Naveen Vs Directorate General of Goods And Services Tax Intelligence (Delhi High Court)
Conclusion: Summons under Section 70 of the CGST Act was only a step in the process of inquiry. Mere issuance of summons could not be equated with arrest or initiation of recovery proceedings.
Held: Assesses were two brothers engaged in the business of trading bidi under the brand name “Udaan” through Aarti Traders. Naveen was the proprietor of the firm, while Suraj assisted him in the business. They approached the High Court seeking quashing of summons issued under Section 70, release of documents and goods seized during search proceedings and protection against alleged illegal detention by officials of the Directorate General of GST Intelligence (DGGI). Respective Officer initiated search and seizure operations under Section 67(2) of the CGST Act at multiple premises, including assessees’ business premises. During the search, incriminating documents, mobile phones, kacchi-parchi and undeclared biri (Udaan brand) were seized. Statements of both assessees were recorded under Section 70 CGST Act. Officer alleged that assessees were engaged in clandestine trading of biri without issuance of tax invoices and without payment of GST, involving alleged evasion exceeding ₹39 crore. Assesses contended that summons were issued mechanically, in violation of CBIC Circulars and allegedly without proper seals and procedural compliance; the search panchnamas were defective, unsigned by all officers, improperly dated, and contrary to prescribed guidelines; issuance of repeated summons without issuance of a show cause notice amounted to harassment and abuse of power. Assessees apprehended arrest and alleged misuse of powers under Section 69 CGST Act. Officer contended that summons under Section 70 were part of an inquiry and did not amount to initiation of proceedings or imply imminent arrest. It was held that summons issued under Section 70 of the CGST Act was only a step in an inquiry and did not amount to initiation of proceedings or determination of liability. Issuance of summons pursuant to a search was legally permissible for gathering information and recording statements. Mere issuance of summons could not be equated with arrest or initiation of recovery proceedings. Arrest could be carried out only when the competent authority had reasons to believe that an offence under the Act had been committed. Section 69 CGST Act provides inbuilt safeguards, requiring “reasons to believe” before effecting arrest. The summons issued to assessees were within the statutory powers of the Respondent and did not suffer from illegality warranting interference under Article 226.
1. Petition under Article 226/227 Constitution of India has been filed for setting aside of the Summons dated 20.05.2024 against the Petitioner No.1 and for release of the papers/documents/goods seized by them on 23.03.2024 and to restrain the Respondent DGGI, not to illegally detain the Petitioner in odd hours.
