Recording reason to feel in INS-01 is a pre-requisite to initiate Research

Excellentvision Complex Academy Pvt. Ltd. Vs State of U P And 5 Many others (Allahabad Significant Court)
In a significant ruling, the Allahabad High Courtroom in the case of Excellentvision Technical Academy Pvt. Ltd. v. Condition of U.P. [Writ Tax No. 554 of 2023, dated May 20, 2024] has emphasized the requirement for the Profits department to file factors in INS-01 ahead of initiating look for proceedings less than Portion 67 of the Central Merchandise and Providers Tax (CGST) Act, 2017.  The Hon’ble Allahabad Higher Court held that where by Revenue division failed to put forward the true motives to feel as essential under Segment 67 of the Central Goods and Solutions Tax Act, 2017 just before initiating look for, in these types of case the full proceedings is liable to be quashed. This determination underscores the significance of adhering to procedural demands to uphold the validity of lookup and seizure operations.
Facts:
M/s. Excellentvision Technological Academy (P.) Ltd. (“the Petitioner”) was searched by the UP GST department on January 4, 2018, subsequently the Department issued two INS-01 (search warrant), on two unique dates: 1 on January 4, 2018 (date of the search) and the an additional on February 11, 2019.
Subsequently, the tax Office initiated the proceedings by issuing display trigger see dated February 8, 2021 underneath Segment 74 of the Uttar Pradesh Goods and Solutions Tax Act, 2017 (“the State GST Act”) and afterwards passed the buy dated September 01, 2021.
The Petitioner aggrieved by the lookup performed by the tax Section filed writ Petition ahead of the Hon’ble Allahabad Large court docket contending that the tax Division never ever set forth the explanations to imagine for conducting research which is mandatory under Section 67 of the Condition GST Act.
Additional, issuance of 2 INS-01 on distinct dates, by itself crate doubt on the genuineness of the authorization to the right officer to carry out the inspection, lookup and seizure.
The Petitioner additional stated that, both the INS-01 does not have “reasons to believe” by the Joint Commissioner to initiate the proceedings in opposition to the Petitioner, as a result, the proceedings initiated under segment 67 is entirely illegal and liable to be established apart.
Concern:
Whether recording explanation to believe in INS-01 is pre-requisite for tax division to initiate the research proceedings?
Held:
The Hon’ble Allahabad Significant Courtroom in Writ Tax No. 554 of 2023 held as underneath:

Observed that, the INS-01 issued on February 11, 2019 is subsequent to the look for and is, hence, an invalid document.
Said that, the very first INS-01 was issued on the date of lookup, was delivered to the Petitioner on the software by the Petitioner. So, the document appears to be fabricated and produced as an afterthought.
Noticed the counter affidavit submitted by the tax Office and said that, the tax Office has failed to describe and put forward the actual explanations to feel as essential underneath Area 67 of the Point out GST Act.
Said that, the whole proceedings that have originated from the unlawful research and seizure carried out beneath Section 67 of the State GST Act have no foot to stand on and accordingly, the entire authorization is liable to be quashed.
Additional, ordered the Tax Office to refund the amount deposited by the Petitioner in lieu of the purchase passed underneath Part 74 of the Point out GST Act inside of a interval of 8 weeks.

