Deputy Assistant Commissioner is not a proper office to issue order of prohibition under Section 67(2) of the Act.

Case Title: Mahendra Kumar Indermal v. Deputy Assistant Commissioner (ST)

Court: High Court of Andhra Pradesh

Petition Number: Writ Petition No. 6146 of 2020

Category of Dispute: Jurisdictional Validity of Search & Seizure under Section 67(2)

Date of Judgment: 6 March 2020

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

Facts of the Case (Paras 1–2, 5, 7)

• The petitioner challenged an Order of Prohibition issued in Form GST INS-03 dated 21.12.2019 by the Deputy Assistant Commissioner (ST), Jaggaiahpet.
• It was contended that under Section 67(2) of the CGST Act, such orders can only be issued by an officer not below the rank of Joint Commissioner, or by one who is specifically authorized in writing by such officer.
• The impugned order was issued by an officer below the prescribed rank, and no such written authorization was shown to have been issued.
• The action pertained to premises of MAT Parcel Service, allegedly involved in tax evasion.

Question(s) in Consideration (Paras 2, 4, 8)

• Whether a Deputy Assistant Commissioner (ST) is competent to issue an order of prohibition under Section 67(2) of the CGST Act?
• Whether lack of written authorization from a Joint Commissioner renders the prohibition order void and without jurisdiction?

Observations of the Court (Paras 5–8)

• Section 67(1) and (2) empower only a “proper officer not below the rank of Joint Commissioner” to initiate inspection and seizure, and such officer can authorize another officer in writing to carry out the act.
• In the instant case, there was no reference or record of such written authorization, and hence the prohibition order lacked legal foundation.
• The order issued under Form GST INS-03 was not sustainable in absence of compliance with statutory preconditions.
• The High Court found substance in petitioner’s argument and held that the action taken was without jurisdiction and thus liable to be set aside.

Judgment of the Court (Paras 8–9)

• The Order of Prohibition issued by the Deputy Assistant Commissioner (ST) was declared illegal and void ab initio due to want of jurisdiction.
• The Writ Petition was allowed, and the impugned order was set aside.
• The Court clarified that the decision was based solely on jurisdictional grounds, and not on the merits of the underlying tax evasion case.
• Authorities were given liberty to proceed afresh in accordance with law, if proper authorization and procedures are followed.

Between Fine Lines

• Only Joint Commissioners or above can authorize searches and seizures under GST.
• Lack of written delegation of powers invalidates actions of lower officers.
• GST INS-03 orders without proper authority are unsustainable.
• Courts will not tolerate procedural violations in exercising seizure powers.
• Fresh proceedings are permitted but only as per law.

Summary of Referred Cases

Takeaway

“Seized by Power, Released by Law – Prohibition Without Jurisdiction Fails”