Bharat Raj Punj S/O Late Brij Raj Punj vs. Commissioner Of Central Goods And Service Tax Department

Held

The Court held that the Petitioner's apprehension of arrest was not a ground to quash the summons issued under Section 70 of the GST Act. The Court found that the Department had established a clear case of fraudulent availment of input tax credit (ITC) to the tune of Rs. 328,36,73,701/- by the Petitioner and its sister concerns on the basis of fake invoices, with Rs. 40,53,58,772/- being the fraudulent ITC claimed by Petitioner No. 2, of which Petitioner No. 1 is the Managing Director. This fact was not controverted by the Petitioner. The Court rejected the argument that tax determination under Sections 73 and 74 was a prerequisite for action, stating that in an offence committed under Section 132, determination of tax is not required, and the Department can proceed directly. The Court found Petitioner No. 1's contention of not being involved in day-to-day affairs unconvincing, given his long tenure as Director and receipt of remuneration. The Court distinguished the "Make My Trip" case, noting it involved collection and non-deposition of tax, whereas the present case concerned fraudulent ITC claims on fake invoices without actual trading. The Court also found the "Meghraj Moolchand Burad" case inapplicable as it pertained to anticipatory bail. Since an offence under Section 132 was made out and senior officials were arrested, the Petitioner, as Managing Director, was responsible, and the Department had the right to proceed under Sections 69 and 70. The Writ Petition was dismissed with costs.

Facts

The Petitioners, M/s Leel Electricals Limited and its Managing Director, Bharat Raj Punj, sought to quash summons issued by the Central Goods and Service Tax Department, Jaipur and Alwar, and prevent coercive action. The Department conducted a raid on the company's premises from January 17-19, 2019. During the raid, senior officials were arrested. The Department alleged that the company fraudulently availed input tax credit (ITC) of Rs. 40.53 crores through fictitious invoices and a total of Rs. 328 crores with sister concerns. The Petitioner No. 1, Bharat Raj Punj, claimed to have been residing in the USA and returned to India in November 2017, being appointed MD on May 30, 2018. He apprehended arrest upon appearing before the authorities. The Petitioner had deposited GST of Rs. 7,15,06,124/- between January 18 and February 2, 2019.

Key Issues

1. Whether the summons issued under Section 70 of the Goods and Services Tax Act, 2017, by the Commissioner of Central Goods and Service Tax Department, Jaipur and Alwar, are liable to be quashed and set aside, and whether the authorities should be restrained from taking coercive action against the Petitioners? (Question of law and mixed fact and law, concerning powers under Section 70 and potential arrest under Section 69). Petitioner's Arguments: - Petitioner No. 1 apprehended arrest if he appeared, citing the arrest of senior officials. - Petitioner had deposited a significant amount of GST, demonstrating law-abiding conduct. - Reliance on "Make My Trip (India) Pvt. Ltd. vs. Union of India" (Delhi HC) and its affirmation by the Apex Court, stating Section 70 does not permit bypassing procedures before arrest and that arrest decisions must be based on credible material, adhering to procedures under Section 73-A(3) & (4) of the Finance Act, 1994. - Reliance on "Meghraj Moolchand Burad vs. Directorate General of GST (Intelligence)" (SC) and "Rakesh Kumar Chaubey vs. Union of India" (Uttarakhand HC) for protection from arrest. - Contention that tax determination under Sections 73 and 74 is necessary before summoning or arresting the Petitioner under Section 69. Revenue's Arguments: - Section 70 of the Act empowers the proper officer to summon any person whose attendance is necessary for evidence or production of documents. - The Petitioner is bound by law to appear before the Proper Officer. - Power of arrest under Section 69 is available when the Commissioner has reason to believe an offence under Section 132 has been committed. - Officials were arrested due to reasonable grounds of committing offences under Section 132(1)(b), (c), or (d). - Bail applications of arrested officials were rejected, indicating the company's involvement in fraudulent ITC claims. - Petitioner No. 1, as a Director since 2012 and receiving remuneration, cannot disclaim responsibility. - The "Make My Trip" case is factually different; here, fraudulent ITC was claimed on fake invoices without trading activities. - Determination of tax is not necessary when ITC has been availed fraudulently, as per Section 73. - The "Meghraj Moolchand Burad" case is about anticipatory bail and not applicable.