Justice GR Swaminathan made the observations while hearing a petition filed by Bhima Enterprises, a jewellery manufacturer and wholesaler, challenging a GST search warrant issued without a computer-generated Document Identification Number (DIN).
Under the Central Board of Indirect Taxes and Customs (CBIC) guidelines, documents such as search authorisations, summons, arrest memos and inspection notices issued during proceedings are required to carry a DIN, except in specified circumstances.
The GST department had attributed the absence of a DIN on the warrant to technical difficulties. The Court, however, found that there was no contemporaneous record explaining what exactly had gone wrong.
“Harishchandras and Yudhishthiras have become an extinct species,” Justice Swaminathan observed, stressing that official assertions must remain capable of verification.
The Court made it clear that simply mentioning a “technical glitch” would not be enough. If an officer is unable to generate a DIN because of a technical problem, the precise difficulty must be recorded in the official file. The officer should also communicate the failed attempt to the immediate superior at the relevant time.
Without such contemporaneous documentation, the Court said it would be reluctant to accept the department’s explanation at face value.
‘Technical glitch’ cannot become a convenient excuse
In the case before the Court, the authorities had merely recorded that a DIN could not be generated because of technical difficulties.
Justice Swaminathan described this as a “convenient fig leaf”, observing that mechanically repeating the language used in the circular could not protect an official action from judicial scrutiny.
The Court also stressed that where a DIN is generated subsequently, it must be furnished to the taxpayer. The entire purpose of the DIN system is to provide transparency and allow taxpayers to verify the authenticity of official communications.
Withholding the DIN, the Court noted, prevents a noticee from checking the document through the relevant portal and defeats the very purpose of introducing the identification system.
Dispute over search of jewellery business
The petition arose from a GST search carried out at the premises of Bhima Enterprises in August 2023.
During the operation, officials seized gold ornaments weighing around 3,808 grams and valued at approximately ₹2.23 crore. Gold bullion weighing about 5,479 grams and valued at nearly ₹3.21 crore was also seized.
The department alleged that the firm’s records showed excess stock of ornaments and a shortage of bullion.
The business paid ₹13.37 lakh on the day of the search and another ₹19.24 lakh the following day, taking the total payment to ₹32.62 lakh. While officials described the payments as voluntary, the firm alleged that the money had been extracted under pressure.
The Court ultimately found the payment to have been involuntary.
Search, inspection are not interchangeable
The Court also raised questions about the nature of the authorisation itself.
Although the warrant was issued under Section 67(2) of the Central Goods and Services Tax Act, which deals with search and seizure, the document described itself as an inspection warrant.
Justice Swaminathan pointed out that inspection, search and seizure are separate statutory powers. The GST INS-01 form must therefore clearly identify the specific authority being exercised.
The Court further noted that taxpayers must be informed about the option of obtaining provisional release of seized goods by furnishing a bond and security.
Fresh assessment ordered
Despite finding serious procedural shortcomings and holding that the ₹32.62 lakh payment was involuntary, the Court stopped short of immediately quashing the search authorisation or directing repayment.
The Court noted that the petitioner had previously relied on the payment while seeking release of the seized gold.
Describing the situation as a “case of pot calling the kettle black”, the Court directed that the matter undergo a fresh assessment.
Whether the amount ultimately has to be refunded will depend on the outcome of those proceedings.
The ruling underscores a broader message for GST authorities: procedural safeguards cannot be reduced to paperwork, and an unexplained assertion of a technical problem will not automatically shield official action from judicial review.
