M/S. Miles Education Private Limited vs. Union Of INDIA

Held

The Court acknowledged that in the course of an investigation, the department has the authority to seek information and clarifications from the recipients of supplies made by the petitioner company, and this action is not beyond their jurisdiction. However, the Court noted that discretion could have been exercised to ensure customer/client confidentiality was not shared with other customers. The learned counsel for the respondent department assured the Court that the department would ensure that in the future, such bulk emails would not be issued to a large number of recipients/customers. The Court, having heard the parties and taken on record the department's stand, was of the view that while no interference was warranted at that stage, the department should ensure proper discretion is exercised when seeking information or clarifications from the petitioner's customers during the investigation. The Court did not make any specific findings on the allegations of illegality, arbitrariness, or mala fide, nor did it address the request to substitute the investigating officer or to conduct investigations solely through the petitioner. The operative direction was for the department to exercise discretion in future communications.

Facts

M/s. Miles Education Private Limited (Petitioner) filed a writ petition challenging the action of the Directorate General of Goods and Service Tax Intelligence (DGGI) and its Senior Intelligence Officer (Respondents No. 2 and 3). The respondents issued a letter dated 15.12.2025 to the petitioner's clients via email on 17.12.2025, seeking clarifications related to an ongoing investigation against the petitioner. The petitioner contended that approximately 200 clients received these emails, which were coercive, intimidating, and intended to damage the petitioner's business reputation by exposing client confidentiality. The petitioner sought a declaration that the respondents' actions were illegal, arbitrary, and mala fide, and requested directions for the investigation to be conducted solely through the petitioner, to refrain from issuing alarming communications, and to substitute the investigating officer. A previous writ petition concerning summons under Section 70 of the CGST Act, 2017, filed by the petitioner, had been disposed of on 17.12.2025.

Key Issues

1. Whether the action of the Respondents No. 2 and 3 in issuing the impugned letter dated 15.12.2025 to the Petitioner's clients via email on 17.12.2025, seeking clarifications in respect of the investigation against the Petitioner, is illegal, arbitrary, and mala fide, thereby violating the principles of natural justice and client confidentiality, as argued by the Petitioner. 2. Whether the Petitioner is entitled to a direction for the Respondents to conduct all enquiries and further investigation only through the Petitioner and not directly with its clients or third parties, unless the Petitioner fails to comply, as sought by the Petitioner. 3. Whether the Petitioner is entitled to a direction restraining the Respondents from issuing or circulating any communications which are coercive, intimidating, alarmist, or which create an impression of culpability on the Petitioner during the pendency of the investigation, as argued by the Petitioner. 4. Whether the Petitioner is entitled to a direction to substitute Respondent No. 3 with a different officer as the investigating officer, as prayed for by the Petitioner. Contentions of the Petitioner: The Petitioner argued that the respondents' approach of directly contacting approximately 200 clients with questionnaires was high-handed, intended to damage business reputation, and improperly exposed client confidentiality. They relied on the principle that investigations should be conducted through the assessee unless non-compliance occurs and sought to restrain coercive communications and change the investigating officer. Contentions of the Respondents: The learned counsel for the respondent department submitted that in the course of investigation, the department can seek answers concerning the subject matter from the recipients of supplies made by the petitioner company, and such information seeking is not beyond their jurisdiction. The department also assured that in future, bulk copies of such emails would not be issued to numerous recipients/customers.