Facts of the Case:
In this case, the petitioner challenged the Prohibition Order in Form GST INS-03 dated 07.02.2024 and the Seizure Order in Form GST INS-02 dated 27.02.2024, issued pursuant to inspection and search under Section 67 of the GST enactments. During inspection on 07.02.2024, certain goods (13 items) were handed over for safe custody with a direction that they shall not be removed or dealt with without prior permission of the State Tax Officer. The allegation against the petitioner was belated availment of Input Tax Credit (ITC) beyond the time limit prescribed under Section 16(4) of the GST enactments for the period 2017–2018 to 2023–2024.
Subsequently, a Show Cause Notice in Form GST DRC-01 was issued culminating in an Assessment Order in Form GST DRC-07. That assessment order was challenged and quashed by the High Court. It was confirmed before the Court that no de novo proceedings had been initiated pursuant to the earlier remand and, importantly, no proposal for confiscation of the seized goods had been issued under Section 67(2) of the GST enactments.
Issue:
Whether the Prohibition Order (GST INS-03) and Seizure Order (GST INS-02) issued under Section 67 can continue to operate when the assessment order forming the basis of proceedings has been quashed; and no proposal for confiscation under Section 67(2) has been initiated.
Held that:
The High Court held that in the absence of any proposal for confiscation under Section 67(2), the continuance of the Prohibition Order and Seizure Order cannot be sustained.
The Court noted that since the assessment order had already been quashed and no fresh proceedings had been initiated, there was no legal basis to continue the restraint over the petitioner’s goods. Seizure or prohibition under Section 67 is not meant to be indefinite and must be backed by statutory proceedings such as confiscation.
In the absence of such proceedings, the impugned orders in Forms GST INS-03 and GST INS-02 were quashed. The writ petition was accordingly allowed.
Case Name: M/s. Goal Closures, Represented by its Partner V. Ponnusamy Versus The State Tax Officer (Int) -1, Coimbatore, The Joint Commissioner (ST), Coimbatore dated
