1.00. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following main reliefs:-

“14.a. Your Lordships be pleased to issue a writ mandamus or any other appropriate writ directing the respondents to immediately remove prohibition of goods prohibited under Prohibition order GST INS 03 dated 05-12-2018. The said order may kindly be quashed or set aside.

b. Your Lordships be pleased to issue a writ of Mandamus or any other appropriate writ refraining the authority from taking any other coercive measure for recovery of so called liability unless appropriate proceedings are concluded and the petitioner is allowed to represent their case before appropriate authority.

c. Such other and further relief as deemed just and expedient be granted.

d. Your Lordships be pleased to issue a writ mandamus or in the nature of mandamus quashing and setting aside the instruction issued wide letter dtd. 23-05-2019 by Respondent No. 4 bearing No.SARAVEKMI (1) ANVESHAN/V-3/ GANDHINAGAR /2019-20/Ja: dated 23-05-2019.”

2.00. The case of the writ applicant in his own words, as pleaded in the writ application, is as under :-

“1. The Petitioner says and submits that the petitioner is engaged in processing of raw cotton classifiable under chapter 52 of the Schedule to the Goods and Service Tax Act, 2017 and is holder of Registration Certificate bearing No.24AAKFG9023B1ZR and are under the control of State Tax Officer, Ghatakt 93, Range-l, Rajkot. The Petitioner says and submits that they were holding registration under the provisions of Gujarat Value Added Tax Act and on introduction of Goods and Service Tax Act, has migrated as per the procedure prescribed under the law.

2. The Petitioner says and submits that they are following all the procedure prescribed under the provisions of the respective Acts and are also availing credit of eligible taxes paid on the input used in relation to the business activity.

3. The Petitioner says and submits that they are procuring Raw Cotton from the market either directly from the respective farmers or through Adatiya or through visiting traders who visits our premises and show us the quality of material and on purchase the payments are being made either by Cheque or by RTGS/NIFT and in case purchase is from farmer and the said farmer insist for cash payment then in few cases by cash.

4. The Petitioner says and submits that on 04-12-2018 some of the officers from the office of Assistant Commissioner (Enforcement) visited our premises and started investigation and during such investigation impounded some documents like Purchase invoices described by them as the dealer who are involved in billing activity.

5. The Petitioner says and submits that the said investigation continued up to 5-12-2018 for the reason that evening i.e. upto 7.30 p.m. the investigation could not be completed.

6. The Petitioner says and submits that on 4-12-2018 and on 5-12-2018 the said investigating authority recorded statement of one of the partner who during such statement has categorically clarified that they have purchased material from the dealers and have made payment through Banking System only and all the purchases are duly accounted in the stock register maintained in computer.

7. The Petitioner says and submits that it was also clarified that all the purchases are on FOR basis and the responsibility of transportation of material is always on supplier and hence they were not in possession of Lorry Receipt.

8. The Petitioner says and submits that the stock available as on 05-12-2018 which stands covered by the order of prohibition is duly accounted for and the duty payable also stands discharged either by the respective dealer or by the petitioner under Reverse Charge Mechanism. In other words the stock lying within the premises is duly duty paid stock and the petitioner has not violated any of the provisions of the Act.

9. The Petitioner says and submits that during such investigation only the respective officer determined so called liability without allowing the petitioner to represent the case and has issued order prohibiting the petitioner from dealing with the goods lying in stock worth ₹ 2,50,00,000/- vide order dated 05-12-2018.

10. The petitioner says and submits that the respondents are served with the notice and are in the knowledge of the fat that the petitioner has challenged the order of prohibition issued under Section 67(2) of the CGST Act, 2017 has issued instructions that the time limit of the said order is further extended by six months.”

2.01. Thus, it appears from the materials on record that an order of seizure dated 5/12/2018 came to be passed by the Assistant Commissioner of State Tax (Enforcement Division-3), Gandhinagar. In the order it has been indicated that the goods as well as the Books and other documents have been seized. It also appears that thereafter an order of prohibition came to be passed under Rule 139(4) with respect to the goods in the nature of cotton seeds and bales. The Seizure Order reads thus :-

“FORM GST INS-O2

ORDER OF SEIZURE

[See rule 139 (2)]

Whereas an inspection under sub-section (1)/search under sub-section (2) of Section 67 was conducted by me on 04/12/2018 at __ AM/ PM in the following premise(s):

