W.P(MD)No.9040 of 2024

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

Reserved on : 28.11.2025

Pronounced on: 05.08.2026

CORAM

THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN

W.P.(MD)No.9040 of 2024

and

W.M.P.(MD)Nos.8240 and 8241 of 2024

M/s.Bhima Enterprises,

Represented by its Accountant,

Sathish Kumar Rajendran,

No.8/7, Ramapuram West,

Manikattipottal,

Pottal Post, Nagercoil,

Kanyakumari District – 629 501. ... Petitioner

Vs.

1.The Principle Chief Commissioner of GST &

Central Excise Tamil Nadu & Puducherry,

No.26/1, Mahatma Gandhi Road,

Nungambakkam,

Chennai – 600 034.

2.The Commissioner of GST & Central Excise,

Madurai Commissionerate,

Central Revenue Buildings,

No.4, Lal Bahadur Sastri Road,

Bibikulam, Madurai – 625 002.

3.The Joint Commissioner,

Office of the Central GST & Excise,

Tirunelveli Division,

2

nd

Floor, Central Revenue Building,

Tractor Road, NGO “A” Colony,

Tirunelveli – 627 007.

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W.P(MD)No.9040 of 2024

4.The Superintendent,

Office of the Central GST & Excise,

Tirunelveli Division,

2

nd

Floor, Central Revenue Building,

Tractor Road, NGO “A” Colony,

Tirunelveli – 627 007.

5.The Inspector,

Office of the Central GST & Excise,

Tirunelveli Division,

2

nd

Floor, Central Revenue Building,

Tractor Road, NGO “A” Colony,

Tirunelveli – 627 007. ... Respondents

Prayer: Writ Petition filed under Article 226 of Constitution of India, to

issue a Writ of Certiorarified Mandamus, calling for the records and to

quash the Authorization for Search in Form GST INS-01 dated

15.08.2023 issued by the third respondent and to consequently direct the

respondents to refund the tax collected to the tune of Rs.32,62,640/- from

the petitioner with interest and to return all the original documents

collected from the petitioner within such period as this Court directs.

For Petitioner: Mr.R.Karthik Ranganathan

For Respondents: Mr.AR.L.Sundaresan,

Additional Solicitor General,

Assisted by Mr.N.Dilip Kumar.

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W.P(MD)No.9040 of 2024

ORDER

The writ petitioner is a partnership firm engaged in jewelry

business. They are manufacturers and wholesalers. A surprise search

was conducted by the respondents 4 and 5 herein on 16.08.2023 under

Section 67(2) of the Central Good and Services Tax Act, 2017. The

officials seized gold ornaments weighing 3808.386 grams valued at

Rs.2,22,98,100/- and physical gold bullion weighing 5478.940 grams

valued at Rs.3,20,79,193/- on the ground that this excess stock was not

reflected in the petitioner's book of accounts. The search officials were

not convinced or satisfied by the explanation preferred by the petitioner.

The seizure details were recorded in the form GST INS-02 on

16.08.2023. A seizure memo was also issued. While the petitioner

would claim that there were compelled to cough up Rs.32,62,640/-

towards tax liability in two installments ie., a sum of Rs.13,37,888/- and

Rs.19,24,752/- on 16.08.2023 and 17.08.2023 respectively, the

respondents contend that it was a voluntary payment made by the

petitioner after they realized that they were liable to pay the same.

2.The case of the petitioner is that this search itself was illegal as

the warrant produced by the officials concerned did not bear the

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W.P(MD)No.9040 of 2024

mandatory “Document Identification Number (DIN)”. Hence, the

proceedings that took place pursuant thereto were non-est. They also

would claim that they were harassed by being repeatedly summoned.

Seeking refund of the amount said to have been coercively collected

from them totalling Rs.32,62,640 and questioning the validity of the

authorization issued on 15.08.2023, this writ petition has been filed.

3.The learned counsel for the petitioner reiterated all the

contentions set out in the affidavit filed in support of the writ petition. He

took me through the contents of his submissions.

Placing reliance on Pradeep Goyal vs Union of India (2023) 1 SCC 566,

he emphasised the significance of sharing the DIN with the taxpayers.

He submitted that though there is no clause requiring communication of

DIN to the tax payer in the circulars issued by CBIC, if that requirement

is not read into the circular, it would cause substantial prejudice to the

taxpayers. He also contended that what was issued was only an

authorization to inspect and not conduct search or seize, which

information came to light when DIN was entered. He submitted that the

entire proceedings were without jurisdiction and called upon this court to

set aside the same and order refund of the illegally collected amounts.

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W.P(MD)No.9040 of 2024

4.Shri.ARL.Sundaresan, Additional Solicitor General of India

assisted by Mr.N.Dilipkumar, learned Standing Counsel for the

respondents vehemently contested the writ prayer. Counter affidavit as

well as notes of submission were filed and I was taken through the same.

The stand of the respondents is three fold:-

(a) The authorities received credible information that the

petitioner had been indulging in tax evasion. Hence, two search

warrants and three inspection notices were issued on 15.08.2023.

On 15.08.2023, authorization for the search was issued by the Joint

Commissioner under Section 67(2) of the Act to the jurisdictional

Assistant Commissioner. During the search, the officers found

excess stock of gold ornaments and shortage of stock of gold

bullion. When the assessee was confronted with these

discrepancies, the assessee voluntarily paid a sum of

Rs.32,62,640/- in two installments on 16.08.2023 and 17.08.2023.

Challenging the seizure order, the petitioner filed W.P.(MD)No.

23502 of 2023 seeking release of the goods. Vide order dated

26.09.2026, the goods were ordered to be released without any

bond or security as the petitioner had already paid the entire tax

amount. Having obtained relief by projecting that the tax liability

has been cleared, it is not open to the petitioner to now ask for

refund of the amount. The petitioner cannot be permitted to blow

hot and cold. The principle of estoppel would operate against the

petitioner.

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W.P(MD)No.9040 of 2024

(b)It is not necessary that authorization letter should

mandatorily contain DIN. It is enough if it is generated within 15

days from the date of inspection / search. In the case on hand, the

time line was followed. Since DIN is not required to be shared

with the assessee, no prejudice has been caused to the petitioner by

non-disclosure of DIN subsequently generated.

(c)The surprise search and inspection had exposed the

petitioner's attempts at tax evasion. Even if some irregularity is

attributed to the acts of the officials, that will not vitiate the

process itself.

In support of his contentions, the learned ASG placed reliance on a

catena of case laws ( DDA vs Durga Chand Kaushish (1973) 2SCC 825,

Hammad Ahmed vs Abdul Majeed (2019) 14 SCC 1, B.Rajendran vs

K.Arumugham (2011) 1 LW 283, Pooran Mal vs Director of Inspection

(1974) 93 ITR 505 SC, UOI vs Kunisetty Satyanarayana (2206) 12 SCC

28, CCE vs Krishna Wax 2019 (368) E.L.T. 796 (S.C.) among others)

5.I carefully considered the rival contentions and went through the

materials on record. The following issues arise for consideration:-

(a)What are the elementary formalities that have to

be observed by the officials for carrying out search,

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W.P(MD)No.9040 of 2024

inspection and seizure under Section 67 of the CGST Act,

2017? Whether DIN has to be shared when it is

subsequently generated?

