The Hon’ble Delhi High Court, in the case of P.V. Rao vs. Senior Intelligence Officer, DGGSTI [W.P.(C.) No. 8975/2020 (dated, November 18, 2020)] denied relief to P.V. Rao (Petitioner) from appearing physically in Delhi to record statement in alleged GST evasion case and held that judicial interference at this threshold stage, in such matters relating to investigation, has to be exercised with circumspection. The concept of balance of convenience, therefore, cannot be tilted in favour of the Petitioner to be allowed to appear through video conferencing, merely because travelling from Bengaluru to New Delhi would be a risk factor for the Petitioner of contracting COVID-19.
The Petitioner is presently employed in the capacity of CFO by Think and Learn Private Limited (“Company”), engaged in the business of providing online courses, classes etc. through its website and mobile applications by the brand name “BYJU’S”.
DGGI (“the Respondent”) carried out an investigation in the company premises at Bengaluru, from 27 to 29 October 2020, under Section 67 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) for evasion of GST on books / printed material being supplied by the Company, by mis-declaring such supplies under an exempted category.
The Respondent summoned the Petitioner, requiring him to tender his statement and present evidence before him on November 05, 2020 at New Delhi. However, owing to his ill health and the rising number of COVID-19 infections across the country since it was not safe to travel to New Delhi for recording of his statement, the Petitioner prayed that he be permitted to appear through video conference. The Respondent had rejected the request for recording statement through video conferencing, after which the Petitioner moved to the Hon’ble Delhi High Court seeking relief in this regard.
Whether the current COVID-19 pandemic situation can ipso facto be cited as a ground to insist that the tendering of statement be done through video conferencing?
The Hon’ble Delhi High Court, in W.P.(C.) No. 8975/2020 dated November 18, 2020 held as under:
Section 67 of CGST Act:
“Power of inspection, search and seizure.
67. (1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that––
(a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or
(b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act,
he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place.
(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things:
Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:
Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act.
(3) The documents, books or things referred to in sub-section (2) or any other documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made thereunder, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice.
(4) The officer authorised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied.
(5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation.
(6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.
(7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized:
Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months.
(8) The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by the proper officer in such manner as may be prescribed.
(9) Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorised by him under sub-section (2), he shall prepare an inventory of such goods in such manner as may be prescribed.
(10) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word “Magistrate”, wherever it occurs, the word “Commissioner” were substituted.
(11) Where the proper officer has reasons to believe that any person has evaded or is attempting to evade the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him and shall grant a receipt for the same, and shall retain the same for so long as may be necessary in connection with any proceedings under this Act or the rules made thereunder for prosecution.
(12) The Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.”
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. Exemption allowed, subject to all just exceptions.
2. The applications stand disposed of.
W.P.(C.) No. 8975/2020 & CM APPL. 28981/2020 (for stay)
3. The Petitioner has evoked the extraordinary jurisdiction of this Court by filing the present petition under Articles 226 and 227 of the Constitution of India, seeking a writ of Mandamus to direct Respondent No. 1, the Senior Intelligence Officer, Director General of GST Intelligence (“DGGSTI”) to allow the Petitioner to tender his statement and adduce evidence through video conferencing, in relation to a summon issued under Section 70 of the Central Goods and Services Tax Act, 2017 (“CGST Act”).
4. The factual background necessary for the purpose of deciding the present petition can be summarized as follows: The Petitioner is presently employed by Think and Learn Private Limited (“Company”) in the capacity of Chief Financial Officer (“CFO”). This company is engaged in the business of providing online courses, classes etc. through its website and mobile applications by the brand name “BYJU’S”. Respondent No. 1, the DGGSTI, is presently carrying out an investigation under Section 67 of the CGST Act in relation to the Company, for evasion of GST on books/printed material being supplied by the Company, by mis-declaring such supplies under an exempted category. In this regard, from 27th to 29th October, 2020, Respondent No. 1 along with a team of officers of DGGSTI visited the premises of the Company at Bengaluru for carrying out an inspection under Section 67 of the CGST Act in order to ascertain the admissibility of the exemption being availed by the company. The Petitioner asserts that his statement was recorded on 28th October, 2020 from 2:00 pm to 6:00 pm. However, owing to his ill health and age-related morbidities, he fell severely unwell during the recording of his statement and accordingly consulted a doctor who prescribed medication and advised rest for a period of three days.
