HC directed authorities to unseal the assessee’s premises if he co-operates in inspection/search of premises, including computer system

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Facts: M/s. Steel Hypermart India (P.) Ltd. (“the petitioner”) company is a private limited company incorporated under the Companies Act, 2013 and a dealer registered under the provisions of the GST Act. The petitioner holds controlling shareholding in another company M/s. Singhi Buildtech Pvt. Ltd which is promoted by the same individuals though belongs to same family. It transpires that the respondent officers along with team of officers visited the registered office of the petitioner at Jigani, Anekal Taluk, Bengaluru and conducting the search in the said premises. So, the petitioner has filled a Writ Petition against the order passed by the respondent officers under Section 67[4] of the Karnataka Goods and Services Tax Act, 2017(“KGST Act”)/Central Goods and Services Tax Act, 2017(“CGST Act”).

Petitioner’s Interpretation of law: It is contended by the petitioner that due to administrative convenience, the day-to-day business activities of the petitioner were also being carried out at go-down of the petitioner premises of M/s. SinghiBuildtech Pvt. Ltd., considering the same, the respondent officials has begun conducting the search in the said premises. It is the grievance of the petitioner that respondent officers have sealed the said premises without authority of law.

Held: The Hon’ble High Court of Karnataka vide its Writ Petition No. 2253 of 2019 (T-RES) dated January 31, 2019 stated with reference to Section 67(4) of the CGST Act, 2017 which contemplates that the officer authorized under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. 

However, the computer system wherein the business transaction of the company was stored, including the tally software stopped functioning all of a sudden along with internet connection abruptly. In the absence of tally information and internet connection, complete verification of the books of accounts of the company was not possible as the same was maintained in the tally software in the server. The directors of the petitioner company did not put any efforts to set out the said disruption. 

Therefore, the Court is of the view that the justice would be sub-served in directing the Revenue to unseal the premises which is convenient to the petitioner and further the petitioner shall co-operate for inspection/search of the premises in question, including the computer system.

Citation: [2019] 103 taxmann.com 16 (Karnataka)

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