Form No.

J(2)

IN THE HIGH COURT AT CALCUTTA

CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE

Present:
The Hon’ble Justice Raja Basu Chowdhury

WPA 4729 of 2024

M/s. Kanak Timber House & Anr.

v.
Assistant Commissioner of Sales Tax & Ors.

For the petitioners : Mr. Ankit Kanodia

Ms. Mesha Agarwal
Mr. Jitesh Soh

For the State : Mr. Anirban Ray

Mr. T. M. Siddiqui
Mr. Tanoy Chakraborty
Mr. Saptak Sanyal

Heard on : 11th March, 2024

Judgment on : 11th March, 2024

Raja Basu Chowdhury, J:

1. Considering the nature of urgency involved, the present writ

petition is taken up for consideration.

2. The present writ petition has been filed, inter alia, praying for

quashing of the order of prohibition dated 25th March, 2023

issued under Section 67(2) of the CGST/WBGST Act, 2017

(hereinafter referred to as the “GST Act”).

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3. It is the petitioners’ case that on/or about 24th March, 2023, a

search and seizure procedure was initiated under Section 67 of

the GST Act at the petitioners’ registered place of business. On

the following date, in terms of first proviso to Section 67(2) of the

GST Act, a prohibitory order was issued. Since then, on 26th

December, 2023, a notice under Section 122 of the GST Act was

issued. According to the petitioners, the petitioners had duly

responded to the said notice and are participating in the

proceedings. Subsequently, on 17th January, 2024, the

petitioners had requested the respondents to release the stock of

timber which had remained seized and covered under the

prohibitory order dated 25th March, 2023.

4. In response to such application, the office of the respondent no.1

by an e-mail communication dated 25th January, 2024 without

appropriately replying to the petitioners’ communication had only

informed that a show-cause notice under Section 122 of the GST

Act has already been issued.

5. Mr. Kanodia, learned advocate representing the petitioners, by

drawing attention of this Court to Section 67(2) of the said Act

submits that power has been vested on the proper officer not

below the rank of Joint Commissioner, either pursuant to an

inspection carried out under sub-section (1) or otherwise, has

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reasons to believe that any goods liable to confiscation or any

documents or book or things which in his opinion shall be useful

for or relevant to any proceedings under this Act are secreted in

any place, he may authorize in writing any other officer of central

tax to search and seize or may himself search and seize such

goods, documents or things.

6. By referring to the first proviso to Section 67(2) of the GST Act, it

is submitted that when it is not practicable to seize any such

goods, the proper officer or any other officer authorized by him,

may serve on the owner or the custodian of the goods an order

that he shall not remove, part with or otherwise deal with the

goods except with the previous permission of such officer. Mr.

Kanodia submits that the respondent no.1 by invoking the first

proviso to Section 67(2) had issued the order dated 25th March,

2023.

7. By referring to Section 67(7) of the GST Act, he submits that

when any goods are seized under sub-section (2) and no notice in

respect thereof has been given within six months from the date of

seizure of the goods, the goods shall be returned to the person

from whose possession those were seized.

8. By placing reliance on the aforesaid provision, it is submitted

that since the respondent no.1 had issued a show-cause under

Section 122 of the GST Act, beyond the prescribed period of six
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months, the respondent no.1 was obliged to return the goods to

the petitioner.

9. In support of his aforesaid contention, he has placed reliance on

a judgment delivered by the Hon’ble Supreme Court in the case of

State of Uttar Pradesh v. Kay Pan Fragrance Pvt. Ltd.,

reported in (2020) 5 SCC 811, and the judgment delivered by the

Hon’ble High Court of Delhi in the case of Best Crop Science

Pvt. Ltd. v. Superintendent of Central Goods and Services

Tax Delhi West, reported in (2023) 10 Centax 295 (Del.).

10. Per contra, Mr. Chakraborty, learned advocate representing the

respondents has taken me through the provisions of Section

67(7) of the GST Act. According to Mr. Chakraborty, the said

section comes into play when no notice of the seizure is issued

within a period of six months. Mr. Chakraborty further by

referring to the provisions of Section 67(6) of the said Act submits

that an assessee has a right to get such goods released on

provisional basis even upon execution of a bond and furnishing a

security in such manner and of such quantum, respectively, as

may be prescribed. According to him, the petitioners have not

approached the respondents for release of the goods even on

provisional basis. The letter dated 17th January, 2024 do not call

provisional release of goods. Having regard to the aforesaid, it is

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submitted that no case for interference has been made out as the

assessee has not approached the respondents for release of the

seized goods in terms of Section 67(6) of the GST Act.

11. Heard the learned advocates appearing for the respective

parties and considered the materials on record. Admittedly in this

case it is noticed that a prohibitory order has been passed by

invoking the first proviso to Section 67(2) of the GST Act.

Admittedly, the assessee has not approached the respondent no.1

for release of goods under Section 67(6) of the GST Act and I find

that the Hon’ble Supreme Court in the case of State of Uttar

Pradesh (supra) has clearly highlighted that the assessee in

order to seek release of the goods must invoke the provisions of

the GST Act to seek release of the goods. The Hon’ble Supreme

Court in paragraph 12 has, inter alia, observed as follows:-

“12. There is no reason why any other indulgence need

be shown to the assessees, who happen to be the owners
of the seized goods. They must take recourse to the
mechanism already provided for in the Act and the Rules
for release, on a provisional basis, upon execution of a
bond and furnishing of a security, in such manner and of
such quantum (even up to the total value of goods
involved), respectively, as may be prescribed or on
payment of applicable taxes, interest and penalty
payable, as the case may be, as predicated in Section
67(6) of the Act. In the interim orders [Kay Pan Fragrance
(P) Ltd. v. State of U.P., 2019 SCC OnLine All
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6201] , [Mahaveer Trading Company v. State of U.P., 2019

SCC OnLine All 6203] passed by the High Court which are
subject-matter of assail before this Court, the High Court
has erroneously extricated the assessees concerned from
paying the applicable tax amount in cash, which is
contrary to the said provision.”

12. Insofar as the judgment delivered in the case of Best Crop

Science Pvt. Ltd. (supra), I find that the Hon’ble Delhi High

Court taking note of the provisions of Section 67(7) of the GST

Act has observed that the prohibitory order cannot be permitted

to continue indefinitely. In this case it may be relevant to

consider that the assessee has not approached the respondents

under Section 67(6) of the GST Act and as such, there is no

reason for this Court to interfere at this stage save and except, if

any application is made by the assessee with the respondent no.1

in terms of Section 67(6) of the GST Act, the same shall be

considered in accordance with law.

13. With the above observations and/or directions the writ petition

stands disposed of. There shall be no order as to costs.

Urgent photostat certified copy of this order, if applied for, be

made available to the parties upon compliance of necessary

formalities.

(Raja Basu Chowdhury, J.)