5. Subsequently, Respondent No. 1 summoned the Petitioner, requiring him to tender his statement and present evidence before him on 5th November, 2020 at New Delhi. The Petitioner represented that, owing to his ill health and the rising number of COVID-19 infections across the country, it was not safe for him to travel to New Delhi for recording of his statement, and requested that he be permitted to appear through video conference. The said request was declined and the Petitioner was directed to present himself for tendering statement on 10th November, 2020. The Petitioner once again vide letter dated 9th November, 2020 informed the authorities that he will be unable to appear on the said date, owing to his health issues. In these circumstances, the Petitioner has approached this Court seeking a writ of Mandamus for directing Respondent No. 1 to record his statement through video conference.
6. At the time of the first listing, Mr. Harpreet Singh, learned Senior Standing Counsel for the Respondent, appeared on advance notice and objected to the prayer sought in the present petition, contending that the Petitioner was not cooperating in the investigation and merits no indulgence by this court. Since the said averment was disputed by the learned Senior Counsel for the Petitioner, we directed the Respondent to file a status report. At the same time, on the request of learned Senior Counsel for the Petitioner, we permitted the Petitioner to place on record his past medical history.
7. In terms of the aforesaid directions, Respondent No. 1 had filed a detailed Status Report recounting the sequence of events relating to the inspection carried out at the business premises of the company from 27th to 29th October, 2020. The status report reveals that on 27th October, 2020, the Petitioner introduced himself as the CFO of the company and informed the investigating team that he was the Chartered Accountant looking after the day-to-day expenses of the company relating to accounts and Direct/Indirect Taxes. As the Petitioner introduced himself as the person responsible for looking after the day-to-day workings pertaining to the accounts and Direct/Indirect Taxes, a summon dated 27th October, 2020 was issued to the Petitioner under Section 70 of the CGST Act, for clarifications on the documents/data inspected during the course of investigation. In response thereto, requested for further time on the ground that he was busy collecting the requested data/documents. He stated that he would be unable to tender the statement and requested that the same may be recorded on 28th October, 2020. His request was accepted by the Respondents on humanitarian ground, proceedings were concluded and the officers left the premises. However, the Petitioner was asked to submit the documents/data which was called for during the day. On 28th October, 2020, the officers again went to the premises at around 12:00 pm and resumed the inspection/investigation and the Petitioner was again asked to provide the documents, which had not been provided on 27th October, 2020. Later in the day, the Petitioner was again asked to tender the statement as previously committed by him. However, on one pretext or the other, he delayed tendering of statement. Thereafter, a short statement was recorded on 28th October, 2020, wherein the Petitioner gave general information relating to his job responsibilities and the business module of the company. At that stage, at about 7:30 pm he requested the officers to defer the recording of his statement to 29th October, 2020 on account of health issues. This request was again accepted and the day’s proceedings were concluded and the officers left the premises. On the following date i.e. 29th October, 2020, when the officers reached the business premises of company, the Petitioner was not available. After some time, he joined the proceedings and when asked to continue with the statement, he again cited ill health and his doctor’s advice and requested the proceedings against him be concluded. The medical certificate of the said date furnished by the Petitioner in support of his contention, did not indicate anything to this effect. Nevertheless, the officers considered his request favourably and did not insist on recording his statement on that day. Accordingly, fresh summons were issued to the Petitioner for his appearance at DGGSTI, Delhi office. At this stage vide e-mail dated 29th October, 2020, the Petitioner informed the officers that due to his prior commitments, he would not be able to appear in-person and further stated that due to ongoing pandemic situation, his statement may be recorded through video conference. Considering the Petitioner’s ground of “prior commitments”, he was again given time and fresh summons dated 5th November, 2020 were issued for his appearance on 10th November, 2020. He was also informed that his request for recording of statement through video conferencing was not feasible because clarifications were required to be sought with respect to documents which were obtained during the inspection.