(b) What was conducted in the petitioner's premises-

search or inspection? Whether those proceedings are valid?

(c)Whether the petitioner is entitled to refund of the

amount paid by him in two installments on 16.08.2023 and

17.08.2023?

6.Section 67 of the CGST Act confers the power on the proper

officer to conduct inspection, search and seizure. It reads as follows:-

“ Power of inspection, search and seizure.

(1) Where the proper officer, not below the

rank of Joint Commissioner, has reasons to believe

that--

(a) a taxable person has suppressed any

transaction relating to supply of goods or services

or both or the stock of goods in hand, or has claimed

input tax credit in excess of his entitlement under

this Act or has indulged in contravention of any of

the provisions of this Act or the rules made

thereunder to evade tax under this Act; or

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(b) any person engaged in the business of

transporting goods or an owner or operator of a

warehouse or a godown or any other place is

keeping goods which have escaped payment of tax

or has kept his accounts or goods in such a manner

as is likely to cause evasion of tax payable under this

Act,

he may authorise in writing any other officer of

central tax to inspect any places of business of the

taxable person or the persons engaged in the

business of transporting goods or the owner or the

operator of warehouse or godown or any other

place.

(2) Where the proper officer, not below the

rank of Joint Commissioner, either pursuant to an

inspection carried out under sub-section (1) or

otherwise, has reasons to believe that any goods

liable to confiscation or any documents or books or

things, which in his opinion shall be useful for or

relevant to any proceedings under this Act, are

secreted in any place, he may authorise in writing

any other officer of central tax to search and seize

or may himself search and seize such goods,

documents or books or things:

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Provided that where it is not practicable to

seize any such goods, the proper officer, or any

officer authorised by him, may serve on the owner

or the custodian of the goods an order that he shall

not remove, part with, or otherwise deal with the

goods except with the previous permission of such

officer:

Provided further that the documents or books

or things so seized shall be retained by such officer

only for so long as may be necessary for their

examination and for any inquiry or proceedings

under this Act.

(3) The documents, books or things referred

to in sub-section (2) or any other documents, books

or things produced by a taxable person or any other

person, which have not been relied upon for the

issue of notice under this Act or the rules made

thereunder, shall be returned to such person within

a period not exceeding thirty days of the issue of the

said notice.

(4) The officer authorised under sub-section

(2) shall have the power to seal or break open the

door of any premises or to break open any almirah,

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electronic devices, box, receptacle in which any

goods, accounts, registers or documents of the

person are suspected to be concealed, where access

to such premises, almirah, electronic devices, box or

receptacle is denied.

(5) The person from whose custody any

documents are seized under sub-section (2) shall be

entitled to make copies thereof or take extracts

therefrom in the presence of an authorised officer at

such place and time as such officer may indicate in

this behalf except where making such copies or

taking such extracts may, in the opinion of the

proper officer, prejudicially affect the investigation.

(6) The goods so seized under sub-section (2)

shall be released, on a provisional basis, upon

execution of a bond and furnishing of a security, in

such manner and of such quantum, respectively, as

may be prescribed or on payment of applicable tax,

interest and penalty payable, as the case may be.

(7) Where any goods are seized under sub-

section (2) and no notice in respect thereof is given

within six months of the seizure of the goods, the

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goods shall be returned to the person from whose

possession they were seized:

Provided that the period of six months may,

on sufficient cause being shown, be extended by the

proper officer for a further period not exceeding six

months.

(8) The Government may, having regard to the

perishable or hazardous nature of any goods,

depreciation in the value of the goods with the

passage of time, constraints of storage space for the

goods or any other relevant considerations, by

notification, specify the goods or class of goods

which shall, as soon as may be after its seizure

under sub-section (2), be disposed of by the proper

officer in such manner as may be prescribed.

(9) Where any goods, being goods specified

under sub-section (8), have been seized by a proper

officer, or any officer authorised by him under sub-

section (2), he shall prepare an inventory of such

goods in such manner as may be prescribed.

(10) The provisions of the Code of Criminal

Procedure, 1973 (2 of 1974), relating to search and

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seizure, shall, so far as may be, apply to search and

seizure under this section subject to the

modification that subsection (5) of section 165 of

the said Code shall have effect as if for the word

"Magistrate", wherever it occurs, the word

"Commissioner" were substituted.

(11) Where the proper officer has reasons to

believe that any person has evaded or is attempting

to evade the payment of any tax, he may, for reasons

to be recorded in writing, seize the accounts,

registers or documents of such person produced

before him and shall grant a receipt for the same,

and shall retain the same for so long as may be

necessary in connection with any proceedings

under this Act or the rules made thereunder for

prosecution.

(12) The Commissioner or an officer

authorised by him may cause purchase of any goods

or services or both by any person authorised by him

from the business premises of any taxable person,

to check the issue of tax invoices or bills of supply

by such taxable person, and on return of goods so

purchased by such officer, such taxable person or

any person in charge of the business premises shall

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refund the amount so paid towards the goods after

cancelling any tax invoice or bill of supply issued

earlier.”

The above provision speaks of inspection, search and seizure. They are

conceptually distinct acts though one may closely follow the other. I have

to say so because the Standing counsel in his written notes has argued

that since inspection and search have been dealt under the very same

provisions(Section 67, Rule 139 and Form GST INS-01), the dividing

line between an inspection and search is too narrow and very much

blurred. The Hon'ble Divison Bench of this Court in Shri

Ramakrishnan Srikishan Jhaver and Others Vs. Commissioner of

Commercial Taxes and Others ((1965) 57 ITR 664) deleniated the

differences in the following terms:-

“16. Now what is ordinarily meant by inspection,

search and seizure? According to the Oxford Concise

Dictionary, to “inspect” is to “look closely into”; “examine

officially”. To that extent what the Attorney-General said is

correct. The word is derived from the Latin Spicere

sped meaning look. The meaning of “search” in the same

dictionary is given as “look or feel or go over (person or his

face or pockets, receptacle, place, book) for what can be

found or to find something of which presence is suspected,

probe, look for, seek out”. Search warrant as seen from this

dictionary is one that is granted by justice of peace to enter

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premises of person suspected of concealing stolen property.

