Naveen & Anr. vs. Directorate General Of Goods And Services Tax Intelligence

Facts

The petitioners, Naveen and Suraj Kumar, brothers involved in the trading of bidis under the brand name 'Udaan', filed a writ petition challenging summons issued by the Directorate General of Goods and Services Tax Intelligence (DGGI). They alleged procedural irregularities during a search and survey conducted by the DGGI, including a future-dated Panchnama, lack of proper signatures and seals on the Panchnama, and the involvement of the Income Tax Department without clear justification. Petitioner No. 1, Naveen, is disabled and runs the business, assisted by Petitioner No. 2, Suraj. Petitioner No. 2 was arrested and later released on bail. The petitioners contended that the summons were issued mechanically, in violation of GST investigation guidelines, and that the DGGI officials were misusing their powers. They also highlighted that Petitioner No. 1 had been regularly filing GST returns and that all transactions were supported by tax invoices paid through banking channels.

Held

The Court held that the summons issued by the Respondent DGGI were for the purpose of inquiry under Section 70 of the CGST Act, which is a legitimate power of the proper officer to gather information and evidence. The Court found no illegality in the issuance of these summons, stating that the Respondent had acted within its powers. The Court also noted that Petitioner No. 2 had been released on bail, and the challenge to the summons was essentially seeking interim protection or anticipatory bail during the inquiry stage, which is premature. The Court referred to various judgments, including Radhika Agarwal vs. Union of India, to emphasize that while safeguards exist for arrest, the inquiry stage itself is for collecting information based on suspicion. The Court concluded that the writ petition was premature and thus liable to be dismissed. The Court explicitly stated that the petitioners were at liberty to approach the appropriate forum at the appropriate stage. No specific findings were made on the alleged irregularities in the Panchnama, as the petition was dismissed on the ground of prematurity.

Key Issues

1. Whether the summons dated 06.05.2024, 20.05.2024, and 28.05.2024 issued by the Respondent DGGI to the Petitioners are in violation of the guidelines and principles of natural justice, rendering them invalid? (Question of law) 2. Whether the search and seizure conducted by the Respondent DGGI on 22.03.2024 to 23.03.2024, and the subsequent Panchnama dated 23.03.2024, suffer from material irregularities and procedural impropriety, making them liable to be set aside? (Question of mixed law and fact) Petitioner's contentions: The summons were issued in a mechanical manner, violating Circular No. 128/47/2019-GST and Circular No. 122/41/2019-GST, as they lacked DIN numbers and were issued with prejudiced minds. The Panchnama contained a future-dated entry and lacked proper authentication. The DGGI officials were engaging in 'tax terrorism' and misusing powers under Section 69 of the CGST Act. Reliance was placed on previous High Court orders granting interim protection to similarly placed individuals and Supreme Court pronouncements on arrest powers. Respondent's contentions: The summons were issued for inquiry under Section 70 of the CGST Act, which is a legitimate power of the proper officer. The search and seizure were conducted in accordance with the law. The petitioners' claims of procedural impropriety were unsubstantiated. The arrest of Petitioner No. 2 was justified under Section 69 of the CGST Act, and he was subsequently released on bail. The writ petition was premature as it was filed during the inquiry stage.