SURVEY No-50, DHOKLIYA,

JAMNAGAR ROAD, AMRELI GAM ROAD

DlST-RAJKOT

which is/are a place/places of business/premises belonging to:

GOLDEN COTTON INDUSTRIES

GSTN : 24AAKFG9023B1ZR

In the presence of following witness (es):-

1. DINESHBHAI PARSTOMBHAI PATEL 5/ ROYAL PARK, KALAVAD ROAD, 201/SANKHESHVAR APPARTMENT, RAJKOT.

2. AMRUTLAL CHANGANLAL RAMKABIR POST DHOKALIYA, TA-PADDHARI, DlST-RAJKOT.

And on Scrutiny of the books of accounts, registers, documents/papers and goods found during the inspection/search, I have reasons to believe that certain goods liable to confiscation and/or books and/or documents and/or things useful for or relevant to proceedings under this Act are secreted in place(s) mentioned above.

Therefore, in exercise of the powers of the conferred upon me under sub-section (2) of section 67, I hereby seize the following goods/books/documents and things:

A) Details of Goods seized:

B) Details of books / documents / things seized :

And these goods; and or things are being handed over for safe upkeep to:

With a direction that he shall not remove, part with, or otherwise deal with the goods or things except with the previous permission of the undersigned.

2.02. The Prohibition Order reads thus :

“FORM GST INS-03

ORDER OF PROHIBITION

[See Rule 139(4))]

Whereas an inspection under sub-section (1) / search under sub-section (2) of Section 67 was conducted by me on 04/12/2018 at ___ AM/PM in the following premise(s);

SURVEY No-50, DHOKLIYA,

JAMNAGAR ROAD, AMRELI GAM ROAD

DlST-RAJKOT

which is/are a place/places of business/premises belonging to:

GOLDEN COTTON INDUSTRIES

GSTN : 24AAKFG9023B1ZR

In the presence of following witness (es):-

1. DINESHBHAI PARSTOMBHAI PATEL 5/ ROYAL PARK, KALAVAD ROAD, 201/SANKHESHVAR APPARTMENT, RAJKOT.

2. AMRUTLAL CHANGANLAL RAMKABIR POST DHOKALIYA, TA-PADDHARI, DlST-RAJKOT.

And on Scrutiny of the books of accounts, registers, documents/papers and goods found during the inspection/search, I have reasons to believe that certain goods liable to confiscation and/or books and/or documents and/or things useful for or relevant to proceedings under this Act are secreted in place(s) mentioned above.

Therefore, in exercise of the powers of the conferred upon me under sub-section (2) of section 67, I hereby order that you shall not / shall not cause to remove, part with, or otherwise deal with the goods except without the previous permission of the undersigned.

Signature of the Witnesses :

2.03. Being aggrieved and dissatisfied with the orders of seizure as well as prohibition, the writ applicant has come up with this writ petition.

3.00. Mr.Sheth, the learned counsel appearing for the writ applicant vehemently submitted that the impugned order of prohibition is in clear violation of the principles of natural justice and contrary to the powers conferred under the provisions of Section 67(2) of the Goods and Service Tax Act, 2017 (for short “GST Act”).

3.01. Mr.Sheth further submitted that the impugned order passed by the authority concerned is premature, as the department has neither determined any liability in any adjudication proceedings nor any assessment order has been passed determining any liability contemplated in law.

3.02. Mr.Sheth further pointed out that in the order of seizure, there is no reference with regard to the details of the goods seized. According to Mr.Sheth, in the absence of any details in the order of seizure, it could be necessarily implied that there is no valid seizure of goods in accordance with law. According to Mr.Sheth, if there is no seizure of the goods in accordance with law, then there cannot be any order of prohibition in that regard.

3.03. Mr.Sheth further submitted that Chapter XIV of the Act, 2017 is with respect to the power of inspection, search, seizure and arrest. According to Mr.Sheth, the conditions as prescribed in Clause (2) of section 67 of the Act are not fulfilled. In the absence of the requisite conditions as laid down in clause (2) of section 67 being fulfilled, there cannot be any seizure. According to Mr.Sheth, there is nothing on record to indicate that the goods were secreted to any place. The submission is that the goods were found to have been stored in the godown owned by the writ applicant. The books of account were also seized from the office premises. Neither the goods nor the books could be said to have been secreted at some unknown place with the intention to hide or conceal them. Such satisfaction is a condition precedent, according to Mr.Sheth, for the purpose of exercising powers under section 67 of the Act.