In French it is Chercher and the Latin word is Circare which

in literal sense means, go around as in circus. It may be seen

that a search is therefore not mere looking for something

which is produced or open but which is hidden, concealed or

not obvious. It is looking for in the sense of seeking out what

is suspected or concealed by probing into or investigation or

examination. Seize, as the dictionary shows, means “taking

possession by warrant or legal right, confiscate, impound or

attach, lay hold of forcibly or suddenly, snatch, grasp with

hand or mind”. Seizure, therefore, is not mere taking but

taking with force. Davis in “Federal searches and seizures”

says that the mere observation or visual inspection of what

is open and patent does not constitute a search and that an

“inspection” contemplates the examination of articles or

objects made available for that purpose and is usually, but

not invariably, associated with civil rather than criminal

proceedings. He adds that an inspection cannot be used in

lieu of a legally justified search for the purpose of

discovering evidence of the commission of a crime. Referring

to an American decision of a Court of Appeal at page 367, it

quotes:

“It is, however, implicit in Davis v. United States [325 U.S.

888.] that the right to inspect does not carry with it the right,

without warrant and in absence of arrest, to reach that

which is to be inspected by a resort to self-help in the face of

the owner's protest”.

17. At page 350 Davis again refers to the American

view that a search implies an examination of one's premises

or person with a view to the discovery of contraband or

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evidence of guilt to be used in prosecution of a criminal

action, that the term implies exploratory investigation or

quest and that it is well established that it is not a search to

observe what is open and patent either in daylight or

artificial light. Though the American view of the meaning of

the words “inspection” and “search” is so expressed in the

context of the Fourth Amendment to the Constitution of the

United States, it seems to us that it correctly represents the

general import and content of those English words. An

examination of sections 96, 98 and 51 of the Code also shows

that search has been used in contradistinction with

“inspection” and implies an exploratory examination or

probing into or seeking out something which is hidden,

concealed, suspected and not open, exposed or

demonstrated. It appears to be hardly appropriate to say that

when a person or place is explored or probed into for

something hidden or not obvious, such a person or place is

inspected. That is clearly a search. Seizure implies not mere

taking but forcible taking. It is taking with force possession

of something contrary to the wishes of its owner or

possessor: See Gianchand v. The State of Punjab [[1962]

Suppl. 1 S.C.R. 364.] . In Chandrika Sao and Hazari Lal v. State

of Bihar [[1964] 1 S.C.J. 116 at 119 : 14 S.T.C. 399.] it was

pointed out:

“In our opinion, merely holding books found lying in the

premises for perusing them cannot properly be regarded as

seizure because seizure implies doing something over and

above holding an article in one's hand. According to the

Shorter Oxford Dictionary, seizure, among other things,

means ‘confiscation or forcible taking possession (land or

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goods); a sudden and forcible taking hold’. As already stated,

Mr. Singh merely picked up the books which were lying in the

shop and did not snatch them away from any one nor did he

take them by force.”

18. A mere power of inspection will not, therefore,

take with it a power to seize unlike a search which often,

particularly, as seen from the provisions of the Code of

Criminal Procedure, includes a power of seizure. But we

think a power of seizure need not necessarily imply a power

of search, for, there may be seizure on production or on

inspection.

Section 67(1) deals with inspection. Section 67(2) deals with search and

seizure. The proper officer cannot invoke these powers arbitrarily. He

must have reasons to believe that the circumstances set out in the

respective provisions exists.This is a condition precedent. While other

statutes speak of “reason to believe”, Section 67 employs the same

expression in plural. This may not make any difference because words

importing the singular number include the plural number, and words

importing plural number include the similar number (Section 2(22) of

BNS, 2023). The expression “reason to believe” has been defined in

Section 2(29) of BNS, 2023 as follows:-

“ A person is said to have “reason to believe” a

thing, if he has sufficient cause to believe that thing

but not otherwise;”

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The Constitution Bench of the Hon'ble Supreme Court in Calcutta

Discount Co. Ltd., Vs. Income Tax Officer ((1961) 41 ITR 191 (SC)) in

the context of Section 34 of the Income Tax Act, 1922 held that the

expression " reason to believe " postulates belief and the existence of

reasons for that belief. The belief must be held in good faith: it cannot be

merely a pretence. The expression does not mean a purely subjective

satisfaction of the authority. Reasons must exist on record. It cannot be a

matter of belief in the mind of the officer. It cannot be based on mere

suspicion. It must be founded upon information. The existence of the belief

and the reasons for the belief, but not the sufficiency of the reasons, will be

justiciable. In Aslam Mohamed Merchant Vs. Competent Authority

((2008) 14 SCC 186) it was observed that whenever a statute provides for

“reasons to believe”, either the reasons should appear on the face on the

notice or they must be available on the materials which had been placed

before the authority. In Income Tax Officer Vs. Lakhmani Mewal Das

((1976) 103 ITR 437 (SC) it was held that the reasons for the formation of

the belief must have a rational connection with or relevant bearing on the

formation of the belief. Rational connection postulates that there must be a

direct nexus or live link between the material coming to the notice of the

authority and the formation of his belief as to the existence of the

circumstances set out in the Section. Thus, Section 67 contains an inherent

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safeguard to ensure that the power of inspection / search and seizure is

not arbitrarily exercised.

7.While the proper officer can authorise any other officer of

Central Tax to carry out inspection, the power to search and seize may be

carried out by an authorised officer or by himself. The search can be

conducted either pursuant to an inspection carried out under sub-Section

1 of Section 67 or otherwise. In view of the use of the word “otherwise”,

one can conclude that search need not follow inspection. It can be

resorted to straightaway also. While sub-Section 1 of Section 67 lists out

many circumstances, sub-Section 2 provides for search only if the goods

liable to confiscation or documents or books or things useful for or

relevant to any proceedings under the Act or secreted in any place. The

purpose of the search is to seize the secreted items, if necessary.

8. The authorisation for search issued under Section 67(2) of the

Act reads as follows:-

“Therefore -

In exercise of the powers conferred upon me under sub-

section (2) of section 67 of the Act, I authorize and require you

to search the above premises with such assistance as may be

Page 1 of 2 necessary, and if any goods or documents and/or

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other things relevant to the proceedings under the Act are found,

to seize and produce the same forthwith before me for further

action under the Act and rules made thereunder.

Any attempt on the part of the person to mislead, tamper

with the evidence, refusal to answer the questions relevant to

inspection / search operations, making of false statement or

providing false evidence is punishable with imprisonment

and /or fine under the Act read with section 179, 181, 191 and

418 of the Indian Penal Code.”

From a bare look at the above, one cannot come to any definite

conclusion. It is said to have been issued under Section 67(2). Therefore,

it can only be a search warrant. But, at the foot of the communication, it

is described as an inspection warrant. The warrant talks about goods

liable to confiscation / documents relevant to the proceedings under the

Act are secreted in the business / residential premises. The second

paragraph lists out all the circumstances envisaged in Section 67(1)

pertaining to inspection. Thus, the authority does not appear to be clear.

The model Form GST INS-1 is a composite form. While issuing the

inspection warrant or search warrant as the case may be, the authority

must do some editing work. That alone would indicate some if not full

application of mind. It cannot be a volley of fire hoping atleast one bullet

will hit the mark. On the other hand, it has to be more like a laser beam.

