🧾 Patna HC: Search Without Independent Witnesses Invalid in GST Case
Published on June 16, 2025 | Category: GST Judgements
The Patna High Court, in a significant ruling on April 25, 2025, quashed a demand order issued against Sri Sai Food Grain & Iron Stors. The order was struck down due to procedural violations during a GST inspection, including tampering with the seizure order and the absence of mandatory independent witnesses.
⚖️ Background of the Case
The premises of Sri Sai Food Grain & Iron Stors were inspected on January 18, 2024 by the Assistant Commissioner of State Tax. Following the inspection, a seizure order was prepared.
On February 5, 2025, the Court directed the tax department to furnish original records of the inspection and seizure. Upon review, the Court discovered tampering in the original seizure order.
The words “As Per Physical Verification” had been inserted in the document by Ms. Kumari Anu Soni, the officer who led the inspection and prepared the seizure order. The insertion was not part of the original record and occurred after the matter became sub judice.
👩‍⚖️ Admission and Apology by Tax Officer
During her appearance in Court on April 9, 2025, Ms. Soni admitted to tampering with the seizure order. She claimed inexperience as a team leader and the pressure of a large public gathering as reasons for the oversight.
She submitted a personal affidavit, accepting the mistake and giving an undertaking not to repeat such conduct. The Court chose not to initiate disciplinary action but warned that any future misconduct would attract strict consequences.
🧾 Disputed Demand Order
The Petitioner challenged a demand letter dated May 9, 2024, which sought â‚ą88,64,550.50 under CGST and BGST combined. The demand was based on the January 18 inspection, which the Petitioner claimed violated legal procedures.
They argued that the search was illegal under:
- Section 67(10) of the BGST/CGST Act
- Section 100(4) of the CrPC
- Instruction No. 01/2020-21 GST-Investigation dated February 2, 2021
Specifically, the search lacked two independent witnesses, which is mandatory under both the GST law and CrPC.
🧑‍💼 Lack of Independent Witnesses
Although the seizure order named two individuals—Santosh Kumar and Ramashish Prasad—as independent witnesses, their signatures were not found on the inspection report.
Instead, the inspection report bore the signatures of Sri Sandeep Jaiswal (the proprietor’s son) and Sri Ram Pravesh Yadav (a staff member), both of whom had a vested interest and were not independent.
The Court found this deeply problematic and concluded that the seizure order had likely been created after the inspection solely to cover procedural lapses.
🔍 Court’s Observations and Verdict
The Court made the following key rulings:
- Ms. Soni’s tampering of the seizure order rendered the document invalid and unreliable.
- The inspection was not conducted in accordance with Section 67 of the CGST Act, as it lacked the two mandatory independent witnesses required by Section 100 of CrPC.
- The order of seizure did not form part of the inspection report, nor did it contain the necessary endorsements linking it to the on-site inspection.
As a result, the Court held that the inspection and resulting seizure were both unlawful, and it set aside the demand order dated May 9, 2024.
đź’ˇ Our Legal Commentary
Section 67 of the CGST Act clearly mandates that any inspection must follow CrPC procedures, which include the presence of two or more independent and respectable local witnesses.
This is reiterated in Section 100(4) of the CrPC, which explicitly outlines the need for independent observers before a search is initiated.
In similar cases, such as Commercial Taxes Officer, Bharatpur v. Krishna Oil Industries, the Court ruled that lack of independent witnesses renders the entire survey and any resulting penalties invalid.
đź“Ś Conclusion
The Patna High Court’s verdict reinforces the importance of procedural integrity during GST inspections. Tax officers must ensure:
- Presence of two independent witnesses
- No tampering or post-facto editing of documents
- Full compliance with CGST, BGST, and CrPC norms
Failure to do so can—and will—lead to quashing of tax demands and potential disciplinary action.
