In this writ petition, the Patna High Court examined whether a tax inspection conducted at a business premises complied with the legal safeguards built into Section 67 of the Bihar Goods and Services Tax Act, 2017 (BGST Act). That provision requires that any search or inspection under the GST law be carried out “in accordance with the Code of Criminal Procedure” (CrPC). Section 100 of the CrPC, in turn, mandates the presence of two independent and respectable witnesses during a search, and their signatures must be recorded on the search proceedings.

The petitioner (a registered GST assessee) challenged an assessment order that flowed from an inspection of its premises. According to the petitioner, the inspection was vitiated because it was not witnessed by two independent persons as required by the CrPC. Early in the proceedings, the Court noted that even if the petitioner had not raised this objection before the inspecting team or the assessing authority, a procedural defect that goes to the “root of the matter” can still be raised in writ jurisdiction. The Court therefore directed the State to produce material proving that two independent witnesses were present and that the inspection records bore their details and signatures.

When the matter was next taken up, a discrepancy surfaced between the inspection report (a carbon copy) provided to the petitioner at the time of inspection and the version produced later by the department with its counter affidavit. The petitioner’s carbon copy showed only one independent witness, and even that without adequate identification or contact details. The department’s copy, however, reflected additional signatures added later and suggested participation of persons connected with the assessee’s own staff. This raised the possibility of interpolation after the carbon copy had already been handed over.

Given the seriousness of that discrepancy, the Court called for the original files, impleaded the then inspecting officers in their personal capacity, and required explanations. On examining the original record produced in Court, Their Lordships found that the version consistent with the carbon copy given to the petitioner showed only one witness — and that too without proper identification particulars like address or mobile number. The Court rejected the State’s explanation that, in remote locations, it is difficult to secure respectable local witnesses, observing that officers can always requisition independent persons from any nearby government office to fulfill the statutory safeguard.

The legal consequence of this finding was straightforward. Because Section 67 of the BGST Act expressly incorporates the CrPC search procedure, a search or inspection carried out without the participation of two independent witnesses does not meet the statutory standard. If the foundational inspection is legally defective, any assessment or demand built upon it is equally vulnerable. Accordingly, the Court set aside the assessment order that had been issued on the basis of this inspection. The writ petition was allowed, and the Court cautioned the tax officers to ensure future compliance with the CrPC’s witness requirement, including recording full identities and details of the witnesses.

A few large-picture points emerge from this ruling. First, GST search powers, though important for revenue protection, are constrained by procedural safeguards. Courts will enforce those safeguards strictly where liberty or property interests are at stake. Second, contemporaneous documentation matters. The difference between the carbon copy issued at the time of inspection and the later version in the official file proved fatal for the department. The Court gave weight to what was provided on the spot — which is exactly why the law insists on witnesses and signatures at the time, not later. Third, the Court emphasised practicality: if independent witnesses are not readily available among local residents, officers must seek them from government offices in the vicinity. That guidance removes any operational excuse for non-compliance.

Finally, the judgment signals that assessees need not be experts in procedural law at the time of inspection to preserve their rights. Even if no immediate objection is recorded, a foundational procedural defect can be raised in writ proceedings, particularly where the defect undermines the legality of the inspection itself. Here, the Court looked beyond technicalities and ensured that the embedded safeguards of the CrPC were not reduced to an empty formality.

Significance or Implication of the Judgment (For general public or government)

For taxpayers: This ruling underscores that GST inspections must follow CrPC safeguards, including the presence of two independent witnesses with clear identification and signatures on the record. If an inspection lacks these basic elements, any assessment growing out of it may be struck down. Assessees should safely preserve the carbon copy or contemporaneous documents handed over during inspection; those documents can be decisive evidence later.

For government departments: The Court has offered a pragmatic solution — when local residents are not available or willing to act as witnesses, officers should requisition neutral officials from nearby government offices. Training, checklists, and supervisory reviews should address: (i) securing two independent and respectable witnesses, (ii) recording their full details, and (iii) ensuring that the carbon copy issued on the spot mirrors the original that remains on file. Non-compliance risks not only invalidation of proceedings but also adverse observations about record-keeping and integrity.

Legal Issue(s) Decided and the Court’s Decision with reasoning

• Whether an inspection under Section 67 of the BGST Act must comply with Section 100 CrPC’s requirement of two independent witnesses.
  — Yes. Section 67 expressly imports CrPC procedure. An inspection without two independent witnesses violates the statutory mandate.
• Whether an assessment based on an inspection that fails CrPC safeguards can stand.
  — No. The assessment is vitiated because its foundation — the inspection — was legally defective; the order was set aside.
• Whether failure to raise the procedural objection before the assessing officer bars relief in writ jurisdiction.
  — No. A defect that goes to the root of the matter may be raised in writ proceedings; the Court entertained the challenge despite the absence of earlier objection.
• Whether practical difficulties in finding local witnesses excuse non-compliance.
  — No. Officers can requisition independent persons from government offices in the locality; lack of local residents is not a valid excuse.

Case Title

Writ petition by a registered GST assessee (petitioner) versus State tax authorities (respondents).

Case Number

Civil Writ Jurisdiction Case No. 8422 of 2024.

Coram and Names of Judges

Hon’ble The Chief Justice K. Vinod Chandran and Hon’ble Mr. Justice Partha Sarthy. Oral Judgment dated 27-11-2024.

Names of Advocates and who they appeared for

• For the petitioner: Mr. Bijay Kumar Gupta, Advocate; Mr. Manish Kumar, Advocate.
• For the respondents (State): Mr. Vikash Kumar, Standing Counsel (11).

Link to Judgment

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