Gujarat High Court

M/S Nrm Metals (India) Private Limited vs Union Of India on 9 May, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

                                                                                                            NEUTRAL CITATION




                              C/SCA/4910/2025                              JUDGMENT DATED: 09/05/2025

                                                                                                             undefined




                                       IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                         R/SPECIAL CIVIL APPLICATION NO. 4910 of 2025
                                                             With
                                         R/SPECIAL CIVIL APPLICATION NO. 5176 of 2025
                                                             With
                                         R/SPECIAL CIVIL APPLICATION NO. 5541 of 2025
                                                             With
                                         R/SPECIAL CIVIL APPLICATION NO. 5837 of 2025


                         FOR APPROVAL AND SIGNATURE:


                         HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                         and
                         HONOURABLE MR.JUSTICE P. M. RAVAL

                         ==========================================================

                                      Approved for Reporting              Yes           No

                         ==========================================================
                                        M/S NRM METALS (INDIA) PRIVATE LIMITED & ANR.
                                                           Versus
                                                   UNION OF INDIA & ORS.
                         ==========================================================
                         Appearance:
                         MR ABHISHEKKUMAR C MALVI(9941) for the Petitioner(s) No. 1,2
                         MR MAULIK VAKHARIYA(6628) for the Petitioner(s) No. 1,2
                         GOVERNMENT PLEADER for the Respondent(s) No. 2,3,4,5
                         MR PARAM SHAH for the Respondent(s) No. 1
                         NOTICE NOT RECD BACK for the Respondent(s) No. 6

                         ==========================================================

                            CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                                  and
                                  HONOURABLE MR.JUSTICE P. M. RAVAL

                                                   Date : 09/05/2025
                                                   ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. Maulik Vakharia

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

for the petitioners, learned Assistant

Government Pleader Ms. Puja Ashar, learned

advocate Mr. Param Shah, learned advocate

Mr. C.R.Abhichandani, learned advocate

Mr. Anip Gandhi with learned advocate Ms.

Isha Mendapara for the respective

respondents.

2. By this petition under Article 226 of the

Constitution of India, the petitioner has

prayed for quashing and setting aside the

search authorization issued by respondent

No.5 with consequential and incidental

relief and further also prayed for

quashing and setting aside the attachment

orders at Annexure D and blocking of ITC

as passed by the respondents with

consequential and incidental reliefs.

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

3. As the issues arising in all these

petitions are common, the same were heard

analogously and are being disposed of by

this common order.

4. For sake of convenience, Special Civil

Application No. 4910 of 2025 is treated as

a lead matter.

5. Brief facts of the case of Special Civil

Application No. 4910 of 2025 are as under:

5.1 The petitioner No.1 is a Private

Limited Company engaged in the business of

dealing in Building Materials, Steel etc.

Petitioner No.2 is one of the two

Directors of the Company.

5.2 On 06.03.2025, the petitioners

were subjected to a search operation u/s.

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

67 of the Central Goods and Service Tax

Act,2017 ['CGST Act' for short] and

Gujarat Goods and Service Tax Act ['GGST

Act' for short] at the principal place of

business of petitioner No.1 and at the

residence of petitioner No.2 by respondent

No.5. The search authorization letter

dated 05.03.2025 was issued by respondent

No.5 for suppressing transactions relating

to supply of goods and services and also

stock of goods in hand, for claiming input

tax credit and refund in excess of his

entitlement which are in contravention of

the provisions of the GST Acts and the

Rules.

5.3 During the said search and seizure

proceedings on 06.03.2025, the respondent

could not access the premises of

petitioner No.2, who was travelling.

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

Therefore, the respondents sealed the

office premises of petitioner No.1-

Company. However, before the search

proceedings were concluded, the respondent

No.4 initiated proceedings to block the

ITC of the petitioner No.1 Company. On the

same day, summons was issued to the

petitioners to produce Books of Accounts

and give Statement on 07.03.2025 and the

bank account of the petitioner No.1

company was provisionally attached by

respondent No.4 with a subjective

satisfaction note in Form GST DRC 22. The

said subjective satisfaction note alleges

the irregularities committed by the

petitioners that the petitioner-company

has inward supply from about 15 GSTIN

registered entities out of which, two

GSTIN Entities are either suspended or

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

cancelled suo moto and against all the

GSTIN entities, the common allegation is

Movement of goods was not found.

5.4 Thereafter on 07.03.2025,

respondent no.4 continued the search and

seizure proceedings and after breaking

open the lock in absence of petitioner

No.2, entered the premises of petitioner

No.1-Company but no seizure of documents

or things was made, however, summons was

issued by respondent No.3 to the

petitioners to product Books of Accounts.