In the case on hand, the authority is not clear as to whether goods have

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been secreted or if documents have been stashed away. He does not know

whether they are in the business premises or the assessee's residence.

Mechanical repetition of the statutory language defeats the very purpose

of incorporating safeguards in the statutes.

9.Though any move of the authority is open to judicial review,

Courts would be reluctant to undertake the exercise once the act is done.

In other words, if an illegal search conducted by the authority leads to

discovery of tax evasion, the Court will not restrain the authority from

proceeding further merely because, the conditions precedent for

undertaking a search were absent.

10. Lord Acton long ago commented that power tends to corrupt,

and absolute power corrupts absolutely. That is why, in any liberal

democracy, absolute power is never conferred on a bureaucrat. Section

67 embodies that principle and is hedged with safeguards. It has to be

read with Rule 142 of the CGST Rules. To supplement them, the Central

Board of Indirect Tax and Customs issued Circular No.122/41/2019-

GST, dated 05.11.2019 whereby the system of generating “Document

Identification Number (DIN)” was put in place. Paragraph No.1 of the

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said circular brings out on record the reasons for introducing such a

system. It reads as follows:-

“In keeping with the Government's objectives of transparency

and accountability in indirect tax administration through widespread

use of information technology, the CBIC is implementing a system for

electronic (digital) generation of a Document Identification Number

(DIN) for all communications sent by its offices to taxpayers and other

concerned persons. To begin with, the DIN would be used for search

authorization, summons, arrest memo, inspection notices and letters

issued in the course of any enquiry. This measure would create a digital

directory for maintaining a proper audit trail of such communication.

Importantly, it would provide the recipients of such communication a

digital facility to ascertain their genuineness. Subsequently, the DIN

would be extended to other communications. Also, there is a plan to

have the communication itself bearing the DIN generated from the

system.”

11.The circular issued under Section 168(1) of the CGST Act,

2017 r/w. Section 37B of the Central Excise Act, 1944 directs that no

search authorization, summons, arrest memo, inspection notices and

letters issued in the course of any enquiry shall be issued by any officer

under the Board without a computer-generated Document Identification

Number (DIN) which should be quoted prominently in the body of such

communication. The digital platform for generation of DIN is hosted on

the Directorate of Data Management online Portal (cbicddm.gov.in). The

circular makes generation of DIN a mandatory requirement. However, it

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also stipulates that in exceptional circumstances, communication may be

issued without an auto generated DIN. But before following back on the

inspection, one must record reasons in writing in the concerned file. The

communication should also expressly state that it has been issued without

a DIN. Two contingencies have been envisaged in the circular. They are

(i) when there are technical difficulties in generating the electronic DIN

or (ii) there is an acute urgency and the authorized officer is outside the

office in the discharge of his official duties. If the specified

communication does not bear the electronically generated DIN and is

also not covered by the exceptions, it shall be treated as void. Even if the

case falls within the exception, it should be regularized by generating

DIN within 15 days of its issuance. Ratification must be obtained from

the superior officer for having issued the communication without DIN.

After such approval is obtained, the DIN must be electronically

generated. After printing the electronically generated pro-forma bearing

the DIN, it has to be filed in the concerned file. In order to ensure

transparency, recipients/members of general public are enabled to verify

the genuineness of the communication by entering the CBIC- DIN. Yet

another circular No. 122/41/2019-GST dated 23.12.2019 was issued on

the same lines.

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12.The Hon'ble Supreme Court in the decision reported in (2023) 1

SCC 566 (Pradeep Goyal Vs. Union of India) gave directions for

implementation of the system of electronic (digital) generation of DIN in

the indirect tax administration. When the search was conducted on an

assessee, but warrant did not contain “DIN”, the Hon'ble High Court of

Andhra Pradesh High Court in Novelty Reddy and Reddy Motors Private

Limited v. Assistant Commissioner reported in 2025 (7) TMI 1922 set

aside the assessment order itself on the ground that it did not bear DIN.

Display of DIN in the search warrant was held to be mandatory and it

was emphasized that DIN should be mentioned not only in the warrant,

but also in the subsequent proceedings. This order has however been

stayed by the Hon'ble Supreme Court on 13.05.2025 in SLP(C)No.28105

of 2025.

13.Any circular issued by CBIC is binding on the department (vide

K.P. Varghese v. ITO, (1981) 4 SCC 173). Display of DIN in the

communication is mandatory. If it could not be displayed for the reasons

set out in the circular dated 05.11.2019, those reasons should be

mentioned in the communication itself. This omission should be made

good by generation of DIN within 15 days thereafter. The circular itself

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clarifies that the authority must record the reasons for not being able to

display DIN in the communication. The technical difficulty in generating

DIN could be a reason. In the present case also, the stand taken by the

authorities is that due to technical glitches, DIN could not be generated.

This is a convenient fig leaf. Parrot-like repetition of the phrase

contained in the circular will not immunize the act of the authority from

judicial review. What was the technical difficulty experienced by the

official concerned must be set out in the file contemporaneously. The

attempt made to generate DIN must be described. If the official

concerned could not be successful for technical reasons, he must

correspondingly send a mail to his immediate superior recording the fact

that his attempt to generate DIN was in vain. Absent such

contemporaneous communication to the immediate superior, the Court

will be reluctant to take the stand of the department at its face value.

14.Harishchandras and Yudhishthiras have become an extinct

species. The veracity of any claim should be open to verification.

Axioms alone can defy the demands for proof. No stand of an official

can be taken as an axiom. It is his burden to show that he is entitled to

invoke the exceptions set out in the circular. If the official concerned is

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W.P(MD)No.9040 of 2024

able to successfully invoke the exception, that is not the end of the

matter. He must generate DIN within 15 days from the date of issue. In

the case on hand, the officials did so on 25.08.2023 and this was also

filed. They contended that this amounts to sufficient compliance of the

requirements set out in the circular. Admittedly, the DIN details were not

shared with the assessee/petitioner. Are they bound to do is the next

question that calls for consideration. My answer is in the affirmative.

The very purpose of introducing DIN was to ensure transparency. This

object is frustrated by not sharing the DIN with the noticee. If the

noticee wants to verify the genuineness of the document, he can do so

only after entering DIN in the portal. By denying the details relating to

DIN, the noticee is disabled from verifying its validity.

15.The circular may not expressly require the department to

furnish the subsequently generated DIN post-inspection. But on an

overall reading of the circular, one can safely come to the conclusion that

without DIN, the noticee cannot take any step for verifying the

genuineness of the communication.

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16.During the pendency of the present writ proceedings, the

department had come out with yet another circular bearing Circular No.

