Case Law Details
Santosh Kumar Gupta Prop. Mahan Polymers Vs Union of India (Delhi High Court)
Delhi High Court’s directive in Santosh Kumar Gupta vs. Union of India emphasizes taxpayer rights during GST inspections. Coercion claim addressed.
Introduction: In a recent legal development, the Delhi High Court issued a noteworthy directive in the case of Santosh Kumar Gupta Proprietor of Mahan Polymers vs. Union of India. The petitioner, engaged in trading PVC Resins under M/s Mahan Polymers, challenged a search conducted at his business premises under the Central Goods & Services Tax Act, 2017. The crux of the matter revolves around the petitioner’s claim of being coerced into depositing ₹10,00,000 during the search, prompting legal action.
Legal Background and Grounds of Challenge: The petitioner, registered under the CGST Act, contested the search conducted under Section 67, alleging it lacked valid grounds. The challenge rested on two primary arguments. First, the petitioner asserted that the authorization for the search was mechanical, lacking substantial grounds as required by Section 67(1)(a) of the CGST Act. Second, the petitioner contended that a prior search by the Delhi Goods & Service Tax Authorities on similar grounds precluded the central officers’ actions under Section 6(2)(b) of the CGST Act.
Respondent’s Counter and Investigation Details: In response, the respondents, representing the GST authorities, detailed an investigation into alleged fraudulent Input Tax Credit (ITC) claims. The petitioner’s purchase from a non-existent supplier triggered suspicions, aligning with ongoing inquiries into entities engaging in fake firms for wrongful ITC benefits. The respondents argued that the inspection was a part of an ongoing investigation and justified by the suspicious transactions involving canceled registrations.
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