8. Mr. Tarun Gulati, learned senior counsel for the Petitioner strongly urges that the Petitioner is in a high-risk and vulnerable age group, and is staying at home to the extent possible, to protect himself against the risk of contracting COVID-19 and, therefore, his request to appear through video conferencing should be allowed. He contends that owing to the Petitioner’s ill health and age related co-morbidities, it is not safe for him to travel from Bengaluru to Delhi for recording of his statement. He submits that in Delhi, COVID-19 infections are on the rise and therefore, considering the Petitioner’s health condition, he would be at grave risk. Mr. Tarun Gulati argues that the Petitioner should be allowed to appear through video conferencing – a practice followed by various judicial and quasi-judicial fora in India, including this Court – to contain the spread of COVID-19. In support of his submissions, Mr. Gulati refers to the Additional Affidavit filed in pursuance to permission granted vide this court’s order dated 12th November, 2020. He drew our attention to the various annexures enclosed alongwith the said Affidavit, particularly the blood test reports and the medical prescription of a doctor. Mr. Gulati emphasises that the blood reports indicate that the Petitioner has high cholesterol and glucose levels. He also refers to the medical prescription of the doctor to stress that the Petitioner is a patient of hypertension, diabetes and the high cholesterol indicates a high risk-factor for heart disease. Mr. Gulati submits that the doctor had also observed that the Petitioner had suffered a mild heart attack recently and his case was under medical evaluation. He submits that in these circumstances, it is not advisable for the Petitioner to undertake any travel as it would expose him to risk of contracting the COVID-19 disease. In support of his contentions, Mr. Gulati also relies upon an order passed by the High Court for the State of Telangana on 17th September, 2020 in W.P. No. 15690 of 2020 titled Ilangovan G. v. Union of India & Ors. He submits that in a somewhat similar situation, the Petitioner in the said case had challenged the summons directing his physical presence to give oral evidence in relation to enquiry into service tax related issues. The Court, after taking judicial notice of the COVID-19 pandemic and the related risk of infection to people travelling from one place to another during such times, had directed the Respondents not to insist on the personal attendance of the Petitioner and had permitted the Petitioner to record his statement in evidence through virtual mode. Mr. Gulati also relies upon the decision in the case of State of Maharashtra v. Dr. Praful B. Desai, (2003) 4 SSC 601, wherein the Supreme Court permitted the recording of evidence of a witness by way of video conferencing. Besides, Mr. Gulati also draws our the attention of this Court to Board Circulars dated 13th October, 1989 and 20th January, 2015 to contend that Senior Management Officials such as CEO, CFO and General Managers of large companies should not be issued summons casually. In support of this view, he also relies upon the judgment of this Court in National Building Construction Company Limited v. Union of India, [2019 (20) G.S.T.L. 515 (Del.)], to contend that the Court had observed that even when facts are to be ascertained and documents are required, the personal presence of a senior officer may not be necessary unless there are compelling reasons. Lastly, Mr. Gulati, also relies upon the orders of the Supreme Court relating to guidelines of Court functioning through video conferencing during the COVID-19 pandemic. He also submits that the Central Board of Indirect Taxes vide instructions dated 27th April, 2020 too has directed that personal hearing in all matters under the Customs Act shall be undertaken through video conferencing.
9. Mr. Harpreet Singh, Senior Standing Counsel appearing for the Revenue, controverts the contentions of the Petitioner. He contends that the Petitioner has been most un-cooperative during the investigation. He contends that the Petitioner was afforded ample opportunities to record his statement when the officers had visited the business premises of the Company, at which stage, the Petitioner evaded the recording of his statement on one pretext or the other. Mr. Singh further argues that the investigations are at the initial stage and documents/data relating to the case are sensitive and incriminating in nature. Detailed clarifications are required to be sought from the witness which will only be feasible in case he physically joins the investigation for recording of his statement. Mr. Singh further submits that if the Petitioner’s statement was recorded through video conferencing, he can have a support system helping him and clarifications/answers can be motivated and influenced, which may adversely affect the ongoing investigation.
10. We have given our thoughtful consideration to the submissions advanced by the learned counsel. The petition, as originally filed, was accompanied with a medical leave certificate dated 29th October, 2020, which merely certified as follows (sic):
“This is to certify that P V Rao aged 57 years under my treatment for Moderate hypertension & anxiety disorder on 29/10/2020 advised rest for 3 days (three days) with effect from 29/10/2020.”