3.04. The grounds of challenge raised in the memo of the writ application are as under :-

“(A). The petitioner says and submits the order passed by the proper officer is improper and unjustified inasmuch as the order passed is in clear violation of principles of natural justice and is in excess of the powers conferred under the provisions of Section 67(2) of Goods and Service Tax Act, 2017?

(B). The petitioner says and submits that the order passed by the proper officer is premature and is in contravention to the provisions of Central goods and Service Act, inasmuch as the department has neither determined any liability by following the adjudication proceeding nor has issued any assessment order determining any liability as contemplated under the law.

(C). The petitioner says and submits that the order of prohibition passed by the roper officer without considering the fact that the goods under consideration are duly accounted for and are utilized in manufacturing of final product which are cleared with payment of tax and the liability thereon also stands discharged.

(D). The petitioner says and submits that the stock lying in the premises has no connection with the so called allegation of the department and is out of the purchases either from the traders who has discharged their liability or from farmers for which the petitioner has discharged liability under the provisions of the Reverse Charge Mechanism. In other words, the stock lying within the premises is duty paid stock and hence the order of prohibition is bad in law and is liable to be set aside.”

3.05. In such circumstances referred to above, Mr.Sheth, submitted that there being merit in this writ application, the same be allowed and the impugned order of prohibition be quashed.

4.00. On the other hand, this writ application has been vehemently opposed by Mr.Devang Vyas, the learned Assistant Solicitor General of India appearing for the respondent No.1, Mr.Jaimin Gandhi, the learned counsel appearing for the respondent No.2 and Ms.Maithili Mehta, the learned AGP appearing for the respondent Nos.3 and 4, respectively.

4.01. Ms.Mehta, the learned AGP submitted that no error, not to speak of any error of law could be said to have been committed by the authority concerned in passing the order of prohibition.

4.02. According to Ms.Mehta, the order of seizure is also absolutely in accordance with law.

4.03. Ms.Mehta placed strong reliance on the following averments made in the Affidavit in reply filed on behalf of the respondent No.4. Averments made in Paragraph Nos.5 to 14 of the reply are as under :-

“6. It is respectfully submitted that, the office of the Commissioner of State Tax, Enforcement vide letter dated 03.12.2018 issued under form GST INS- 1 authorised the Assistant Commissioner of State Tax to inspect and search under rule 139 (1) of Gujarat Goods and Services Tax Act, 2017, the same letter was received by the partner of the petitioner company. It is respectfully submitted that, as per rule 139 (2) from GST INS 2 mainly order of seizure is issued to the petitioner on 05.12.2018, the said form is also received by the partner of M/s Golden Cotton Industries, the said form is annexed at Annexure-A to the memorandum of the application. It is further respectfully submitted that, sub-rule-4 of Rule 139 provides for;

“Where it is not practicable to seize any such goods, the proper officer or the authorized officer may serve on the owner or the custodian of the goods, an order of prohibition in firm GST INS-03 that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer”.

The said form is also issued to the partner of M/s Golden Cotton Industries, which is annexed at Annexure-D to the memorandum of the application.

7. It is respectfully submitted that, upon issuance of such form under Rule-139 of the Gujarat Goods and Services Act, 2017, the petitioner was also served with the copy of show cause notice under form GST DRC 01 dated 05.12.2018, showing as to cause the petitioner did not produce related documents of purchase like Lorry receipt, Delivery Chalan, Gate Pass, weigh receipt.

8. It is respectfully submitted that pursuant there to a criminal complaint was filed before the Hon’ble Additional Chief Metropolitan Magistrate, Ahmedabad bearing Criminal Case no. 111714 of 2018, wherein as accused no.22 one Mr. Nitin Chaganbhai Sirza, accused No.23 namely Bharatbhai Chaganbhai Sirza who are the partners of M/s Golden Cotton Industries and accused no. 24 M/s. Golden Cotton Industries.

9. It is respectfully submitted that, in paragraph no.2 of the compliant it is stated that, the Assistant Commissioner of State Tax has accorded sanctioned as warrant under section 132 (6) and section 134 of the Gujarat Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017 for the purpose of launching prosecution against the cited accused Vide sanctioned order bearing no.1925 dated 18.12.2018, it is also stated in paragraph no.3 of the said complaint that the department is investigating case of fraudulent transaction of input tax credit and evasion of huge amount of Gujarat Goods and Service Tax by various entities in Gujarat, particularly in the commodities of edible or non-edible oils and cakes. For carrying out search proceedings at some places, search warrant has been issued under section 67 of the Gujarat Goods and Services Act, 2017 to the officers.