249/06/2025-GST, dated 09.06.2025 modifying the earlier circular and

holding that when verifiable Reference Number (RFN) is generated in a

document uploaded on the common portal in compliance with Section

169 of the CGST Act, there is no need to quote DIN. It was further

clarified that the communication bearing RFN will be treated as a valid

communication. The department modified this circular vide Circular

bearing No. 23/2025 -Customs, dated 23.09.2025 by holding that

Document Identification Number generated through DIN utility shall

continue to be mandatorily quoted on all other communications which

have not been dispatched using public option in CBIC’s e-Office

application. Be that as it may, these two circulars have no bearing on the

present proceedings.

17.At the foot of the impugned authorization letter 15.08.2023

issued under Section 67(2) of the Act, the following endorsement was

made:-

“Due to technical difficulties in generating the

DIN number, the Inspection warrant is issued without

DIN number. However the same will be generated

later”

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The technical difficulty experienced in generating DIN has not been

recorded in any file. There is no contemporaneous proof to show that the

authorizing officer had such technical difficulties. Be that as it may, the

DIN generated on 25.08.2023 was also not shared with the assessee. It is

not for the department to claim that post-intimation of DIN to the

petitioner would not serve any purpose. When a safeguard has been put

in place to check arbitrariness, it is the duty of the officials concerned to

strictly adhere to the same.

18. I am unable to invalidate the search held on 16.08.2023 and its

outcome in view of the conduct of the petitioner. The petitioner had filed

W.P.(MD)No.23502 of 2023 and vide order dated 26.09.2023 obtained

release of the goods by claiming that the tax liability has already been

discharged in view of the payment of Rs.32,62,640/-. The prayer in the

said writ petition was for quashing the seizure order. The learned Judge

vide order dated 26.09.2023 directed return of the goods since the

petitioner had paid the applicable tax. The seizure was not set aside.

Inspection and search are stages anterior to seizure. When seizure itself

has been implicitly upheld, one cannot nullify the search that preceded

seizure. It is too late in the day to assail the validity of the inspection

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itself. In my considered view, even while seeking provisional release, the

legality of the search should also have been questioned. The legality of

the inspection / search cannot be challenged after obtaining relief of

provisional release of goods.

19.The next question that calls for consideration is whether the

authorities were justified in making the petitioner cough up a sum of Rs.

32,62,640/- during the course of the inspection.

20.According to the authorities, this payment was voluntarily made

by the petitioner. The petitioner contended that it was done under

coercion. In such matters, a commonsensical approach has to be

adopted. Section 67(6) of the Act provides that the goods so seized shall

be released on a provisional basis upon execution of a bond and

furnishing security or on payment of applicable tax, interest and penalty.

Since conflicting versions are possible, the Hon'ble Division Bench of

the Gujarat High Court in the judgment authored by Hon'ble Mr.Justice

J.B.Pardiwala (as His Lordship then was) in M/s.Bhumi Associates Vs.

Union of India reported in 2021 (2) TMI 701 issued the following

directions:-

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"The Central Board of Indirect Taxes and Customs

as well as the Chief Commissioner of Central/ State Tax

of the State of Gujarat are hereby directed to issue the

following guidelines by way of suitable

circular/instructions:

(1) No recovery in any mode by cheque, cash, e-

payment or adjustment of input tax credit should be

made at the time of search/inspection proceedings

under Section 67 of the Central/Gujarat Goods and

Services Tax Act, 2017 under any circumstances.

(2) Even if the assessee comes forward to make

voluntary payment by filing Form DRC03, the assessee

should be asked/ advised to file such Form DRC03 on

the next day after the end of search proceedings and

after the officers of the visiting team have left the

premises of the assessee.

(3) Facility of filing complaint/ grievance after the

end of search proceedings should be made available to

the assessee if the assessee was forced to make payment

in any mode during the pendency of the search

proceedings.

(4) If complaint/ grievance is filed by assessee

and officer is found to have acted in defiance of the

aforestated directions, then strict disciplinary action

should be initiated against the concerned officer."

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Following the said directions, CBIC issued Instruction No. 01/2022-23

[GST – Investigation] on 25.05.2025. It reads as follows:-

“Subject: Deposit of tax during the course of

search, inspection or investigation - reg.

During the course of search, inspection or

investigation, sometimes the taxpayers opt for deposit

of their partial or full GST liability arising out of the

issue pointed out by the department during the course

of such search, inspection or investigation by furnishing

DRC-03. Instances have been noticed where some of the

taxpayers after voluntarily depositing GST liability

through DRC-03 have alleged use of force and coercion

by the officers for making 'recovery' during the course

of search or inspection or investigation. Some of the

taxpayers have also approached Hon'ble High Courts in

this regard.

2. The matter has been examined. Board has felt

the necessity to clarify the legal position of voluntary

payment of taxes for ensuring correct application of law

and to protect the interest of the taxpayers. It is

observed that under CGST Act, 2017 a taxpayer has an

option to deposit the tax voluntarily by way of

submitting DRC-03 on GST portal. Such voluntary

payments are initiated only by the taxpayer by logging

into the GST portal using its login id and password.

Voluntary payment of tax before issuance of show cause

notice is permissible in terms of provisions of Section

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73(5) and Section 74 (5) of the CGST Act, 2017. This

helps the taxpayers in discharging their admitted

liability, self-ascertained or as ascertained by the tax

officer, without having to bear the burden of interest

under Section 50 of CGST Act, 2017 for delayed

payment of tax and may also save him from higher

penalty imposable on him subsequent to issuance of

show cause notice under Section 73 or Section 74, as

the case may be.

3. It is further observed that recovery of taxes not

paid or short paid, can be made under the provisions of

Section 79 of CGST Act, 2017 only after following due

legal process of issuance of notice and subsequent

confirmation of demand by issuance of adjudication

order. No recovery can be made unless the amount

becomes payable in pursuance of an order passed by the

adjudicating authority or otherwise becomes payable

under the provisions of CGST Act and rules made

therein. Therefore, there may not arise any situation

where "recovery" of the tax dues has to be made by the

tax officer from the taxpayer during the course of

search, inspection or investigation, on account of any

issue detected during such proceedings. However, the

law does not bar the taxpayer from voluntarily making

payment of any tax liability ascertained by him or the

tax officer in respect of such issues, either during the

course of such proceedings or subsequently.

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4. Therefore, it is clarified that there may not be

any circumstance necessitating 'recovery' of tax dues

during the course of search or inspection or

investigation proceedings. However, there is also no bar

on the taxpayers for voluntarily making the payments

on the basis of ascertainment of their liability on non-

payment/ short payment of taxes before or at any stage

of such proceedings. The tax officer should however,

inform the taxpayers regarding the provisions of

voluntary tax payments through DRC-03.

5. Pr. Chief Commissioners/ Chief Commissioners,

CGST Zones and Pr. Director General, DGGI are advised

that in case, any complaint is received from a taxpayer

regarding use of force or coercion by any of their

officers for getting the amount deposited during search

or inspection or investigation, the same may be

enquired at the earliest and in case of any wrongdoing

on the part of any tax officer, strict disciplinary action as

per law may be taken against the defaulting officers.”