11. The aforesaid certificate merely indicates that the Petitioner was undergoing treatment for moderate hypertension and had been advised rest by the doctor for three days. Apart from the aforesaid document, there was no other medical document placed on record which could substantiate that the Petitioner suffered from any serious ailments, which is the main plank of the Petitioner’s case. However, at the time of hearing, when confronted with this position, permission was sought by the Petitioner’s counsel to file an Additional Affidavit. This Affidavit was enclosed with blood test reports and yet another medical prescription. These blood test reports again do not suggest any serious ailment except for high levels of cholesterol and mean plasma glucose. In any event, the certificates given by the doctors only indicate that the Petitioner is undergoing treatment of hypertension and diabetes and has a high risk-factor for heart disease. In these circumstances, during the course of hearing, we had put it to Mr. Tarun Gulati that the documents placed before us do not indicate any serious health issues that could prevent the Petitioner from undertaking any travel from Bengaluru to Delhi, and in these circumstances, we would like to have the Petitioner examined by a medical board of a Government Hospital comprising of experts in the field, who, after examining the Petitioner, could give their opinion viz. the Petitioner’s health status, including whether he is in a position to undertake the travel from Bengaluru to Delhi, as well as whether he is fit to make a statement. Responding to this suggestion, Mr. Gulati submitted that such a direction may not be necessary, as it is not the case of the Petitioner that he is unable to undertake the travel from Bengaluru to Delhi. He urged that although the Petitioner can travel to Delhi, however, considering the prevalent situation relating to the COVID-19 pandemic, he is likely to be exposed to the risk of contracting the coronavirus. Further, as the Petitioner has co-morbidities, in the event the Petitioner contracts the COVID-19 disease, it would have long-term ramifications on his health, and therefore, his statement be recorded through video conferencing instead.
12. In view of the aforesaid stand of Mr. Gulati, it manifests that the Petitioner’s health condition does not impede his ability to undertake travel. The only ground that is urged for our consideration is whether the current COVID-19 pandemic situation can ipso facto be cited as a ground to insist that the tendering of statement be done through video conferencing. Concededly, the investigation is ongoing and the Respondent wants to unearth the role of the Petitioner in the alleged tax evasion by the Company. The previous conduct of the Petitioner, at the stage of inspection when the officers of the Respondents were visiting Bengaluru, demonstrates that the Petitioner consistently avoided recording his statement on one pretext or the other. Thus, having regard to the past noncooperative conduct of the Petitioner, and the mere apprehension or fear of the Petitioner of contracting the COVID-19 infection, we would not like to interdict or interfere in the investigation process. No doubt, due to the recent outbreak of COVID-19, the Courts of this country including the Supreme Court as well as this Court have adopted measures to reduce physical presence of the lawyers and litigants, and several social-distancing guidelines have been issued by several health authorities as well as the Government of India. In this process, the use of the modern technologies has been put to use for dispensation of justice by the Courts. However, that is not the situation before us. The statement to be recorded in not during trial before a court of law. Therefore, the judgment of the Supreme Court in State of Maharashtra v. Dr. Praful B. Desai (supra), relied upon by Mr. Gulati, in this regard, does not apply to facts and circumstances of the present case. The order passed by the High Court for the State of Telangana in Ilangovan G. v. Union of India & Ors. (supra), is only an interim order and is distinguishable on facts. We are concerned with the investigation being carried out by an investigating agency. The evidence being recorded at this stage would impact the entire investigation of tax evasion. The questioning during investigation has to be on the basis of evaluation and examination of documents. During the process of interrogation, the investigating agency may come across certain relevant facts and discoveries which are germane and crucial for concluding the investigation. Judicial interference at this threshold stage, in such matters relating to investigation, has to be exercised with circumspection. The concept of balance of convenience, therefore, cannot be tilted in favour of the Petitioner to be allowed to appear through video conferencing, merely because travelling from Bengaluru to New Delhi would be a risk factor for the Petitioner of contracting COVID-19. This mere apprehension of contracting COVID-19 does not persuade us to grant the relief sought for by the present Petitioner.
13. For the foregoing reasons, we do not find any merit in the present petition. While dismissing the writ petition, we take the statement made by Mr. Harpreet Singh on record, to the effect that while recording the statement of the Petitioner, as and when he appears before the Respondents, all safety measures and protocols would be in place, and that his statement would be recorded and concluded on day-to-day basis so that the Petitioner would have to travel to Delhi only once. Accordingly, the Petition along with the pending application, is dismissed.
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