Facts of the Case

The petitioner, M/s Shakti Oil and Chemical Co., challenged an impugned order dated 04.04.2022, whereby its business premises were sealed by the GST authorities. The petitioner contended that such sealing was arbitrary and contrary to law, particularly when the issue was already covered by a prior judgment of the High Court.

The petitioner further alleged non-compliance with mandatory procedural safeguards, including failure to draw a Panchnama during the search and seizure process under Section 67 of the CGST/DGST Act.

The primary grievance remained that the sealing of the premises prevented the petitioner from carrying on business activities.

Issues Involved

  1. Whether the power to seal premises under Section 67(4) of the CGST/DGST Act was exercised lawfully.
  2. Whether procedural requirements under Section 67(10), including preparation of Panchnama, were followed.
  3. Whether sealing of premises violated the fundamental right under Article 19(1)(g).
  4. Whether the petitioner was entitled to immediate de-sealing of the business premises. 

Petitioner’s Arguments

  • The sealing action was without authority of law and contrary to settled legal position.
  • The authorities failed to comply with mandatory procedural safeguards, particularly the requirement of drawing a Panchnama.
  • The powers under Section 67(4) are limited and cannot be exercised arbitrarily.
  • Sealing of premises resulted in violation of the petitioner’s fundamental right to carry on business under Article 19(1)(g).
  • The petitioner sought de-sealing of premises and release of goods.

Respondent’s Arguments

  • The Revenue submitted that if the petitioner produces relevant documents, there would be no objection to de-sealing of the premises.
  • The authorities maintained their power to take appropriate action in accordance with law if deficiencies were found.

Court’s Findings / Order

The Delhi High Court disposed of the writ petition with specific directions:

  1. The petitioner was directed to present relevant documents before the concerned officer on 13.05.2022 by 11:00 AM.
  2. The respondents were directed to de-seal the premises on the same day by 07:00 PM.
  3. In case of deficiencies in documents, authorities may take action in accordance with law, however, sealing shall not continue beyond the stipulated timeframe.

The Court thus ensured a balanced approach, protecting both procedural compliance and the petitioner’s right to business.

Important Clarification

  • The Court emphasized that sealing of premises cannot be continued indefinitely.
  • Even if deficiencies exist, authorities must follow due process without unnecessarily restricting business operations.
  • The order reflects that compliance with procedural safeguards under GST law is essential, especially in search and seizure actions.

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1851-DB/RAS12052022CW73902022_202831.pdf

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