10. It is respectfully submitted that the complainant has Specifically upon satisfaction stated in paragraph-16 of the complaint that to find out the beneficiaries of input tax credit, which was fraudulently transferred by using the dubious firm/entities to them, the investigation is underway. In such exercise three firms/companies (accused no.19, 21 and 24) are also found, which have availed the input tax credit in excess of Rs. one crore. They have committed the offence as mentioned in Section 132 (1)(C), 132(1)(f) and 132 (1)(1) of the Gujarat Goods and Service Act, 2017 and Central Goods and Service Act, 2017. Further since the partner or director of such firms/companies who are mentioned as accused no.17, 18, 20, 22 and 23 were in-charge of or responsible to the firm or company for the conduct of business, they are also guilty of such offence as per the provisions of section 137 of the Gujarat Goods and Services Act, 2017 and the Central goods and Service Act, 2017. It is further contended in paragraph 20 of the complaint that they have committed an offence under sections 132(1)(a)(b) (c)(f)(h)(i)(k)(l) of the Gujarat Goods and Services Act, 2017 and the Central Goods and Service Act, 2017, read with section 120-B of the Indian Penal Code. Therefore, it is prayed that cognizance of the aforesaid offences may be taken against the accused. The Hon’ble Court may be pleased to issue process of warrant against the accused Nos.9, 10, 11, 12, 14, 15, 16, 17, 18, 20, 22 and 23 (accused Nos.1 to 6 are under judicial custody) and after trial punished them according to law.

11. It is respectfully submitted that there is a subjective satisfaction on the part of the respondent authority in issuing the prohibition order under Rule 139(4) for the reason that being that, the petitioner is engaged in the business of processing of raw cotton material, whereas subjective satisfaction is that the petitioner has engaged into sham/bogus billing transaction with three firms namely Srinath Refoils, Gopinath Trading Company and Radharaman Enterprise. It is further respectfully submitted that, these three firms are being run by sole proprietorship and are accused nos. 10, 15 and 16 in the criminal complaint filed before Hon’ble Additional Chief Metropolitan Magistrate, Ahmedabad. It further respectfully submitted that, the three firms are engaged in the business of edible and non-edible oils and cakes.

12. It is respectfully submitted that, as far as subrule 4 and Rule-139 is concerned. It is further respectfully submitted that, sub-rule-4 of the Rule 139 reads as under;

“Sub-Rule 4 and Rule 139 :

“Where it is not practicable to seize any such goods, the proper officer or the authorized officer may serve on the owner or the custodian of the goods, an order of prohibition in FORM GST INS-03 that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.”

In the light of the above, it is submitted that, the rule begins with words where it is not practicable to seize any such goods and therefore, in the present case the order of prohibition was in form GST INS 03, which is annexed at Annexure-D to the memorandum of the application. It is respectfully submitted that, the goods seized are in the nature of cotton, cotton seeds and bales worth of Rs. Two crore and Fifty lakhs.

It is respectfully submitted that, the petitioner has replied to the show cause notice dated 22.01.2019 which is issued under form GST DRC 01 under section 73, under section 74 read with Rule-142 of Central “”4M”! Services Tax, 2017 and rules.

14. It is respectfully submitted that the proceedings under Section 73 and Section-74 are under adjudication and if the petitioner is aggrieved by any order passed under the said Section, the petitioner also has efficacious alternative remedy under Section-107 which provides for Appeal and Revision before the Appellate Authority.”

4.04. Ms.Mehta, the learned AGP submitted that the proceedings for confiscation of the seized goods under section 73 and section 74, respectively, are in progress. The writ applicant has an alternative remedy under section 107 of the Act which provides for Appeal and Revision before the concerned authority.

ANALYSIS :-

5.00. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the authority concerned committed any error in passing the order of Seizure and also the order of Prohibition?.