Respondent No.3 also directed petitioner

No.2 to remain present at the GST Office

at Vadodara to give statement on

10.03.2025 at 11:00 A.M. Simultaneously,

respondent No.4 also directed the

petitioner to remain present at the

principal place of business at Ahmedabad.

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

In compliance of the aforesaid summonses,

the petitioner No.2 expressed the

practical difficulties in handing over

huge volume of data and documents within

such a short period of time and sought for

reasonable time for recording the

statement.

5.5 Thereafter on 10.03.2025,

respondent No.4 continued search and

seizure proceedings at the office of the

petitioner No.1-Company and seized books

of account and documents and the Panchnama

was drawn along with FORM GST INS -02. On

the very same day, a summons was also

issued by respondent no.4 to the

petitioners asking the petitioner No.2 to

produce Books of Accounts and give

statement on 18.03.2025 at 11:00 A.M at

GST Office at Gandhidham.

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

5.6 On 21.03.2025, respondent No.4

provisionally attached 'Sundry Debtors' of

the petitioner No.1-Company directing the

Debtors not to pay any amount to the

petitioner No.1-company without prior

permission of respondent No.4.

5.7 It is the case of the petitioners

that the transactions of the petitioners

were structured under "Bill to Ship To"

and/or 'Bill from-Dispatch from' and/or

"Combination of both" concept wherein,

title of the goods change hands before or

during the movement of the goods either

one or multiple times. It is further the

case of the petitioner that transferring

the title of the goods, which is a unique

physical movement of the goods, should be

under the Unique E-Way bill whereas, the

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

petitioners, due to incorrect

understanding of the GST Law, has

inadvertently issued duplicate E-Way Bill

which created a misunderstanding, leading

authorities to incorrectly assume a

fraudulent transaction when in reality,

the tax was fully accounted for, and no

revenue loss has occurred.

Being aggrieved and dissatisfied by the

actions of the respondents for authorizing

search and seizure proceedings u/s. 67(1),

blocking of ITC and for passing of order

of provisional attachment dated

06.03.2025, the petitioner approached this

Court by way of present petition.

6. Learned Senior Advocate Mr. S.N.Soparkar

appearing for the petitioners submitted

that the respondent-State authorities have

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

not issued the summons and the impugned

orders with DIN. It was submitted that as

per the Circular No. 37 of 2019 issued by

the Central Board of Indirect Taxes and

Customs (Investigation-Custom) dated

05.11.2019, it is mandatory for the

respondents to mention the DIN in all the

summons, arrest memo, inspection notices

and letters issued in the course of any

enquiry except in exigent circumstances

as stated in Para 3 of the said Circular,

failing which, such summon, notice etc.

has to be treated as invalidated and

deemed to have been never issued.

6.1 It was therefore, submitted that

admittedly, the impugned summons and

attachment order under challenge which

are without DIN, cannot be said to have

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

been ever issued by the respondent

authority as per the aforesaid Circular.

6.2 It was further submitted that the

impugned order of attachment are issued by

the Assistant Commissioner who is not an

authorised or proper officer because as

per the provisions of section 83 of the

Gujarat Goods and Service Tax Act,2017

Commissioner is only the authorized person

to pass the order of provisional

attachment.

6.3 In support of his submissions

reliance was placed on the Notification

dated 05.07.2017 whereby, the Commissioner

of State Tax has delegated all the

functions under the GST Act to the Special

Commissioner of State Tax and Additional

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

Commissioner of State Tax for carrying out

purpose of the Act but not the Assistant

Commissioner. Learned Senior Advocate Mr.

Soparkar also distinguished the order

dated 15.01.2018 issued by the

Commissioner of State Tax wherein, proper

officer specified in Schedule-A have been

assigned to perform the function which

includes provisional attachment to protect

the revenue in certain cases by Deputy

Commissioner of Assistant Commissioner,

State Tax. It was therefore, submitted

that though the Commissioner has specified

the proper officer in order dated

15.01.2018, but the term "Proper Officer"

is not referred to or stated in section 83

of the GST Act and therefore, delegation

of powers by the Commissioner to "Proper

officer" being Deputy Commissioner and

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

Assistant Commissioner of State Tax for

assignment of the function of issue of

provisional attachment order to protect

the revenue is without jurisdiction. It

was therefore, submitted that summons and

the impugned orders passed by the

Assistant Commissioner are without

jurisdiction.

6.4 Learned senior advocate Mr.

Soparkar submitted that the provisional

attachment made by the respondent-

authority is without jurisdiction as the

respondent-authority has not considered

the fact that the petitioners have entered

into the transactions of 'Bill To- Ship

To' and therefore, there is no evasion of

tax as alleged in the satisfaction note.

