M/S. Dhariwal Products vs. Union Of INDIA
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M/s. Dhariwal Products, the petitioner, filed a writ petition challenging summons issued under Section 70 of the GST Act and the alleged coerced recovery of ₹11.5 crores during search operations on January 5-6, 2022. The petitioner sought refund of this amount and fair investigation/adjudication under Section 74 of the CGST Act. The High Court initially granted an interim order restraining coercive steps and preventing forced deposit of GST amounts without adhering to Section 74. The respondents filed an application to vacate this stay. The parties agreed to final arguments, and the petitioner requested liberty for the department to continue proceedings while adhering to Section 74, with protection from coercive action. A timeframe for conclusion was also requested.
Held
The Court directed that the petitioner and its representatives shall cooperate with the GST authorities in the ongoing proceedings pursuant to the search/seizure dated January 5-6, 2022. These proceedings are to be conducted strictly in accordance with the procedure laid down under Section 74 and allied provisions of the CGST Act. The Court also directed that the enquiry/investigation shall be undertaken and concluded within a period of one year from the date of the order, provided the petitioner and its representatives cooperate. Crucially, no coercive steps shall be taken against the petitioner or its representatives, and the petitioner shall not be forced to deposit any amount towards GST before the conclusion of these proceedings. The writ petition was disposed of on these terms.
Key Issues
1. Whether the GST authorities can proceed with enquiry/assessment proceedings against the petitioner while adhering to the procedure laid down under Section 74 and allied provisions of the CGST Act, and whether the petitioner should be protected from coercive action during this period? Petitioner's arguments: The petitioner sought to ensure that all investigation and adjudication proceedings are conducted strictly in accordance with the law, specifically Section 74 of the CGST Act. They also requested protection from coercive steps and the forced deposit of any amount towards GST before the conclusion of these proceedings. The petitioner also sought a direction for the conclusion of the enquiry/assessment within a specified period. Revenue/State's arguments: The respondents, through their counsel, agreed to continue with the proceedings of enquiry/assessment while adhering to the provisions of Section 74 and allied provisions of the CGST Act. They also agreed to provide protection from coercive action to the petitioner/representatives and consented to the conclusion of the exercise within a period of one year, subject to the petitioner's cooperation.
Sections Cited
Section 70, Section 74
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Cause title — parties, addresses and appearances
Order
(2 of 4) [CW-2189/2022] 12/07/2022 The instant writ petition has been preferred by the petitioner M/s. Dhariwal Products for assailing the summons issued to the petitioner by the respondent GST authorities under Section 70 of the GST Act; alleged coerced recovery of rupees 11.5 crores during the course of search operations dated 05.01.2022- 06.01.2022; to refund the said amount to the petitioner and to direct the respondents to undertake the remaining investigation/adjudication proceedings fairly and strictly in accordance with law with reference to Section 74 of the CGST Act, 2017. While entertaining the writ petition, this Court passed an interim order dated 09.02.2022 (i) restraining the respondents from taking coercive steps against the petitioner/ its representatives in furtherance of the search / seizure operations dated 05.01.2022 / 06.01.2022 and the summons issued in pursuance thereof; and (ii) that the petitioner shall not be forced to deposit any amount towards GST without adhering to the procedure provided under Section 74 of the CGST Act. The matter came up for orders on the Interlocutory Application No.01/2022 filed by the respondents under Article 226(3) of the Constitution of India for vacating the ad interim stay order dated 09.02.2022. With the consent of the learned counsel for the parties, final arguments were heard today itself. Learned Senior Counsel Shri Vikas Balia assisted by Shri Sharad Kothari, Advocate representing the petitioner and Shri Rajvendra Saraswat, counsel representing the respondent GST Department, submitted that rather than entering into the merits of (3 of 4) [CW-2189/2022] the controversy, the Department may be given liberty to continue with the proceedings of enquiry /assessment while adhering to the provisions of Section 74 and allied provisions of the CGST Act and while giving protection from coercive action to the petitioner / its representatives. A request was also made to permit conclusion of such exercise within a period of one year from the date of this order and to require the petitioner/ its representatives to cooperate in the enquiry/ investigation/ assessment proceedings. In view of the submissions made herein above, it is hereby directed that (I) that the petitioner and its representatives shall cooperate with the further course of action to be taken by the respondents GST Authorities pursuant to the search / seizure proceedings dated 05.01.2022/06.01.2022 which shall be continued strictly in accordance with the procedure laid down under Section 74 and allied provisions of the CGST Act. (II) The petitioner/ its representative shall cooperate in the proceedings and will appear before the enquiry officer/ investigating officer as and when directed. The enquiry/ investigation shall be undertaken and concluded within a period of one year from today subject to the condition that the petitioner and its representatives cooperate in the proceedings. (III) No coercive steps shall be taken against the petitioner/ its representatives and the petitioner shall not be forced to deposit any amount towards GST before conclusion of the proceedings as above.
(4 of 4) [CW-2189/2022] The writ petition is disposed of in these terms. All pending applications are also disposed of. No order as to costs. (KULDEEP MATHUR),J (SANDEEP MEHTA),J 27-Tikam/Prashant-
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.