21.The Hon'ble Division Bench of Delhi High Court in the

decision reported in 2022 SCC OnLine Del 4508 (M/S.Vallabh Textiles

vs Senior Intelligence Officer And Ors.) remarked that while the

aforesaid instructions are in line with the wholesome directions given in

M/s.Bhumi Associates, it falls short in as much as it side-steps direction

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No.2 contained in M/s.Bhumi Associates which states that even if the

assessee comes forward to make voluntary payment in the prescribed

form ie., DRC-03, he / she should be advised to file the same the day

after the search had ended and the concerned officials had left the

assessee's premises. It also took note of the omission of the direction in

Bhumi pertaining to the various modes of collection adopted in such

circumstances, for example via., cheque, cash, e-payment or even via.,

adjustment of input tax credit.

22.After extracting Paragraph Nos.3 and 4 of the above circular

verbatim, the Hon'ble Supreme Court in the decision reported in (2025) 6

SCC 545 (Radhika Agarwal Vs. Union of India) in Paragraph No.67

held as follows:-

“67. Analysing the aforesaid data indicates that

the number of people arrested is normally in hundreds

or more.52 However, it is to be noted that the figures

with regard to the tax demand and the tax collected

would, in fact, indicate some force in the petitioners’

submission that the assessees are compelled to pay tax

as a condition for not being arrested. Sub-section (5) to

Section 74 of the GST Acts gives an option to the

assessee and does not confer any right on the tax

authorities to compel or extract tax by threatening

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arrest. This would be unacceptable and violative of the

rule of law.”

The Hon'ble Supreme Court called upon the revenue to submit data with

regard to the arrest made for recovery of tax. After analyzing the data,

the Hon'ble Supreme Court noted that the number of people arrested is

normally in hundreds or more. The Court went on to remark that there is

some force in the petitioner's submission that the assessees are compelled

to pay as a condition for not being arrested. Sub-Section 5 to Section 74

of the CGST Act gives an option to the assessee and does not confer any

right on the tax authority to compel or extract tax threatening arrest. That

would be unacceptable and violation of the rule of law. The Hon'ble

Supreme Court further observed that in case tax is collected under threat,

force or coercion, the assessee is entitled to move the Court for refund of

tax deposited by them.

23.M/S.Vallabh Textiles also held that the directions given by the

Gujarat High Court are binding on the revenue and violation of the

safeguards put in place by the statute or the Court would render the

collection of any amount towards tax, interest and penalty as one without

the authority of law. The Delhi High Court rejected the claim of the

department that the deposit of tax, interest and penalty was voluntary.

Paragraph No.41 of M/S.Vallabh Textiles reads as follows:-

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“41. The reason that the officers of the official

respondents/revenue have been asked, perhaps, to have

the amounts deposited the day after the search is

concluded, is, to also give space to the concerned person

to seek legal advice, and only thereafter deposit tax,

interest and penalty, wherever applicable, upon a

proper self-ascertainment.

41.1 Undoubtedly, in this case, no such

elbowroom was made available.”

24.Since the Court came to the conclusion that the deposit of the

amount lacks an element of voluntariness, the revenue was directed to

refund the same with interest. M/s.Vallabh Textiles was followed by the

Hon'ble Calcutta High Court in ATR Malleable Casting (P) Ltd. v.

Inspector of Central Taxes, reported in (2024) 130 GSTR 127. A

learned Judge of this Court had also followed the decision of M/s.Bhumi

Associates in the decision rendered in Shri Nandhi Dhall Mills India

(P.)Ltd vs SIO, DRI, Service tax (2021 4 TMI 363).

25.In the case on hand, admittedly, the authorization was issued

only on 15.08.2023 by the Joint Commissioner to Assistant

Commissioner. The search was conducted on 16.08.2023. An excess

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stock of jewellery and shortage of stock gold bullion was said to have

been found. The revenue claims that thereupon, the petitioner voluntarily

paid an amount of Rs.13,37,888/- on 16.08.2023 and Rs.19,24,752/- on

the next day.

26.The direction issued in M/s.Bhumi Associates is that the

assessee must be advised to make payment towards liability after the

search is concluded.

27. Chapter 15 of CGST Act, 2017 deals with demands and

recovery. Determination of tax not paid or short paid or erroneously

refunded or input tax credit wrongly availed or utilised for any reason

other than fraud or any willful-misstatement or suppression of facts

would fall under Section 73 of the Act. If it was by reasons of fraud or

any willful-misstatement or suppression of facts, it would fall under

Section 74 of the Act. Section 75 contains general provisions leading to

determination of tax.

28. According to the department, the case on hand falls under

Section 74 of the Act. Section 74 of the Act reads as follows:-

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“74. Determination of tax not paid or short paid

or erroneously refunded or input tax credit wrongly

availed or utilised by reason of fraud or any willful

misstatement or suppression of facts.—

(1) Where it appears to the proper officer that

any tax has not been paid or short paid or erroneously

refunded or where input tax credit has been wrongly

availed or utilised by reason of fraud, or any wilful-

misstatement or suppression of facts to evade tax, he

shall serve notice on the person chargeable with tax

which has not been so paid or which has been so short

paid or to whom the refund has erroneously been

made, or who has wrongly availed or utilised input tax

credit, requiring him to show cause as to why he should

not pay the amount specified in the notice along with

interest payable thereon under section 50 and a penalty

equivalent to the tax specified in the notice.

(2) The proper officer shall issue the notice

under sub-section (1) at least six months prior to the

time limit specified in sub-section (10) for issuance of

order.

(3) Where a notice has been issued for any period

under sub-section (1), the proper officer may serve a

statement, containing the details of tax not paid or short

paid or erroneously refunded or input tax credit

wrongly availed or utilised for such periods other than

those covered under sub-section (1), on the person

chargeable with tax.

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(4) The service of statement under sub-section

(3) shall be deemed to be service of notice under sub-

section (1) of section 73, subject to the condition that

the grounds relied upon in the said statement, except

the ground of fraud, or any wilful-misstatement or

suppression of facts to evade tax, for periods other than

those covered under subsection (1) are the same as are

mentioned in the earlier notice.

(5) The person chargeable with tax may, before

service of notice under sub-section (1), pay the amount

of tax along with interest payable under section 50 and

a penalty equivalent to fifteen per cent. of such tax on

the basis of his own ascertainment of such tax or the tax

as ascertained by the proper officer and inform the

proper officer in writing of such payment.

(6) The proper officer, on receipt of such

information, shall not serve any notice under sub-

section (1), in respect of the tax so paid or any penalty

payable under the provisions of this Act or the rules

made thereunder.

(7) Where the proper officer is of the opinion that

the amount paid under sub-section (5) falls short of the

amount actually payable, he shall proceed to issue the

notice as provided for in sub-section (1) in respect of

such amount which falls short of the amount actually

payable.

