Case Law Details
Prakash Chandra Purohit Vs Union of India (Rajasthan High Court, Jodhpur Bench)
During the course of arguments, learned counsel for the respondents submit that at present the only purpose of issuing Summons u/s 70 of CGST Act to the petitioners is to record their statements seeking to extract the role of the petitioners in the affairs of the companies involved in GST evasion. Learned counsel for the respondents would further submit that the apprehension that everyone, who is being called to give statement is being arrested, is not correct.
We also find that number of persons were issued summons under Section 70 of the CGST Act and it is not a case that every person has been arrested. Whether or not the petitioners are involved in the alleged GST evasion would depend upon result of the investigation which is being carried out.
Furthermore, the submission of learned counsel for the petitioners that once Director of the companies involved in the alleged GST evasion is arrested and complaint is filed against him, no further action can be taken against any other person including the petitioners, does not appeal to us.
Another submission that proceeding under Section 70 of the CGST Act could be initiated only after a final assessment is carried out, is also, on prima facie considerations, not borne out from the statutory scheme of the CGST Act.
On prima facie considerations, we do not find that the issuance of summons to petitioners is without jurisdiction and authority of law. The action initiated by the respondents does not appear to be actuated by any mala fide intention and further taking into consideration the material disclosed during various searches and raids conducted by the respondent authorities involving M/s MPPL and M/s. MPSPL, we are not inclined to pass any interim order in favour of the petitioners, keeping in view that we are not dealing with an application for grant of anticipatory bail but challenge to jurisdiction and authority of respondents in issuing summons under Section 70 of the CGST Act.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
Heard on stay applications for interim relief filed by the petitioners namely, Prakash Chandra Purohit in Civil Writ Petition No.2750/2022 and petitioner namely, M.L. Paliwal in Civil Writ Petition No.2751/2022.
Learned senior counsel appearing for the petitioners in the aforesaid two petitions have prayed for interim protection against an apprehended action of arrest pursuant to the proceedings initiated by Director General of GST Intelligence and its offices in the matter of alleged evasion of GST.
Learned senior counsel appearing for the two petitioners would submit that the petitioners have been issued summons under Section 70 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’) to appear before the GST authorities, even though these two petitioners have no role to play in the alleged evasion of GST, in the course of manufacturing activities and other business activities of M/s. Miraj Products Private Limited (hereinafter referred to as ‘M/s. MPPL’), nor they have any iota of involvement in the alleged clandestine supply of packaging material involving M/s. MPPL and/or M/s. Montage Packaging Sales Private Limited (hereinafter referred to as ‘M/s. MPSPL’). It is submitted that earlier Director of M/s. MPPL, namely, Shri Vinay Kant Ameta was issued summons and when he appeared, he arrested and harassed until he was granted bail by the Court. Later on, some other arrests have been made, which show that the respondent authorities are bent upon harassing not only those who are involved in the manufacturing and other business activities of M/s. MPPL, but also others like the petitioners who have no connection whatsoever in the alleged clandestine supply and evasion of GST.
Number of decisions rendered by the Supreme Court and High Courts are cited at the Bar by learned counsel for the petitioners to impress upon this Court that in the absence of any prima facie material even requiring issuance of summons and the manner in which the respondent authorities are engaged in wild goose chase, the petitioners may be protected against any arrest till these petitions are decided by the Court, otherwise the purpose of filing these petitions would be frustrated.
On the other hand, learned counsel appearing for the respondents would argue that the petitions are based on apprehension which has no basis. They would submit that the petitioners have rushed to the Court at this stage when only summons under Section 70 of the CGST Act have been issued. It is argued that the respondents are holding investigation into serious allegation of tax evasion. They would submit that acting upon an intelligent input that M/s. MPSPL is indulged in racket of huge GST evasion with hand holding of various tobacco manufacturing units including M/s. MPPL by way of clandestine supply of packaging material under the cover of invoices issued to various fake firms registered either in Rajasthan or in Gujarat, simultaneous searches were carried out by the officers of DGGI, JZO, Jaipur at various places related to M/s. MPSPL, M/s. MPPL and M/s. Montage Enterprises Private Limited, Haridwar on 22.04.2021 and during the course of search several incriminating documents were seized.
He would submit that during the course of investigation so far carried out, materials have been disclosed bearing involvement of the two petitioners relating to various transactions also in the aforesaid affairs. Therefore, it has become necessary to record the statements of these two petitioners. He would submit that the authorities have jurisdiction under the law to issue such summons and the petitioners are duty bound to cooperate with the investigation. With regard to the apprehension that the petitioners would be unnecessarily arrested, it is argued that it has no basis because though large number of persons alleged to be involved in the business to the aforesaid companies were issued summons, but only some of them were arrested and others were not arrested but released after recording their statements.
On prima facie considerations, we find that these petitions have been filed by the petitioners at the initial stage when summons have been issued to them to appear before the respondent authorities in the course of investigation being carried out pursuant to searches carried out in various business establishments in the matter of alleged huge GST evasion. At this stage, after hearing learned counsel for the parties and various judgments cited at the Bar, it cannot be said that the respondent authorities had no jurisdiction or authority under the law to issue summons under Section 70 of the CGST Act. The summons have been issued to the petitioners in the two petitions in the course of investigation into allegation of huge evasion of GST based on search and raid carried out in various premises/manufacturing units. It is not that without any material so far collected, all of a sudden, summons have been issued to the petitioners.
While the petitioners’ claim to be completely unconnected with the affairs of various companies which are alleged to be involved in GST evasion, according to the respondents, this matter is still under investigation and the presence of these petitioners is necessary to record their statements.
During the course of arguments, learned counsel for the respondents submit that at present the only purpose of issuing notice to the petitioners is to record their statements seeking to extract the role of the petitioners in the affairs of the companies involved in GST evasion. Learned counsel for the respondents would further submit that the apprehension that everyone, who is being called to give statement is being arrested, is not correct.
We also find that number of persons were issued summons under Section 70 of the CGST Act and it is not a case that every person has been arrested. Whether or not the petitioners are involved in the alleged GST evasion would depend upon result of the investigation which is being carried out.
Furthermore, the submission of learned counsel for the petitioners that once Director of the companies involved in the alleged GST evasion is arrested and complaint is filed against him, no further action can be taken against any other person including the petitioners, does not appeal to us.
Another submission that proceeding under Section 70 of the CGST Act could be initiated only after a final assessment is carried out, is also, on prima facie considerations, not borne out from the statutory scheme of the CGST Act.
On prima facie considerations, we do not find that the issuance of summons to petitioners is without jurisdiction and authority of law. The action initiated by the respondents does not appear to be actuated by any mala fide intention and further taking into consideration the material disclosed during various searches and raids conducted by the respondent authorities involving M/s MPPL and M/s. MPSPL, we are not inclined to pass any interim order in favour of the petitioners, keeping in view that we are not dealing with an application for grant of anticipatory bail but challenge to jurisdiction and authority of respondents in issuing summons under Section 70 of the CGST Act.
Accordingly, the stay applications for interim protection are rejected.
Learned counsel for the Union of India, in both the cases, is granted two weeks’ time to file reply.
These two writ petitions be listed for final disposal immediately after two weeks.
