Singhi Buildtech Pvt. Ltd. Vs Additional Commissioner of Commercial Taxes Enforcement (Karnataka High Court)

In a case filed in the High Court of Karnataka at Bangalore, the petitioner, M/S. Singh Builder Technology Pvt. Ltd., is suing the Assistant Commissioner of Commercial Taxes under Section 67(4) of the Karnataka Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017.

The petitioner claims to be a private limited company incorporated under the Companies Act, 2013 and a dealer registered under the provisions of the Act. The petitioner is a wholly owned subsidiary of M/s. Steel Hypermart India Pvt. Ltd., which is promoted by the same individuals but belongs to the same family.

The petitioner argued that the day-to-day business activities of the petitioner were also being carried out from the premises of M/s. Steel Hypermart Pvt. Ltd., at the ground floor of the building situated at No.2/1A, Mannat, Nanjappa Road, Shanthinagar, Wilson Garden, Bengaluru-560027. The petitioner argued that the respondent officers had sealed the premises without authority of law. The learned counsel for the petitioner argued that the respondent issued an authorization of search on 08.01.2019 on a suspicion that the directors would be involved in circular trading with other companies located in Bengaluru and Hosur.

However, the authorization order does not authorize the officer who had passed the order impugned under Section 67(4) of the Act. The learned counsel further submitted that Section 67 of the Act does not empower the respondent to seal the business premises since access to the business premises was not denied by the petitioner as reflected in the order impugned.

The court found that the first argument of the learned counsel for the petitioner failed. Section 67(4) of the Act contemplates that the officer authorized under Sub-section [2] shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, or 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.

The petitioner argued that the books of accounts of some other companies were maintained in the premises where the inspection was carried on. However, the computer system where the business transaction of the company was stored, including the tally software, stopped functioning abruptly, and complete verification of the books of accounts of the company was not possible due to the absence of tally information and internet connection.

The petitioner company’s tally software was disrupted, leading to a denial of access to the computer system. Section 67 was invoked to seal the premises in question. The learned Additional Government Advocate, Sir.J.J. Prakash, submitted that the premises should be unsealed in the presence of the petitioner on any date convenient to the petitioner.

The court considered the justice served in directing the Revenue to unseal the premises on 04.02.2019 at 11.00 a.m., and the petitioner should cooperate for inspection and search of the premises, including the computer system. The writ petition stands disposed of.

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