5.01. We take note of two very important aspects of the matter from the reply filed on behalf of the respondent No.4. First, we take notice of the fact that the office of the Commissioner of State Tax (Enforcement) vide letter dated 3/12/2018 issued under Form GST INS-1, authorised the Assistant Commissioner of State Tax to inspect and carry out the search under section 67 of the Act, 2017. This is suggestive of the fact that the proper officer not below the rank of Joint Commissioner had reasons to believe that the writ applicant had indulged in contravention of the provisions of the Act to evade tax. Secondly, it could be said that the proper officer had reasons to believe that the goods were liable to confiscation and such goods were likely to be secreted at a particular place. In such circumstances, the proper officer authorised the Assistant Commissioner of Sales Tax (Enforcement), Division-3, Gandhinagar to carry out the search and seize such goods, documents or books or things. One another aspect of which we take note of is that the confiscation proceedings have been initiated against the writ application by issuing notice under section 73 and section 74 of the Act. This is suggestive of the fact that pending the confiscation proceedings, action has been taken under section 67 of the Act with regard to the search, seizure and prohibition.

5.02. Section 67 of the GST Act reads thus :

“Section 67 :(1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that-

(a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or

(b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place.

(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:

Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act.

(3) The documents, books or things referred to in sub-section (2) or any other documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made thereunder, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice.

(4) The officer authorised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied.

(5) The person from whose custody any documents are seized under sub-section (2 ) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation.

(6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.

(7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized:

Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months.

(8) The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by the proper officer in such manner as may be prescribed.

(9) Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorised by him under subsection (2), he shall prepare an inventory of such goods in such manner as may be prescribed.

(10) The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word “Magistrate”, wherever it occurs, the word “Commissioner” were substituted.

(11) Where the proper officer has reasons to believe that any person has evaded or is attempting to evade the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him and shall grant a receipt for the same, and shall retain the same for so long as may be necessary in connection with any proceedings under this Act or the rules made thereunder for prosecution.

(12) The Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.”

5.03. The words “where the proper officer has reasons to believe” in section 67 of the Act suggest that the belief must be that of an honest and reasonable person based upon the relevant materials and circumstances. The satisfaction has to be of the Proper Officer not below the rank of Joint Commissioner. The Proper Officer should have reasons to believe that a taxable person has suppressed any transaction relating to supply of goods or services or both.

5.04. In Pukhraj Versus D. R. Kohli, reported in AIR 1962, SC 1559 at page 1563, the Supreme Court observed as follows:

“After all, when we are dealing with a question as to whether the belief in the mind of the officer who effected the seizure was reasonable or not, we are not sitting in appeal over the decision of the said officer. All that we can consider is, whether there is ground which prima facie justifies the said reasonable belief.”

5.05. If the information is such as leads the Proper Officer to believe that the articles of search are secreted in a place, he may thereby have ‘reasons to believe’ as contemplated under Section 67 of the Act and authorise in writing any other officer to search and seize such goods. All that the court can consider is, whether there is ground which prima facie justifies the reasonable belief.

5.06. In Durga Prasad’s case, AIR 1966 SC 1209 it has been held by the Supreme Court that the power of search granted under Section 105 of the Customs Act (para-materia to section 67 of the Act, 2017) is a power of general search but it is essential that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied, that is, the officer concerned must have reasons to believe that the documents and things which in his opinion are relevant for any proceedings under the Act, are secreted in their place. In Gopikisen’s case, AIR 1965 SC 1298 the Supreme Court held that Section 105 of the Customs Act did neither compel the officer to give reasons nor the particulars of the goods and of the documents were to be given in the authorisation.

5.07. The statutory requirement of reasonable belief, rooted in the information in possession of Proper Officer under the Act, is to safeguard the citizen from vexatious proceedings. ‘Belief’ is a mental operation of accepting a fact as true, so, without any fact, no belief can be formed. It is true that it is not necessary for the Proper Officer under the Act to state reasons for his belief. But if it is challenged that he had no reasons to believe, in that case, he must disclose the materials upon which his belief was formed, as it has been held by the Supreme Court in Sheonath Singh’s case (AIR 1971 SC 2451), that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court.

5.08. It is very pertinent to state at this stage that in the case on hand, there is no challenge with regard to the reasons of belief as well as the legality and validity of the authorisation. The challenge is confined to the so-called improper exercise undertaken by the Officer with regard to the search and seizure as authorised by the Proper Officer.

5.09. In the case of Durga Prasad etc. Versus H. R. Gomes, Superintendent (Prevention) Central Excise, Nagpur and another, reported in AIR 1966 1209, it was argued before the Supreme Court that in context with the section 105 of the Customs Act (paramateria to section 67 of the Act, 2017), that the authorisation in the said case was not legally valid since there was no averment by the Assistant Collector that the documents were “secreted”. Section 105 of the Customs Act reads thus :

“Section 105 :

105. (1) If the Assistant Collector of Customs, or in any area adjoining the land frontier or the coast of India an officer of customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act, are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things.

