Issuance of Summons u/s 70 CGST Act Cannot be Considered as Initiation of Proceedings: Delhi HC [Read Order]

The Delhi High Court recently ruled that the issuance of summons by an officer of the Revenue under Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act) cannot be construed as the initiation of proceedings against the subject individual.

The decision was given by the Court in a writ petition filed by the petitioners, Md. Aniqul Islam and Akhtar Hussain who were registered dealers and suppliers engaged in the bidi business.

The petitioner’s premises at New Shastri Park in Delhi were subject to a search and seizure operation by officers from the Directorate General of GST Intelligence (DGGI) on 22 March 2024 from 10:54 a.m. to 6:15 p.m. Midway to the search, the petitioner arrived at his premises and fully cooperated with the officials

Consequent to the search, a panchnama and seizure order was prepared under Rule 139(3) of the CGST Rules in Form GST INS-02. The order was effectuated on the allegation that the petitioner had not produced the invoices of bidi stock valued at ₹7.22 lakh during the inspection, and thus the stock was seized by the officials.

Your Guide to GST Tariffs & Exemptions, Click here

The petitioner subsequently received another summons dated May 6, 2024, requiring his presence on May 8, 2024, in connection with the earlier seizure. This summons linked him to another entity named M/s Aarti Traders. The petitioner denied any sort of connection with said entity and stated that this summons was issued with an ulterior motive.

Simultaneously, a search was conducted at the premises of Akhtar Hussain, proprietor of M/s Nila Biri Factory in West Bengal, on May 15, 2024. Although the stock at his factory was found to be in order and matched the registers, a summons was issued to him on May 25, 2024, requiring his appearance before the DGGI.

Both Islam and Hussain have filed the present petition citing mala fide intent and procedural violations in the summons issued by the department.

The petitioners, represented by Manisha Gupta raised a key submission that the summons dated March 22, 2024 was handwritten, lacked a Document Identification Number (DIN), and did not bear the seal of the issuing office, thereby violating CBIC Circular No. 128/47/2019-GST. Under this circular, such summons are to be treated as invalid and non-est.

The petitioners further argued that the DGGI officers were misusing their powers under Section 69 of the CGST Act and conducting "tax terrorism" in the name of revenue collection.

The respondent DGGI was represented by Anurag Ojha,Dipak Raj, Priyatam and Garima Kumar.

The single-judge Bench of Justice Neena Bansal Krishna examined the statutory provisions and noted that Section 70 of the CGST Act is an enabling provision for inquiry. The Bench observed that summons issued under this section are primarily for gathering information and providing an opportunity to the individual to produce documents or give evidence during an investigation.

Section 70 of the CGST Act, 2017 is as follows:

“70. Power to summon persons to give evidence and produce documents.— (1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).”

The High Court accordingly held that “issuance of summons under Section 70 CGST Act cannot be considered to be initiation of proceedings against the Petitioners.”

The Court further clarified that in cases where there is a possibility of arrest, Section 69 of the CGST Act contains inherent safeguards requiring the Commissioner to have "reasons to believe that a person has committed an offence under Section132 of the CGST, it further provides that the officer authorized to arrest the person shall inform such person the ground of arrest.

The petition was accordingly dismissed by the High Court for being premature, however, with liberty to the petitioners to approach the appropriate forum at a later stage if required.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates