2026-VIL-841-MAD
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SGST High Court Cases

GST - Mandatory requirement of Document Identification Number (DIN) in search authorization under Section 67 of CGST Act - Transparency and accountability in tax administration - Petitioner was subjected to search under Section 67 of CGST Act. The search warrant dated 15.08.2023 was issued without DIN - Petitioner contended that the search was illegal due to non-display of DIN as mandated by CBIC Circular No.122/41/2019-GST dated 05.11.2019 - Whether search warrant issued without DIN and DIN subsequently generated but not shared with noticee is valid – HELD - The CBIC Circular directing electronic generation of DIN for all search authorizations is binding on the Department as directed under Section 168(1) of CGST Act. Display of DIN in communication is mandatory. If DIN could not be displayed for reasons set out in the Circular those reasons must be expressly mentioned in the communication itself. If failure is due to technical reasons the nature of difficulty must be recorded contemporaneously by the official in the file - The omission to generate DIN initially must be made good by generating it within 15 days. Once generated such DIN must be shared with the noticee to enable verification of genuineness - The very purpose of introducing DIN was to ensure transparency and accountability and this object is frustrated by not sharing DIN details with the noticee. In the present case, DIN was generated on 25.08.2023 but was not shared with the petitioner. Technical difficulties were not recorded in any file contemporaneously - The CBIC Circular may not expressly require the department to furnish the subsequently generated DIN post-inspection. But without DIN, the noticee cannot take any step for verifying the genuineness of the communication. Therefore the search warrant issued without DIN and the subsequent failure to share the DIN with noticee renders the search irregular - Voluntariness of payment of tax during search and inspection proceedings under Section 67 of CGST Act - Procedure to be followed for accepting voluntary payment under Section 74(5) of CGST Act - The Petitioner jewelry business entity made payment of Rs.32,62,640/- in two installments during search proceedings conducted on 16.08.2023 and 17.08.2023. The Respondents contended that this was voluntary payment made after the Petitioner realized its tax liability - The Petitioner contended that payment was made under coercion and duress – HELD - There may not be any circumstance necessitating recovery of tax dues during search proceedings though law does not bar taxpayers from voluntarily making payments. Following the directions of Gujarat High Court in M/s.Bhumi Associates assessee must be advised to make payment towards liability only after search is concluded and officers have left the premises. To ensure no element of coercion the assessee shall make self-ascertainment of liability in writing and communicate the same to proper officer. Payment made under Section 74(5) must be acknowledged in Form GST DRC-04. The assessee is entitled to receive provisional release of seized goods on execution of bond and furnishing security - In the present case payment was made immediately during search without proper self-ascertainment in writing and without informing the assessee about the option to obtain provisional release. Moreover 100% penalty was paid whereas Section 74(5) provides for only 15% penalty on self-assessed tax. Therefore the payment lacked element of voluntariness and was made under coercion. Assessee can seek refund of such involuntary payment - Whether the amount in question should be refunded to the petitioner or not will abide by the outcome of such assessment proceedings - Procedural distinctions between powers of inspection, search and seizure under Section 67 of CGST Act - Form GST INS-1 - Proper officer must have reasons to believe circumstances for invoking such powers - The Petitioner challenge was to the validity of the search warrant issued for conducting search of its business premises – HELD - Inspection, search and seizure are conceptually distinct acts. Inspection is looking closely into or examining. Search is looking for seeking out what is hidden concealed or not obvious by probing into or investigation. Seizure is taking possession by warrant or legal right with force. Section 67(1) deals with inspection under which proper officer can authorize any other officer to inspect any places of business. Section 67(2) deals with search and seizure and can be conducted by authorized officer or proper officer himself. The authorization must specifically indicate which power is being conferred - Mere mechanical repetition of statutory language in Form GST INS-1 without editing defeats the purpose of incorporating safeguards. The proper officer cannot invoke these powers arbitrarily and must have reasons to believe that circumstances specified in the respective provisions exist. Reasons must be recorded on record with a rational connection to formation of belief. Court can scrutinize through judicial review whether such reasons exist - In the present case authorization letter described as inspection warrant but contained language pertaining to search and seizure was defective as it was unclear as to exact nature of authorization conferred and whether goods were suspected to be secreted or documents stashed.
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