Karnataka High Court | S. 67 of CGST Act Mandates Authorisation by Joint Commissioner | Officers Below Rank Cannot Inspect Assessee’s Premises Independently
Sanchayita Lahkar
The High Court of Karnataka at Dharwad, Single Bench of Justice Suraj Govindaraj held that inspections under Section 67 of the Central Goods and Services Tax Act, 2017 cannot be carried out independently by officers below the rank of Joint Commissioner without proper authorisation. The Court clarified that while the confidential material forming the basis of such authorisation need not be disclosed, the authorised officer conducting the inspection must inform the assessee that approval from the Joint Commissioner has been obtained. Finding the inspection in question supported by valid authorisation, the Court dismissed the challenge to the proceedings.
The petitioner, a proprietorship firm represented by its sole proprietor, sought to challenge inspection proceedings initiated under Section 67(1) of the GST Act, 2017. The petitioner contended that the inspection was conducted without proper application of mind by the Joint Commissioner, as required by law, and that no valid reasons to believe had been recorded. The petitioner argued that the Commercial Tax Officer had inspected the premises and called for documents and a written statement dated 02.09.2025 without jurisdiction.
The reliefs sought included a writ of certiorari to quash the inspection proceedings, alternatively a mandamus directing that inspections be confined to transactions covered by recorded reasons to believe, and a further mandamus that any full-fledged audit must be conducted under Section 65 or 66 of the Act. The petitioner also sought a declaration that its written statement did not amount to consent for an audit, and any other relief deemed fit.
The petitioner submitted that Section 67 requires a proper officer not below the rank of Joint Commissioner to have reason to believe before authorising an inspection. The petitioner argued that since no such authorisation was shown, the inspection was without jurisdiction. The petitioner further contended that the copy of the Joint Commissioner’s order ought to have been furnished to the petitioner.
The learned AGA submitted that proper authorisation had indeed been issued. He produced a copy of GST INS-01 issued by the Joint Commissioner, Dharwad, authorising the inspection. It was submitted that the Joint Commissioner, having received confidential information regarding suppression of transactions involving the petitioner, exercised powers under Section 67(1) of the Act and duly authorised the inspection. The AGA contended that the nature of such information was confidential and not required to be disclosed to the taxable person.
The Court identified the points for determination: (i) whether any officer below the rank of Joint Commissioner can conduct inspection without authorisation; (ii) whether authorisation issued by the Joint Commissioner must be provided to the taxable person; and (iii) what order ought to be made.
Justice Suraj Govindaraj, after reproducing Section 67(1) and (2) of the Act, recorded: “In view of the above, it is clear that under Subsection (1) of Section 67 of the Act, it is only the Joint Commissioner who has to have reasons to believe and who may authorise in writing any other officer.” The Court further stated: “In terms of Subsection (2) of Section 67 of the Act, the person so authorised by the Joint Commissioner may confiscate any goods or documents by himself or authorise anyone else to seize and confiscate such documents or goods.”
Considering the facts, the Court observed: “In the present case, on the basis of submission of the learned AGA, as also the authorisation which has been issued, it is clear that the Joint Commissioner has received certain information, and as such the Joint Commissioner has reasons to believe that there is suppression of transaction relating to supply of goods and or services, which comes within the purview of clause (a) of Subsection (1) of Section 67 of the Act, in pursuance of which, an authorisation has been issued to the Commercial Tax Officer.” The Court held that there was compliance with Section 67(1), enabling the Commercial Tax Officer to act.
On the requirement to provide copies of authorisation, the Court recorded: “As rightly contended by learned AGA any information which may be received in regard to suppression may be confidential information and as such in my opinion it would not be required for such information to be made available to the taxable person.” However, the Court clarified: “It would however be required that the concerned Officer, who carries out the inspection in terms of Subsection (2) of Section 67 of the Act, at least inform the taxable person of the authorisation having been received from the Joint Commissioner.” The Bench also directed that in future, respondent No.2 must instruct all delegates to inform taxable persons about the existence of such authorisation.
Thus, the Court answered point (i) by holding that no officer below the rank of Joint Commissioner may inspect without authorisation, and point (ii) by holding that while confidential details need not be disclosed, the fact of authorisation must be communicated.
The Court concluded: “In the present matter, there is no infirmity in the actions taken by the respondent No.1 in pursuance of the authorisation issued by the Joint Commissioner under Subsection (1) of Section 67 of the Act. Hence, no grounds having been made out, the relief which had been sought for cannot be granted. The petition stands dismissed.”
Advocates Representing the Parties
For the Petitioner: Sri Vishwanath Hegde, Advocate
For the Respondents: Sri Sharad V. Magadum, Additional Government Advocate; Sri M.B. Kanavi, Central Government Standing Counsel
Case Title: M/s. Bee Jay Engineers v. Commercial Tax Officer & Ors.
Neutral Citation: 2025: KHC-D:11784
Case Number: Writ Petition No. 106642 of 2025
Bench: Justice Suraj Govindaraj