(8) Where any person chargeable with tax under

sub-section (1) pays the said tax along with interest

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payable under section 50 and a penalty equivalent to

twenty-five per cent. of such tax within thirty days of

issue of the notice, all proceedings in respect of the said

notice shall be deemed to be concluded.

(9) The proper officer shall, after considering the

representation, if any, made by the person chargeable

with tax, determine the amount of tax, interest and

penalty due from such person and issue an order.

(10) The proper officer shall issue the order

under sub-section (9) within a period of five years from

the due date for furnishing of annual return for the

financial year to which the tax not paid or short paid or

input tax credit wrongly availed or utilised relates to or

within five years from the date of erroneous refund.

(11) Where any person served with an order

issued under sub-section (9) pays the tax along with

interest payable thereon under section 50 and a penalty

equivalent to fifty per cent. of such tax within thirty

days of communication of the order, all proceedings in

respect of the said notice shall be deemed to be

concluded.

Explanation 1.—For the purposes of section 73

and this section,— (i) the expression -all proceedings in

respect of the said notice? shall not include proceedings

under section 132;

(ii) where the notice under the same proceedings

is issued to the main person liable to pay tax and some

other persons, and such proceedings against the main

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W.P(MD)No.9040 of 2024

person have been concluded under section 73 or

section 74, the proceedings against all the persons

liable to pay penalty under sections 122, 125, 129 and

130 are deemed to be concluded.

Explanation 2.––For the purposes of this Act, the

expression -suppression? shall mean non-declaration of

facts or information which a taxable person is required

to declare in the return, statement, report or any other

document furnished under this Act or the rules made

thereunder, or failure to furnish any information on

being asked for, in writing, by the proper officer.”

29.The department came to know that there has been non-payment

of tax on part of the petitioner only during search of the premises under

Section 67 of the Act. Once it appears to the proper officer that there has

been non-payment or short payment, he shall serve notice on the person

chargeable with tax. In other words, service of show cause notice has to

follow, once such an impression of default has been formed by the proper

officer. But the assessee is given a window period. There will

necessarily be a time gap between such formation of opinion and the

actual service of notice. This window period can be made use of by the

assessee by offering to make the payment on the basis of his own

ascertainment of such tax. Sub-Section 5 of Section 74 provides for such

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a course of action. A careful reading of Sub-Section 5 of Section 74

leads one to the conclusion that the basis of the voluntary payment would

be the assessee's own ascertainment of such tax or the tax as ascertained

by the proper officer. The assessee also has to inform the proper officer

in writing of such payment.

30.In order to ensure that there is no element of coercion in the

entire process, the Gujart High Court had introduced certain safeguards.

With utmost respect, let me add one more. GST provides for

self-assessment. Section 39 of the Act deals with furnishing of such self-

assessment returns. I do not see much of a difference between

assessment and ascertainment. To ensure that the payment made as an

immediate fall-out of inspection/search is voluntary, the assessee will

have to inform the authority that he has made self-ascertainment. It

should be akin to a self-assessment return under Section 39 of the Act.

This should be done before making payment under Section 74(5) of the

Act. Sub-Section 5 talks about informing the proper officer in writing of

such payment. Rule 142(2) of the CGST Rules provide that the assessee

shall inform the proper officer of payment in Form GST DRC -03 and the

proper officer shall issue an acknowledgement, accepting the payment

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W.P(MD)No.9040 of 2024

made by the person in Form GST DRC 4. Mere furnishing of challan is

not sufficient because it does not disclose whether the payment was made

towards satisfaction of the particular tax liability in question. Mere

description of the payment as voluntary is insufficient. The basis of

ascertainment must be brought out in the own language and words of the

assessee. Once such a statement is made, the assessee cannot resile from

the stand so taken.

31.When no tax shall be collected except without the authority of

law (Article 265 of the Constitution of India), any amount collected

towards tax or interest or penalty without the authority of law is liable to

be refunded. Tax is determined and collected or recovered only by

following a statutorily prescribed procedure. If tax has escaped such

assessment and such escapement is subsequently discovered, before the

authority issues show cause notice, the assessee can make the payment.

But such payment has to be voluntary and not under coercion. During

inspections and searches, such escapement might be noticed and

consequences may have to follow. The assessee may therefore seek to

buy peace by making the payment. Or alternatively, the officials might

bring pressure on the assessee forcing him to make the payment. It is

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well settled that the revenue does not have the power to recover tax at

this stage. Thus, the whole issue will boil down to the voluntariness of

the payment. To test the said element, Bhumi Associates has laid down a

set of directions. A further gloss has been added in Paragraph No.30

above by stipulating that self ascertainment of liability in writing must

precede such payment. That apart, the officials are obliged to inform the

assessee that the seized goods can be taken back on provisional basis by

executing a bond and furnishing security. There must be material on

record to show that the assessee was appraised of such a statutory right.

Payment should be preceded by passing of such an information from the

revenue to the assessee. It is for the assessee to make a conscious choice

therafter. He can take back the goods by executing a bond and furnishing

a security or he can make payment. I hold that any payment not made in

the manner laid down herein would be treated as involuntary and the

assessee can seek refund of the same.

32.Section 74(5) of the Act talks about paying penalty equivalent

to 15% of the tax. But in the case on hand, GST DRC-03 indicates that

100% penalty was paid. This itself runs counter to the statute. The

petitioner has however not taken such a plea before me that he had paid

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100% penalty. If the payment is made under Section 74(5) of the Act, the

penalty cannot be 100%. It can can only be 15%. Since the petitioner has

been taking consistent stand that he had not voluntarily made any

payment, he has not probably gone into the quantum of penalty remitted

by him.

33. I am more than satisfied that search conducted by the

respondents was not in tune with the statutory procedure. The payment

made by the petitioner was also not voluntary. The department, on the

strength of an illegal warrant, descended on the petitioner's premises and

seized jewelry and gold bullion. The official informed the petitioner that

he has to pay Rs.32,62,640/- towards tax and penalty. The petitioner was

made to make the payment. In the light of what has been laid down

above, the petitioner is entitled to seek refund. But I am unable to

straight away grant the said relief for only one reason.

34. The petitioner had earlier filed W.P.(MD)No.23502 of 2023

challenging the seizure order dated 16.08.2023 and seeking release of the

goods. The writ petition was allowed on 26.09.2023 in the following

terms:-

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“2. The respondents have seized the goods since

it is excess stock available with the petitioner. The

petitioner had already paid the tax and penalty.

However, the respondents are not releasing the goods.

Under Section 67 (6) the respondents are having power

to release the goods on certain conditions. The said

provision is extracted hereunder:

“(6) The goods so seized under sub-section (2)

shall be released, on a provisional basis, upon execution

of a bond and furnishing of a security, in such manner

and of such quantum, respectively, as may be prescribed

or on payment of applicable tax, interest and penalty

payable, as the case may be.”

