Tax Inspector Caught Tampering Documents: Patna High Court Cancels 88 Lakh GST Demand

The Hon'ble High Court of Judicature at Patna in  M/s Sri Sai Food Grain and Iron Stors v. The State of Bihar and Others Civil Writ Jurisdiction Case No.13674 of 2024 dated 25-04-2025 held that an inspection conducted without independent witnesses and with a tampered seizure order violates Section 67 of BGST/CGST Act, 2017 read with Section 100 of the Code of Criminal Procedure, 1973, making the consequent demand order invalid.

Facts of the Case

M/s Sri Sai Food Grain and Iron Stors, a proprietary concern operated by Gyanti Devi, challenged a demand letter dated May 9, 2024 issued by the Deputy Commissioner of State Tax, Gopalganj Circle. The demand letter required payment of Rs. 44,32,250.25 under CGST and Rs. 44,32,250.25 under BGST, totaling Rs. 88,64,550.50 for the period April 2023 to January 2024.

On January 18, 2024, Ms. Kumari Anu Soni, then Assistant Commissioner of State Tax, conducted an inspection of the Petitioner's establishment and prepared an order of seizure. During the pendency of this case, the Court discovered that Ms. Soni had tampered with the original order of seizure by inserting the words "As Per Physical Verification" in Column (A) - Details of Goods Seized, after the matter was subjudice.

When confronted by the Court on April 9, 2025, Ms. Soni admitted to tampering with the document and filed a personal affidavit acknowledging her misconduct. She cited her lack of experience in search and seizure operations and tendered an unconditional apology, undertaking not to repeat such mistakes in future.

The inspection report dated January 18, 2024 was signed by two witnesses - Sri Sandeep Jaiswal (son of the Petitioner's proprietor) and Sri Ram Pravesh Yadav (staff of the Petitioner). The order of seizure mentioned two different witnesses - Santosh Kumar and Ramashish Prasad - whose signatures were not found on the inspection report. The Petitioner filed the writ petition challenging the demand letter on grounds that the inspection violated mandatory statutory provisions requiring independent witnesses.

Issue

Whether the inspection conducted without independent witnesses and with a tampered seizure order is valid under Section 67 of BGST/CGST Act, 2017 read with Section 100 of the Code of Criminal Procedure, 1973?

Held by the Court

The Hon'ble High Court of Judicature at Patna in Civil Writ Jurisdiction Case No.13674 of 2024 held that:

1. Court observed that Section 67 of BGST/CGST Act, 2017 specifically mandates an inspection to be conducted in accordance with the Code of Criminal Procedure, and Section 100 of CrPC stipulates that there shall be two witnesses when the inspection is conducted.

   
   

2. Court held that Sri Sandeep Jaiswal and Sri Ram Pravesh Yadav, who signed the inspection report, were connected to the Petitioner and had no independent status as witnesses. The inspection report therefore did not contain the names and signatures of two independent witnesses, which is a mandatory requirement.

   
   

3. Court opined that mentioning two different persons (Santosh Kumar and Ramashish Prasad) as witnesses in the order of seizure appeared to be an afterthought to cover up the lacuna. The Court noted that if these persons were present as independent witnesses, their signatures should have been taken on the inspection report.

   
   

4. Court observed that there was no endorsement or reference in the inspection report about the order of seizure being part of it, indicating that the order of seizure was prepared later only to cover up serious lacunas.

   
   

5. Court held that the admitted tampering/interpolation by Ms. Kumari Anu Soni made the order of seizure totally invalid and unreliable.

   
   

6. Court concluded that the inspection was carried out without any independent witnesses and with an invalid order of seizure, both violating Section 67 of BGST/CGST Act, 2017 read with Section 100 of CrPC.

   
   

7. Court set aside the demand order dated May 9, 2024 and admonished Ms. Kumari Anu Soni, warning that any future tampering with departmental/court records would result in disciplinary action. The writ petition was allowed.

Relevant Sections

"Section 67 of BGST/CGST Act, 2017" "Section 100 of the Code of Criminal Procedure, 1973" "Section 74(9) of BGST/CGST Act, 2017" "Section 67(10) of BGST/CGST Act, 2017"

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