Court Directs Strict Adherence to GST Investigation Guidelines, Allows Petitioner to Continue Normal Business Operations Amid Search Under Section 67 CGST Act
In a significant ruling dated September 18, 2026, the Gauhati High Court passed orders restraining the GST authorities from taking any coercive action against M/s Deepak Construction Co. during an ongoing inspection and search under Section 67 of the Central Goods and Services Tax (CGST) Act, 2017. The petitioner had approached the court alleging undue pressure by officials to discharge liabilities during the inspection, which was initiated based on allegations of wrongful availment of input tax credits during a period when its GST registration was suspended.
The search and inspection commenced on September 15, 2026, at the principal place of business of the petitioner located in Hijuguri, Tinsukia. Despite the absence of any seizure or prohibition orders, officials remained present at the petitioner's premises throughout the business hours, leading to claims of continuous coercion to settle liabilities prematurely.
The court, presided over by Justice Manish Choudhury, heard submissions from Mr. Amit Goyal, counsel for the petitioner, who cited the guidelines issued under Instruction No. 01/2022-2023 [GST-Investigation], dated May 25, 2022. These guidelines explicitly prohibit coercive measures during the course of inspections and searches, emphasizing adherence to procedural fairness.
Representing the respondents, the Finance & Taxation Department and CGST authorities denied any coercion, asserting that any demand for discharge of liability would follow statutory procedures. However, the court underscored the importance of maintaining the balance between enforcement and protection of taxpayer rights.
Accordingly, the court directed that no coercive steps shall be taken against the petitioner for discharge of liability during the ongoing inspection/search proceedings. The authorities were instructed to strictly comply with the aforementioned GST investigation guidelines until the matter is next listed for hearing on October 12, 2026.
Further, the petitioner was permitted to continue its normal business operations without disruption. This order seeks to ensure that while the tax authorities carry out their investigation, the business does not suffer undue hardship or operational paralysis due to prolonged inspections.
This judgment highlights the court's commitment to safeguarding procedural safeguards within the GST regime and reinforces the necessity for government authorities to act within the framework of established guidelines during tax investigations.
Bottom Line:
GST Law - Inspection and Search under Section 67 of CGST/AGST Act, 2017 - Authorities directed not to take coercive steps for discharge of liability during inspection/search and to adhere to guidelines issued vide Instruction No. 01/2022-2023 [GST-Investigation], dated 25.05.2022.
Statutory provision(s):
Section 67 of the Central Goods and Services Tax Act, 2017, Assam Goods and Services Tax Act, 2017
M/s Deepak Construction Co. v. Union of India, (Gauhati) : Law Finder Doc Id # 2982049
