159, Rule 159(5) * **Gujarat Value Added Tax Act, 2003:** Section 45 * **Income Tax Act, 1961:** Section 147 * **Form GST DRC-22** (referenced in previous judgments regarding Section 83) ### 7. Precedents Cited * **Radha Krishnan Industries v. State of Himachal Pradesh and Others** (2021) 6 SCC 771 (Supreme Court) - *Seminal and extensively relied upon.* * **Valerius Industries v. Union of India**, 2019 SCC OnLine Guj 6866 (Gujarat High Court) - *Principles for Section 83.* * **Jay Ambey Filament (P) Ltd. v. Union of India**, 2020 SCC OnLine Guj 3009 (Gujarat High Court) - *Subjective satisfaction based on credible information.* * **Kaish Impex (P) Ltd. v. Union of India**, 2020 SCC OnLine Bom 125 (Bombay High Court) - *Proceedings must be against the taxable entity whose property is attached, nexus between proceedings and attachment.* * **Vishwanath Realtor v. State of Gujarat**, 2015 SCC OnLine Guj 6564 (Gujarat High Court) - *"Tangible material" for opinion under Gujarat VAT Act Section 45.* * **CIT v. Kelvinator of India Ltd.**, (2010) 2 SCC 723 (Supreme Court) - *"Tangible material" and "live link" for "reason to believe" under Income Tax Act Section 147.* * **CIT v. Techspan (India) (P) Ltd.**, (2018) 6 SCC 685 (Supreme Court) - *Followed Kelvinator principle.* ---