(2) The provisions of the Code of Criminal Procedure, 1898, relating to searches shall, so far as may be, apply to searches under this section Subject to the modification that subsection (5) of section 165 of the said Code shall have effect as if for the word “Magistrate”, wherever it occurs, the words “Collector of Customs” were substituted.”

The Supreme Court, thereafter proceeded to observe as under :-

“According to the appellant the power of seizure under s.105 of the Customs Act cannot be exercised unless the Assistant Collector had reason to believe that the documents were secreted. It was argued that the word “secreted” is used in s. 105 in the sense of being hidden or concealed and unless the officer had reason to believe that any document was so concealed or hidden, a search could not be made for such a document. We are unable to accept the submission of the appellant as correct. In our opinion, the word “secreted” must be understood in the context in which the word is used in the section. In that context, it means ‘documents which are kept not in the normal or usual place with a view to conceal them’ or it may even mean ‘documents or things which are likely to be secreted’; In other words, documents or things which a person is likely to keep out of the way or to put in a place where the officer of law cannot find it. It is in this sense that the word ‘secreted’ must be understood as it is used in s.105 of the Customs Act. In this connection reference was made by the Solicitor-General to the affidavits of the Superintendent of Central Excise dated October 28, 1963. Para 6 states that

“Some of the documents were recovered from the living apartments and safe of the petitioner and also from the drawers 1006 of the tables and cabinets utilised by his sons and a search was made for documents which may have been secreted in the premises”.

14. It was further submitted on behalf of the appellant that the power of search under S.105 of the Customs Act cannot be exercised unless the authorisation specifies a document for which search is to be made. In other words, it is contended that the power of search under S.105 of the Customs Act is not of general, character. We do not accept this argument as correct. The object of grant of power under S.105 is not search for a particular document but of documents or things which may be useful or necessary for proceedings either pending or contemplated under the Customs Act. At that stage it is not possible for the officer to predict or even to know in advance what documents could be found in the search and which of them may be useful. or necessary for the proceedings. It is only after the search is made and documents found therein are scrutinised that their relevance or utility can be determined. To require, therefore, a specification or description of the documents in advance is to misapprehend the purpose for which the power is granted for effecting a search under s.105 of the Customs Act. We are, therefore, of opinion that the power of search granted under S.105 of the Customs Act is a power of general search. But it is essential. that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied-that is, officer concerned must have reason to believe that any documents or things, which in his opinion are relevant for any proceeding under the Act, are secreted in the place searched. We have already mentioned the reasons for holding that this condition has been satisfied in the present case.”

5.10. We may also refer to a decision of the Supreme Court in the case of R. S. Seth Gopikisan Agarwal’s case reported in AIR 1967 SC 1298. The Supreme Court in the said decision observed as follows :-

“Section 105 of the Act confers an unguided and arbitrary power on the Assistant Collector of Customs to make a search, the only condition being of the facts mentioned therein. It is said that the said belief is practically a subjective satisfaction and the section neither lays down any policy nor imposes any effective control on his absolute discretion. So stated the argument is attractive, but a deeper scrutiny of the provisions indicates not only a policy but also effective checks on the exercise of the power to search by the Assistant Collector of Customs. The object of the section is to make a search for the goods liable to be confiscated or the documents secreted in any place which are relevant to any proceeding under the Act. The legislative policy reflected in the section in that the search must be in regard to the two categories mentioned therein, namely, goods liable to be confiscated and documents relevant to a proceeding under the Act. No doubt, the power can be abused. But that is controlled by other means. Though under the section the Assistant Collector of Customs need not give the reasons, if the existence of belief is questioned in any collateral proceedings, he has to produce relevant evidence to sustain his belief.”

5.11. A Division Bench of the Bombay High Court in the case of Union of India Versus Ashok Sukhadeo Singh Chavan, reported in 1991 Cri.L.J. 2359 had the occasion to consider section 105 of the Customs Act. We may quote relevant observations of the Bombay High Court.

“Considering the proposition laid down by their Lordships of the Supreme Court, it is clear that the officer concerned, giving authorization for search and seizure of the contraband articles need not give reasons for his satisfaction. If the authorising officer’s satisfaction of reasonable belief is questioned in any collateral proceedings then only he has to produce relevant evidence to sustain his belief.”

