The Madhya Pradesh High Court has held that a person subjected to search and seizure proceedings under the Goods and Services Tax (GST) law cannot insist on the presence of an advocate during the search operation.
The bench of Justice Prakash Shrivastava and Justice Vandana Kasrekar dismissed a writ petition challenging the sealing of a manufacturing unit by the Directorate General of GST Intelligence (DGGI) and declined to interfere with the ongoing investigation.
The petitioners, engaged in the manufacture of sweet betel nut products, approached the High Court after GST intelligence authorities sealed their factory premises situated in the Industrial Area at Sanwer Road, Indore, on June 20, 2020. The premises had been taken on lease by the petitioners from a third party.
According to the petitioners, they possessed all necessary licences and registrations and were regularly discharging GST liabilities. They alleged that the sealing action was connected to separate proceedings initiated against the owner of the property for alleged tax evasion and that they had no connection with those allegations.
The petitioners further contended that the search and seizure proceedings under Section 67 of the Central Goods and Services Tax Act, 2017, were not being conducted in accordance with law. They expressed apprehension that statements could be recorded under pressure and sought a judicial direction that the search be conducted in the presence of their advocate.
The DGGI informed the Court that officers had visited the premises to conduct a search under Section 67 of the CGST Act. However, since the factory was found locked, the authorities were faced with two options—either break open the premises or seal it and conduct the search later in the presence of the occupants.
The department stated that it chose the latter course and sealed the premises only to preserve the situation until the search could be carried out in the petitioners’ presence. The department assured the Court that all statutory safeguards would be followed during the search.
The Court examined Section 67 of the CGST Act, which governs inspection, search and seizure powers under GST law. It noted that Section 67(10) makes the provisions relating to search and seizure under the Code of Criminal Procedure applicable to GST investigations.
Referring to Section 100(4) of the CrPC, the Court observed that every search must be witnessed by two or more independent and respectable inhabitants of the locality. Since the GST authorities had assured compliance with this requirement, the Court found no reason to issue any additional directions on that aspect.
The judgment reinforces that GST authorities are obligated to conduct searches in the presence of independent witnesses and in accordance with the procedural safeguards prescribed by law.
The principal issue before the Court was whether a taxpayer could demand that search and seizure proceedings be conducted in the presence of an advocate.
Rejecting the contention, the Court held that the petitioners had failed to point out any statutory provision granting such a right. The bench noted that neither the CGST Act nor any other applicable law mandates the presence of a lawyer during search proceedings or examination by GST authorities.
To support its conclusion, the Court relied upon the Supreme Court’s landmark decision in Poolpandi v. Superintendent, Central Excise (1992), where the apex court held that persons being questioned in tax and customs investigations cannot insist on the presence of their lawyers during interrogation.
The Court also referred to the Delhi High Court’s judgment in Sudhir Kumar Aggarwal v. Directorate General of GST Intelligence, which specifically applied the same principle in the context of GST investigations and held that the presence of a lawyer cannot be claimed as a matter of right during examination by GST officers.
The petitioners relied on the Punjab and Haryana High Court’s decision in Akhil Krishan Maggu v. DGGI. However, the Madhya Pradesh High Court distinguished that judgment, observing that it dealt primarily with issues relating to arrest under GST law.
Since the present matter involved only a proposed search and seizure operation and no challenge to any arrest action, the Court held that the precedent was inapplicable.
After analysing the statutory framework and judicial precedents, the High Court concluded that no case for interference had been made out. The Court accepted the department’s assurance that the search would be conducted in accordance with law and dismissed the writ petition.
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