It was further submitted that the

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

petitioner has very good prima facie case

as the respondent-authorities are invoking

provision of section 16(2)(c)of the GST

Act and as such, the impugned orders are

liable to be quashed and set aside.

7. On the other hand, learned Assistant

Government Pleader Ms. Puja Ashar for the

respondent submitted that there is no

circular issued by the State Tax authority

similar to that of the Circular issued by

the Central Board of Indirect Taxes and

Customs which is addressed to all the

Central Officers and there is no provision

for issuing DIN in the communications,

orders, summons etc. issued by the State

Tax authority under the provisions of the

Gujarat Goods and Service Tax Act, 2017.

It was further submitted that as per the

order dated 15.01.2018 (Page 106 of the

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

petition), the Commissioner has assigned

the functions mentioned in Schedule-A of

the said order that is to say, provisional

attachment to protect revenue to Deputy

Commissioner and Assistant Commissioner of

State Tax and in the facts of the case,

the Assistant Commissioner of State Tax

has passed the order of provisional

attachment.

7.1 It was submitted that the

Commissioner has passed the order in

exercise of the powers conferred under

sub-section (3) of section 5 read with

section 2(91) of the Goods and Service Tax

Act and the Rules framed thereunder to

assign the functions to be performed under

the Act by a proper officer and as the

Commissioner is a person, who is

authorized to pass an order under section

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

83, he has assigned such functions to the

proper officer and as per the said order,

since 2018, the Deputy Commissioner,

Assistant Commissioner and State Tax

Officers are passing the order under the

provisions of section 83 of the Act. It

was submitted that once the functions are

assigned by the Commissioner to the

designation of proper officer, as defined

under section 2(91) of the GST Act, no

further fault can be found in the impugned

order of provisional attachment. It was

submitted that section 2(91) defines the

proper officer in relation to any function

to be performed under this Act means the

Commissioner or the officer of the Central

Tax who is assigned their functions by the

Commissioner in the Board. It was

therefore, submitted that the Commissioner

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

is authorized to pass an order of

provisional attachment and Commissioner

himself is a proper officer as per section

2(91) of the Act. Therefore, the

Commissioner has rightly assigned his

functions as the proper officer to pass a

provisional attachment while exercising

power under sub-section (3) of section 5

of the GST Act.

7.2 With regard to the merits of case

is concerned, it was submitted that the

petitioner has not preferred any

application raising the objections against

the satisfaction note and if the

petitioner prefers such application, the

same shall be considered by the

respondent-authority in accordance with

law and therefore, at present, this

petition is a premature petition and no

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

interference should be made at this stage

as the investigation is in process and the

respondent-authorities are contemplating a

huge evasion of tax by the petitioners.

8. With regard to the contention raised on

behalf of the petitioner for not

mentioning the DIN is concerned, it

appears from the record that DIN on

summons or provisional attachment order is

not mentioned. The Circular relied upon by

the petitioner is issued by the Central

Board of Indirect Taxes and Customs

addressed to all Principal Chief

Commissioner of Customs, Principal

Director General, Chief Commissioner of

Customs, Director General, Principal

Commissioner of Customs, Principal

Additional Director General, Commissioner

of Customs, Additional Director General

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

and all Joint Secretaries and

Commissioner, CBIC. The Circular is not

addressed to any of the Commissioners of

any of the State Tax who is an authorized

person. Therefore, the application of the

circular is rightly stated to have been

not applicable to the State Tax Officer

under the provisions of the GGST Act.

Learned Senior Advocate Mr. Soparkar has

rebutted such contention of the respondent

stating that as the Central Goods and

Service Tax Goods and State Goods Service

Tax Act are replica and therefore, the

Circular issued by the CBIC are also

binding upon State Tax Officer. We

respectfully disagree with such contention

raised on behalf of the petitioner as it

is evident from the legal legislative

history that both the Acts i.e. Central

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

Goods Service Tax Act and State Goods

Service Tax Act are operating by separate

Acts, Notification, Circulars issued by

the Central Government and the State

Government separately. As and when any

notification issued by the Central

Government or Central Board of Indirect

Taxes, similar notification is issued by

the State Authorities. However in the

facts of the case, it is not brought to

our notice that any such similar circular

like Circular Number 37/2019 is issued by

the State Tax Authority. On a specific

inquiry made by this Court to learned

advocate Mr. Abhishek Malvi appearing for

learned advocate Mr. Maulik Vakhariya for

the petitioner, it was stated at bar that

no such circular is issued by the State

Tax Authority as per his knowledge.

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

9. In view of the above facts emerging from

the record, Circular No. 37 of 2019 cannot

be said to be applicable to the

communications including the summons,

notices or any order issued by the State

Tax authority.

