Facts of the Case:

In this case, the petitioner challenged the sealing of all its outlets by the GST authorities under Section 67(2) of the Delhi Goods and Services Tax Act, 2017 (DGST Act). During an inspection conducted by the Assistant Commissioner (Anti-Evasion-1), the petitioner failed to produce its books of accounts. Thereafter, a show cause notice was issued in February 2026, pursuant to which the petitioner submitted certain documents in May 2026.

Subsequently, the Special Commissioner authorized a search under Section 67(2) on 27.06.2026. During the search also, the petitioner failed to produce the books of accounts. Consequently, the GST authorities sealed all the petitioner’s business outlets.

Before the High Court, the petitioner contended that sealing of all outlets was a drastic measure causing severe financial hardship and expressed willingness to produce the books of accounts before the authorities. The respondents, on the other hand, submitted that the petitioner had allegedly defaulted in payment of VAT dues for nearly six years involving arrears exceeding ₹20 crore.

Issue:

Whether the continued sealing of the petitioner’s business premises under Section 67(2) of the DGST Act should continue when the petitioner expressed willingness to produce the books of accounts before the GST authorities.

Held That:

The Delhi High Court did not examine the legality or validity of the sealing of the petitioner’s business premises under Section 67(2) of the Delhi Goods and Services Tax Act, 2017 on merits. Instead, considering the petitioner’s willingness to cooperate with the ongoing investigation, the Court adopted a pragmatic approach to balance the interests of tax administration with the petitioner’s right to carry on business.

The Court recorded the statement made on behalf of the petitioner that it was now prepared to produce the books of accounts before the GST authorities. Accepting this statement, the Court directed the petitioner to appear before the Assistant Commissioner, Anti-Evasion-1, Department of Trade & Taxes, on the specified date and time and produce the complete books of accounts for examination.

The Court further directed the competent authority to scrutinize the books of accounts and other relevant records produced by the petitioner and thereafter pass an appropriate order strictly in accordance with law within five days from the date fixed for production of the records. The Court emphasized that the authority should complete this exercise expeditiously without unnecessary delay.

Recognising that the continued sealing of twelve restaurant outlets could have significant commercial consequences, the Court observed that, after examining the records, the competent authority would be at liberty to pass an interim order directing de-sealing of the outlets, if the circumstances so warranted. Thus, the Court left the decision regarding de-sealing to the satisfaction of the competent authority after assessing the petitioner’s cooperation and the material produced during the investigation.

The Court also made it clear that the benefit of reconsideration was conditional upon the petitioner’s full cooperation. If the petitioner failed to produce the complete books of accounts or failed to cooperate with the investigation, the competent authority was directed to pass a reasoned speaking order explaining the necessity for continuation of the sealing or any further action in accordance with the provisions of the GST law.

Accordingly, the writ petition was disposed of with these directions, while ensuring that the competent authority completed the exercise within the prescribed timeline and passed an appropriate order based on the material produced by the petitioner.

Case Name: BTB Marketing Private Limited Versus Assistant Commissioner Anti Evasion-I & Ors. dated 03.07.2026

To read the complete judgement 2026 Taxo.online 1873