Harsh Wadhwani Proprietor Vijay Laxmi Trade Company vs. Additional Director General

Held

The Court directed the petitioners to appear before the concerned investigating officers/authorities of the DGGI, Raipur, on October 28, 2025, and thereafter as and when required. The Court held that if the petitioners cooperated with the investigation, the Central GST Authority would not take any coercive steps against them concerning the inquiry into M/s. Taj Enterprises and M/s. Agastya Enterprises. Additionally, the Court observed that the objections filed by the petitioners (Annexure P/13 Colly) should be disposed of by the respondent officers/authorities as early as possible, by passing a speaking order in accordance with the law. The Court did not decide on the validity of the summons themselves but focused on facilitating the inquiry and protecting the petitioners from immediate coercive action, provided they cooperated. The primary issue revolved around the ongoing inquiry and the petitioners' apprehension of coercive measures.

Facts

The petitioners, Harsh Wadhwani and Santosh Wadhwani, proprietors of Vijay Laxmi Trade Company, filed a writ petition before the High Court of Chhattisgarh at Bilaspur. They sought to quash notices and summons issued by Respondent No. 3, the Superintendent/Appraiser/Senior Intelligence Officer of the Directorate General of GST Intelligence (DGGI), Raipur. The DGGI had issued a notice under Section 70 of the CGST Act, 2017, alleging that the petitioners had claimed Input Tax Credit (ITC) for the financial year 2024-2025 based on fake invoices from two specific firms: M/s. Taj Enterprises and M/s. Agastya Enterprises. The petitioners had responded to the initial notice and were subsequently issued further summons requiring their personal appearance for oral evidence. The petitioners expressed readiness to cooperate with the inquiry regarding these two firms.

Key Issues

1. Whether the summons issued by Respondent No. 3, which did not clearly specify the parties for whom oral evidence was required, were procedurally valid under Section 70 of the Central Goods and Services Tax Act, 2017? 2. Whether the petitioners are entitled to protection from coercive steps during the ongoing inquiry concerning alleged fake ITC claims for the financial year 2024-2025? Petitioner's Arguments: The petitioners contended that while they were willing to cooperate, the subsequent summons were vague regarding the specific parties for whom oral evidence was sought, unlike the initial notice which named M/s. Taj Enterprises and M/s. Agastya Enterprises. They sought directions for the respondent authorities to withdraw any negative balance or block on their Electronic Credit Ledger and to refrain from taking coercive steps against them during the inquiry related to the aforementioned two firms. Revenue's Arguments: The respondents (DGGI) argued that scrutiny of the petitioners' GSTR-3B returns revealed discrepancies and potential evasion of tax due to claims of fake ITC for the financial year 2024-2025, supported by fake invoices. They stated that the subsequent summons were issued to obtain oral evidence to clarify these discrepancies, as the initial reply was insufficient. They further submitted that if the petitioners cooperated and the authorities were satisfied, no coercive steps would be necessary.