10. It is also brought to our notice that

there is no mechanism of issuance of DIN

on any of the communication, notice,

summons, orders issued by the State Tax

Authorities. In such circumstances, the

contention raised on behalf of the

petitioner, that the DIN is not mentioned

in any of the summons and the previously

attachment order being without any basis,

is rejected.

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

11. The other contention raised on behalf of

the petitioner is that the impugned

provisional attachment order passed in

this petition is issued by the Assistant

Commissioner who is not a Commissioner as

required by the provision of section 83 of

the GST Act.

12. Section 83 of the GST Act reads as under:

"83. Provisional attachment to protect revenue in certain cases.--

(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed."

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

13. It was further submitted that as per

section 2(91), "Proper Officer" is defined

and, as per the order dated 15.01.2018,

the Commissioner has assigned the

functions of provisional attachment to

protect the revenue to Deputy Commissioner

and Assistant Commissioner as a proper

officer and therefore, it cannot be said

that impugned orders are passed by the

Commissioner who is only the authorised

person. The above contention raised on

behalf of the petitioner appears to be

very attractive in the first blush

however, on close scrutiny of the

provisions of section 2(91) which defines

the proper officer, it appears that the

Commissioner himself is a proper officer

and as such, once the one proper officer

has assigned the functions while

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

exercising power conferred under sub-

section (3) of section 5 of the Act, to

other proper officer, it cannot be said

that the delegation of assignment of the

powers by the Commissioner by impugned

order dated 15.01.2018 is contrary to the

provisions of the GST Act. This contention

is already considered by this Court in

case of Nathalal Maganlal Chauhan vs.

State of Gujarat reported in [2020] 114

taxmann.com 424 (Gujarat) as under:

"43. Mr.Pandya invited our attention to a decision of this Court in the case of Valerius Industries (supra), more particularly, the observations made by this Court in para-35. We quote para-35 as under:

"In the case on hand, Section 83 makes it abundantly clear that it is the Commissioner's opinion which is relevant. The

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

Legislature has thought fit to confer this power upon the Commissioner. Whether such power conferred upon the Commissioner by the legislature could have been delegated to the three subordinate officers referred to above by virtue of the order dated 15th January 2018 passed in exercise of power under sub- section (3) of Section 5 read with clause 19 of Section 2 of the Act and the rules framed thereunder. In our opinion, the answer has to be in the negative. Although there is no specific challenge to the order dated 15th January 2015 passed by the Commissioner of State Tax delegating his power under Section 83 to the subordinate officers, yet, we are of the view that by virtue of such order, such impugned order of provisional attachment cannot be defended. "

44. In Valerius Industries (supra), this Court was dealing with a matter in which the subject matter of challenge was an order of provisional attachment under Section 83 of the Act. For the purpose of Section 83 of the Act, the Legislature thought fit

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

to confer the power upon the Commissioner. However, in this regard also, the Commissioner has issued a notification dated 15th January 2018 delegating his power to three subordinate officers. While considering the challenge, this Court observed in para-35 as quoted above.

45. We are of the view that the observations made by this Court in the above referred para-35 could be termed as per incurium as such observations run contrary to the Supreme Court decisions referred to above in this judgment.

46. It is an accepted principle of administrative law that the repository of power must exercise that power personally. However, there are two exceptions to this principle:

1. Legislation provides for the power to delegate or authorise:

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

An express power to delegate, usually in legislation, allows the person who has the legislative authority to delegate that authority to others. The individual/s or position/s having the delegation can exercise the authority in their own right. An example of an express power to delegate can be seen in section 5(3) of the Act, 2017.

2. Implied power to authorise:

An implied power to authorise, arises where even though there may or may not be an express power to delegate in legislation, there can be an implied power for an official to exercise the power on the person's behalf - it is often termed the 'alter ego' principle, the 'Carltona principle' or an implied power to delegate. This principle arose from the decision Carltona Limited v Commissioner of Works [1943] 2 ALL ER 560.

47. The principle is: devolving power is permitted in the cases where the nature, scope, and purpose of the power in legislation means that it is unlikely that the

NEUTRAL CITATION

C/SCA/4910/2025 JUDGMENT DATED: 09/05/2025

undefined

Parliament intended that the power is to be exercised personally, and the only practical way the power can be exercised is by the officers who are responsible to the person (who has the power by legislation)."

14. Therefore, reliance placed by the

petitioner on notification dated

05.07.2017 whereby the powers of the

Commissioner are delegated to the Special

Commissioner of State Tax and Additional

Commissioner of State Tax for the purpose

of said Act would not be applicable in the

facts of the case when by order dated

15.01.2018 (page 106 of the petition), the

Commissioner being a proper officer has

assigned the function which is to be

performed by him by the another proper