3.The respondents are empowered to demand to

pay tax, interest and penalty or they can direct the

petitioner to execute a bond or furnish security. In the

present case, since the petitioner has paid the

applicable tax and penalty. Therefore, the petitioner is

entitled to be considered under section 67. Since the

petitioner had paid the entire tax portion and the

penalty, then it is not necessary to execute the bond or

security. Therefore, the respondents are directed to

release the goods within a period of two days from the

date of receipt of a copy of this order.”

35. The writ petitioner having availed the benefit of the order made

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in W.P.(MD)No.23502 of 2023, may not be justified in demanding refund

of the said tax. Any litigant has to play fair in the Court. Admittedly, the

goods belonging to the petitioner were seized. He had secured the return

of the goods by pleading before this Court that the entire tax had been

paid. The prayer in W.P.(MD)No.23502 of 2023 was in two parts. It

questioned the legality of seizure. It sought return of the goods. The

relief of return alone was granted. The seizure order was not set aside.

What the petitioner failed to achieve in W.P.(MD)No.23502 of 2023

cannot be indirectly achieved in these proceedings by nullifying the

authorization order dated 15.08.2023.

36.I can understand the petitioner's situation. They are engaged

not only in the business of sale but also manufacture. They probably had

the goods that had been entrusted to them by others. They could not

afford to engage in a long drawn battle with the department. Probably,

that was why, they coughed up the money that was demanded from them

orally. But their relief was short-lived. They continue to be vexed with

summons again and again by the department. The department nowhere

stated that by paying a sum of Rs.32,62,640/-, all their miseries would

come to an end. On the other hand, it is taking a stand that further

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investigation revealed that there has been tax evasion to the tune of more

than Rs.5 Crores. Probably, that is why, several writ petitions came to be

filed by the petitioner.

37.The writ petitioner who comes to the Court must come with

clean hands. But I will judge the department also on the same scale. If

the department had committed patent illegality, they cannot be allowed to

get away. The principle that the petitioner cannot succeed by picking

holes in the respondent's defence has a converse. The department too

cannot be allowed to succeed by solely taking advantage of the conduct

of the assessee / petitioner. The bar that the Court will set for the

department will be higher than the one meant for the tax payer.

38.The principles enunciated above can be summarised as

hereunder:

a) The power to inspect is distinct from the power to conduct

search and the power to effect seizure. Authorization in form

GST INS-1 must specifically bear out the nature of the power

conferred. That is to say, authorisation to inspect by itself would

not include the power to search and effect seizure.

b) The officer authorised in this behalf must act strictly in

accordance within the limits of the power so conferred and

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W.P(MD)No.9040 of 2024

cannot traverse beyond.

c) The Proper officer cannot invoke the powers conferred under

Section 67(1) and Section 67(2) arbitrarily. He must have

“reasons to believe” that the cicrumstances set out in the

respective provisions exist. Court can scrutinise in exercise of the

power of judicial review if those circumstances exist.

d) Display of the DIN in the communication/summon/notice is

mandatory. If it could not be displayed for the reasons set out in

the circular dated 05.11.2019, they must be expressly mentioned

in the communication itself. If failure to generate is on account

of technical reasons, the nature of the difficulty must be recorded

by the official in the file contemporaneously. The official

experiencing technical difficulties must correspondingly send a

mail to his immediate superior recording that his attempts to

generate were in vain. The burden is on him to show that he is

entitled to invoke the exception set out in the circular.

e) The omission to generate DIN at the first instance must be

made good by generating it within 15 days. Once it is generated,

it should be shared with the noticee.

f) If during search, goods are seized, the official is obliged to

inform the person searched in writing that he is entitled to obtain

provisional release of the seized goods by executing bond and

furnishing security.

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W.P(MD)No.9040 of 2024

g) Payment made under Section 74(5) of the CGST Act must be

in accordance with the directions set out in Bhumi Associates.

Such payment should follow self-ascertainment of one's liability

in writing which should be communicated to the proper officer.

This payment should be duly acknowledged in Form GST

DRC-4.

h) Payment not in consonance with the procedure delianated

above will not be treated as voluntary and the assessee can seek

refund by filing writ petition.

Adherence to the aforesaid approach would ensure that the powers

conferred under Section 67 of the Act are not abused or misused.

38.Coming to the case on hand, I am satisfied that the search was

itself not above board. The search warrant itself is a jumbled up piece. It

meant everything to every one. A departmental communication cannot

be like a one stop shop. It has to be specific and categorical. The

impugned inspection warrant dated 15.08.2023 did not contain DIN. The

reason for not being able to generate DIN does not appear to be in the file

because no such record was produced before me. The authorities did not

share the DIN which is claimed to have been subsequently generated.

More than anything else, it is too obvious that the payment of Rs.

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W.P(MD)No.9040 of 2024

32,62,640/- was not voluntary. In any event, the assessee could not have

been made to pay 100% penalty.

39.When the entire facts have come to light and it is a case of pot

calling the kettle black, Court would be justified in striking a balance. If

the petitioner is shown the door by citing his conduct, it may lead to

unjust enrichment of the other side. I, therefore, dispose of the writ

petition in the following terms:-

a) The respondents are directed to initiate fresh assessment

proceedings with regard to the subject matter of the writ petition

alone. The period from 15.08.2023, till the date of receipt of

certified copy of this order shall be excluded for the purpose of

limitation.

b) The petitioner will be issued with notice and proper

enquiry shall also be held by adhering to the time lines provided

in the statute.

c) Whether the amount in question should be refunded to

the petitioner or not will abide by the outcome of such

assessment proceedings.

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W.P(MD)No.9040 of 2024

40.This writ petition is disposed of accordingly. No costs.

Consequently, connected miscellaneous petitions are closed.

05.08.2026

NCC : Yes / No

Index : Yes / No

Internet : Yes/ No

IAS / PMU

To

1.The Principle Chief Commissioner of GST &

Central Excise Tamil Nadu & Puducherry,

No.26/1, Mahatma Gandhi Road,

Nungambakkam,

Chennai – 600 034.

2.The Commissioner of GST & Central Excise,

Madurai Commissionerate,

Central Revenue Buildings,

No.4, Lal Bahadur Sastri Road,

Bibikulam, Madurai – 625 002.

3.The Joint Commissioner,

Office of the Central GST & Excise,

Tirunelveli Division,

2

nd

Floor, Central Revenue Building,

Tractor Road, NGO “A” Colony,

Tirunelveli – 627 007.

4.The Superintendent,

Office of the Central GST & Excise,

Tirunelveli Division,

2

nd

Floor, Central Revenue Building,

Tractor Road, NGO “A” Colony,

Tirunelveli – 627 007.

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W.P(MD)No.9040 of 2024

5.The Inspector,

Office of the Central GST & Excise,

Tirunelveli Division,

2

nd

Floor, Central Revenue Building,

Tractor Road, NGO “A” Colony,

Tirunelveli – 627 007.

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W.P(MD)No.9040 of 2024

G.R.SWAMINATHAN, J.

IAS / PMU

W.P.(MD)No.9040 of 2024

05.08.2026

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