5.12. Clause (2) of section 67 of the Act, 2017 makes it clear that if the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books. The first proviso to clause (2) further clarifies that if it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. Clause (6) provides that the goods so seized under sub-section (2) can be released on a provisional basis upon execution of a bond and furnishing a security in such manner and on such quantum as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.

5.13. Thus, even at this stage, the authority concerned is empowered to release the seized goods on a provisional basis upon asking the writ applicant to execute a bond and also furnishing security of a particular quantum.

5.14. We are not impressed by the submission of Mr.Sheth, the learned counsel appearing for the petitioner that the order of prohibition is not in accordance with section 67 of the Act, as there is nothing to indicate even prima facie that the goods were secreted. The word “secreted” in clause (2) needs to be understood.

5.15. The Supreme Court in the case of Gian Chand Versus State of Punjab, reported in [1962] Supp. 1 S.C.R. 364 had an occasion to consider the meaning of the word “secreted” within the meaning of section 105 of the Customs Act. The Supreme Court in the said decision has observed and held as under :-

“….It cannot be said that the documents have not been ‘secreted within the meaning of S.105 of the Customs Act unless they are hidden or concealed. In the context of the section the word means ‘documents which are not kept in the normal or usual place’ or it may even mean ‘documents or things which are likely to be secreted’; in other words documents or things which a person is likely to keep out of the way or to put in a place where the officer of the law cannot find it. [1005 F-G].

The power to search granted under S.105 of the Customs Act is a power of general search and it is not necessary for its exercise that the authorisation should specify the documents for which search is to be made. But it is essential that before this power is exercised the preliminary conditions required by the section must be strictly satisfied that is, the officer concerned must have reason to believe that any documents or things which-in his opinion are relevant for any proceeding under the Act are secreted in the place searched. [1006 C-F]993.”

5.16. In view of the above, even if the authority has reason to believe that the goods liable to be confiscated are likely to be secreted, the authority will have the power to pass an order of prohibition pursuant to the order of seizure.

5.17. We are not impressed by the submission of Mr.Sheth, that pending the confiscation proceedings, there could not have been any seizure or prohibition of the goods or documents or books of accounts or other things. The argument of Mr.Sheth runs contrary to the Scheme of the Act. The whole object is to preserve and protect the goods or books or documents pending the determination of the tax liability. However, we find something very unusual in the Form GST-INS-02 issued under Rule 139(2) of the Rules with regard to the order of seizure which is at page 7 Annexure-A to this petition and Form GST-INS-03 issued under Rule 139(4) of the Rules with regard to the order of prohibition which is at page 41 Annexure-D to this petition. We are saying so because the order of seizure and prohibition is issued and duly signed by the Assistant Commissioner of State Tax (Enforcement) Division-3, Gandhinagar. The Assistant Commissioner is the person who has been authorised by the Proper Officer under section 67 of the Act to carry out the search and seizure. We fail to understand why it has been stated in the Form that he had reason to believe that certain goods were liable to confiscation and are secreted in the place mentioned in the order. The reasonable belief was entertained by the the Proper Officer. The Assistant Commissioner appears to have merely carried out the orders of the superior officer namely the Appropriate Officer not below the rank of the Joint Commissioner. This aspect needs to be looked into by the State Government. It is possible that the Proper Officer not below the rank of Joint Commissioner under the Act may himself pass an order of seizure as well as order of prohibition. In such circumstances, the scenario would be altogether different. However, in the case on hand, it appears from the stance of the respondent No.4, as indicated in the Affidavit-inreply that the Assistant Commissioner of State Tax was authorised by the office of the Commissioner of State Tax (Enforcement) to inspect and carry out the search and seizure. To this extent, the orders of prohibition and seizure / Form – GST-INS-02 as well as the Form GST-INS-03 appears to be defective.

5.18. We would not like to go any further into the factual aspects of the matter. We have confined our adjudication only with regard to the legality and validity of the order of prohibition and in our opinion, the same is in accordance with law.

5.19. We permit the writ applicant to invoke clause (6) of section 67 of the GST Act and prefer an appropriate application before the appropriate authority for release of the seized goods on provisional basis upon execution of a bond and furnishing a security to the satisfaction of the concerned authority. If such an application is filed, the same shall be considered expeditiously, on its own merits and in accordance with law.

6.00. With the above, this writ application is disposed of.