Conclusion: The Allahabad Significant Court’s ruling in the case of Excellentvision Technical Academy Pvt. Ltd. v. Condition of U.P. serves as a vital reminder for tax authorities to strictly adhere to procedural needs when initiating look for and seizure functions. The court’s determination to quash the proceedings thanks to the lack of recorded causes in INS-01 highlights the great importance of transparency and accountability in tax administration. This judgment not only upholds the rights of taxpayers but also reinforces the lawful framework governing tax queries under the GST routine.
Whole Textual content OF THE JUDGMENT/Get OF ALLAHABAD Higher Court
1. The instantaneous writ petition under Report 226 of the Structure of India issues the search and seizure order dated January 4, 2018, the subsequent proceedings whereby the see was issued on February 8, 2021 and the buy dated September 1, 2021 passed under Segment 74 of the Uttar Pradesh Goods and Solutions Tax Act, 2017 (hereinafter referred to as “the Act”). The writ petition also difficulties the buy passed in charm dated January 6, 2023.
2. The primary thrust of the petitioner in the writ petition is that the respondent authorities by no means complied with the obligatory provision of Section 67 of the Act, as the Joint Commissioner, although granting the authorization for look for and seizure, under no circumstances put forth the reasons to imagine that the search was required.
3. Upon a perusal of the files, a single finds that the research was carried out on January 4, 2018, on the other hand there are two INS-01, which have been issued on two various dates just one on February 11, 2019 and an additional on January 4, 2018 (day of the look for). It will become distinct that the INS-01 issued on February 11, 2019 is subsequent to the research and is, consequently, an invalid doc. With regard to other INS-01 that has been issued on the date of look for, it even more seems that no causes to believe have been famous in the exact same. In actuality, this document was furnished to the petitioner upon the petitioner building an software. This doc seems to be fabricated and designed as an afterthought.
4. The petitioner raised this stage in paragraph Nos.41 and 42 of the immediate writ petition. The exact are delineated below:
“41. That considering the fact that there are two INS-01 issued on unique dates, it alone doubt the genuineness of the authorization to the appropriate officer to perform the inspection, lookup and seizure.
42. That from the perusal of the two the INS-01 it is pretty distinct that no motives to imagine has been recorded or shaped by the Joint Commissioner SIB to initiate the proceedings in opposition to the petitioner below area 67 which is mandatory requirement to initiate the proceedings in opposition to the petitioner beneath segment 67, as a result, the proceedings initiated less than part 67 is thoroughly illegal and liable to be set aside as properly as the consequential proceedings are liable to be dismissed.”
5. In paragraph 38 of the counter affidavit, the Condition authorities dealt with paragraph 41 of the writ petition. The identical is delineated below:
“38. That the contents of paragraph no. 41 of the writ petition are not admitted in the way stated therefore denied, in reply thereto, the averments made in paragraph no. 30 of the counter affidavit are reiterated and reaffirmed.”
6. Paragraph 38 of the counter affidavit refers to paragraph 30, which is delineated beneath:
“30. That the contents of paragraph no. 33 of the writ petition are not admitted in the fashion said hence denied, in reply thereto, the averments built in paragraph no. 24 of the counter affidavit are reiterated and reaffirmed.”
7. Surprisingly, paragraph 30 also refers to paragraph 24 of the counter affidavit, which is delineated under:
“24. That the contents of paragraph no. 18 of the writ petition are not admitted in the fashion mentioned consequently denied, in reply thereto, it is submitted that the prevalent portal provides facility to Petitioner to seek out adjournment primarily based on averments. Even so Petitioner neither utilised such a facility to converse such averments nor produced these kinds of averments all through the proceedings in any other type (e mail/letter etc) nor submitted when sought adjournment of proceedings twice as a result of programs dated 22.12.2020 and 19.01.2021 w/s 75(5) of CGST Act. Late: at Para 47 of Petition, the Petitioner averred that because of to COVID 19 and other complications the Petitioner was not able to make a reply. As a result these averments are afterthought evidently to mislead this Hon’ble Courtroom for the reason that the business has more than just one Director any direction could have reply to the observe.”
8. This try of the Condition authorities in detailing the issue of two INS-01 varieties has resulted in a kerfuffle and nothing at all more. The confusion is writ large in the counter affidavit and no smart rationalization has been presented to put forward the true factors to think as demanded under Segment 67 of the Act. In the present circumstance, the mentioned process had not been adopted, and accordingly, the whole authorization is vitiated and liable to be quashed.
9. In gentle of the same, the total proceedings that have originated from the unlawful lookup and seizure carried out below Part 67 of the Act have no foot to stand on, and accordingly, are quashed and established aside. The State authorities are directed to release all the merchandise and files that they may possibly have detained or confiscated in just a period of a few weeks from day.
10. Any total deposited by the petitioner in lieu of the purchase passed less than Section 74 of the Act should really be refunded to the petitioner in just a period of eight weeks from day.
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(Author can be attained at data@a2ztaxcorp.com)