Facts of the Case

The petitioner challenged an order dated 11.03.2022 passed by the Assistant Commissioner under Section 74 of the Delhi Goods and Services Tax Act, 2017. The primary contention was that the same officer who conducted the inspection, search, and seizure at the petitioner’s premises also passed the adjudication order.

The authorization dated 23.08.2021 empowered the same officer to conduct the search and seizure, raising concerns regarding impartiality in adjudication.

The High Court, at the initial stage, observed a prima facie likelihood of bias and stayed the operation of the impugned order. 

Issues Involved

  1. Whether adjudication proceedings under Section 74 DGST Act are vitiated when conducted by the same officer who carried out investigation and search.
  2. Whether such dual roles violate the principle of natural justice, particularly the rule against bias (nemo judex in causa sua).
  3. Whether fresh proceedings should be initiated in light of updated administrative guidelines.

Petitioner’s Arguments

  • The impugned order was invalid as it was passed by the same officer who conducted search and seizure.
  • This created a reasonable apprehension of bias, violating principles of natural justice.
  • The adjudicating authority must be independent of the investigation authority to ensure fairness. 

Respondent’s Arguments

  • The respondent sought time initially and later submitted that the department intended to revisit its position.
  • The respondent relied upon a Circular dated 20.09.2022, modifying guidelines for inspection, search, and seizure.
  • It was indicated that the department may align its practice with central tax guidelines.

Court’s Findings / Order

  • The Court reaffirmed that there exists a likelihood of bias when the same officer performs both investigative and adjudicatory functions.
  • The impugned order dated 11.03.2022 was set aside.
  • The Court directed that:
    • Proceedings must be conducted de novo.
    • A fresh show cause notice must be issued.
    • Authorities must adhere to the Circular dated 20.09.2022.

The writ petition was disposed of accordingly. 

Important Clarification by the Court

  • The Court emphasized that institutional fairness requires separation of roles between investigation and adjudication.
  • The Circular dated 20.09.2022 plays a crucial role in ensuring procedural fairness in GST enforcement.
  • Jurisdictional objections raised at the outset must be duly considered before proceeding.

Sections Involved

  • Section 74, Delhi Goods and Services Tax Act, 2017 – Determination of tax not paid or short paid due to fraud, willful misstatement, or suppression of facts.
  • Principles of Natural Justice – Rule against bias.

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4150-DB/RAS26092022CW56802022_174708.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.