GST Summons Are Only for Inquiry, Not Initiation of Proceedings; Delhi HC Refuses to Quash DGGI Summons at Investigation Stage

The Delhi High Court refused to quash Directorate General of GST Intelligence (DGGI) summons issued under Section 70 of the CGST Act, holding that such summons are meant only for inquiry and do not amount to initiation of proceedings and interference at the investigation stage would be premature.

The case was filed by Naveen and Suraj Kumar, two brothers engaged in the business of trading bidi under the brand name “Udaan” through Aarti Traders. Naveen is the proprietor of the firm, while Suraj assists him in the business. The firm is registered under GST and regularly files its returns.

In March 2024, officers of the DGGI conducted search operations at the petitioners’ premises and other connected locations. During the search, goods, documents and mobile phones were seized. After the search, summons under Section 70 of the CGST Act were issued to the petitioners calling upon them to appear and produce documents. Petitioner No.2 was arrested during the course of investigation and was later released on bail.

The petitioners approached the Delhi High Court challenging the summons and also sought release of seized goods and protection from alleged illegal detention. They argued that the summons were issued mechanically without proper application of mind. They also argued that no show cause notice was issued and the summons was being misused to harass them.

The petitioners’ counsel argued that repeated summons created fear of arrest and affected their personal liberty. They also argued that arrest or coercive action under GST law cannot be taken without proper inquiry or adjudication, and that the petitioners had cooperated with the investigation.

The DGGI opposed the petition and argued that the investigation was initiated based on specific information of large-scale GST evasion. The department argued that searches revealed incriminating material showing clandestine trading of bidi without invoices and large tax evasion. They argued that the summons were issued only to collect evidence and record statements, and not to start proceedings.

JusticeNeena Bansal Krishna observed that a summons under Section 70 of the CGST Act is only a step in the process of inquiry. The court explained that at the stage of issuing summons, the department is only gathering information and has not yet decided whether to initiate adjudication or prosecution.

The court further observed that the GST law contains sufficient safeguards before any arrest can be made. Arrest can be carried out only when the competent authority has reasons to believe that an offence under the Act has been committed. The court pointed out that issuance of summons by itself does not lead to arrest.

The court held that the writ petition was premature.

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