M/S. Pochampad Construction Company Private Limited vs. Union Of INDIA

Held

The Court noted that the investigation by respondents No. 4 and 5 (DGSI) had been completed and a show cause notice was in the process of being finalized. In light of this, the Court found the petitioner's grievance of being arrested again to be misconceived. The Court stated that if the investigation was completed, it was open to the respondents to issue a show cause notice under the relevant provisions of the Central Goods and Services Tax Act, 2017. The Court explicitly mentioned that no opinion was expressed on the merits of the case and all contentions were kept open. The writ petition was disposed of with a direction that if a show cause notice is issued, the petitioners would be entitled to contest it. The Court also closed miscellaneous applications and made no order as to costs.

Facts

The petitioner, M/s. Pochampad Construction Company Private Limited, filed a writ petition before the Telangana High Court. The petitioner's grievance stemmed from repeated summons by the Directorate of GST Intelligence (DGSI) alleging Goods and Services Tax (GST) evasion. The petitioner further apprehended arrest. It was stated that the petitioner's Managing Director was arrested on November 3, 2020, after which the petitioners paid Rs. 4,51,00,000. The petitioner's primary concern was that the respondents were compelling payments without quantifying the demand, based on alleged GST evasion. The petitioners sought a declaration that the proceedings initiated by the DGSI were illegal and arbitrary, and prayed for the refund of the amount paid.

Key Issues

1. Whether the proceedings initiated by the Directorate of GST Intelligence (DGSI) for alleged GST evasion, leading to the arrest of the petitioner's Managing Director and subsequent payment of Rs. 4,51,00,000 without quantification of demand, are illegal, arbitrary, and violative of Articles 14, 19, and 265 of the Constitution of India, as contended by the petitioner? 2. Whether the apprehension of the petitioner regarding further summons and arrest on the same allegations is justified, given the ongoing investigation, as argued by the petitioner? Contentions of the Petitioner: The petitioner argued that the respondents were compelling payments without quantifying the demand, based on alleged GST evasion. They further apprehended being summoned again and arrested on the same set of allegations. The petitioner sought a declaration that the proceedings were illegal and arbitrary, and prayed for the refund of the amount paid. Contentions of the Respondents: The counsel for the Central Board of Indirect Taxes and Customs (CBIC) and DGSI submitted, on instruction, that the investigation by respondents No. 4 and 5 had been completed. A show cause notice to the petitioners was in the process of being finalized. Therefore, the grievance of being arrested again appeared to be misconceived.