Complete sealing of business mere on the ground of non-production of books of accounts was not held justified.

Case Title: Napin Impex (P.) Ltd. v. Commissioner of DGST, Delhi

Court Name: High Court of Delhi

Petition Number: W.P. (C) No. 10287 of 2018

Category of Dispute: Search & Seizure / Sealing of Premises under Section 67

Date of Judgement: 28 September 2018

Relevant Sections: Section 67(1), 67(2), 67(4) of CGST Act, 2017; Rule 139(1) of CGST Rules, 2017

Facts of the Case

• The petitioner, a registered dealer trading in PVC raisins and food items, alleged that its business premises were sealed by DGST officers on 29.08.2018 after a visit under Section 67 of the CGST Act. The petitioner was directed to produce books of account but requested 24 hours for compliance. The premises were then temporarily sealed. [Para 4]
• On the next day, i.e., 30.08.2018, the premises were fully sealed without further opportunity being granted. The petitioner challenged the legality of this indefinite sealing. [Para 5]
• The Revenue justified the action by citing lack of cooperation from the petitioner and stated that the premises would be de-sealed upon production of books and documents. [Para 6]

Question(s) in Consideration

• Whether the indefinite sealing of business premises by the DGST under Section 67 of the CGST Act, 2017, was legally valid and authorized. [Para 3, 5]

Observation of the Court

• The court examined the scope of Section 67 and Rule 139. It noted that the statute allows sealing only to the extent necessary for search and seizure; it does not permit indefinite or full-scale sealing of premises. [Para 8]
• It was also observed that the authorisation in Form GST INS-01 did not specifically name the assessee, which raised questions of procedural propriety. [Para 8]
• The court held that even temporary restraint to secure evidence should not become an indefinite closure of business activity, which is not supported by the statutory language. [Para 8]

Judgement of the Court

• The court declared the complete sealing of the premises as per se illegal and directed the immediate de-sealing of the premises within 12 hours. [Para 9]
• The writ petition was accordingly allowed. [Para 10]

Between Fine Lines (Summary in Simple Words)

• The GST department sealed a business without clear legal backing beyond what Section 67 allows.
• Sealing should only be temporary to facilitate a search, not a method to indefinitely shut down business.
• Procedural flaws like not naming the assessee in the authorization further weakened the department’s case.
• The court sided with the business and ordered immediate de-sealing.
• This judgment protects businesses from arbitrary and prolonged closures by tax authorities.

Summary of Referred Cases