Himanshu Balram Gupta vs Union Of India
2021 Latest Caselaw 1404 Guj

     C/SCA/16271/2020                             JUDGMENT DATED: 01/02/2021




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 16271 of 2020


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE J.B.PARDIWALA                                 Sd/-

and

HONOURABLE MR. JUSTICE ILESH J. VORA                                 Sd/-
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1     Whether Reporters of Local Papers may be allowed                YES
      to see the judgment ?

2     To be referred to the Reporter or not ?                         YES

3     Whether their Lordships wish to see the fair copy               YES
      of the judgment ?

4     Whether this case involves a substantial question                NO
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?



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                        HIMANSHU BALRAM GUPTA
                                Versus
                            UNION OF INDIA
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Appearance:
MR CHETAN K PANDYA(1973) for the Petitioner(s) No. 1
MR DEVANG VYAS(2794) for the Respondent(s) No. 1,2,6
NOTICE SERVED(4) for the Respondent(s) No. 3,4,5
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 CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
        and
        HONOURABLE MR. JUSTICE ILESH J. VORA

                              Date : 01/02/2021

                           ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE ILESH J. VORA)

1. Ordinarily, no litigant would come to the High Court questioning the legality and validity of a summons issued by any

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authority under any particular enactment, asking him to remain present before him on a particular day and date for the purpose of inquiry, interrogation or adducing of evidence. However, over a period of time, the imminent threat of being arrested at the end of the interrogation and the harsh treatment at times has led to filing of the writ-applications in different High Courts under Article 226 of the Constitution of India, challenging the summons on the ground that the authority has no jurisdiction.

2. The present writ-application is also one of the types referred to above and it is very apparent that the writ-applicant has a fear in his mind that if he would appear before the DGGSTI he may be arrested, and that is the reason why he has come before this Court with the present writ-application.

3. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs :

"(A) To issue a writ of certiorari or any other writ, order or direction, quashing and setting aside the investigation bearing F.No.DGGI/AZU/Gr.A/12(4)/118/2019-20 issued by Directorate General of Goods and Service Tax Intelligence, Zonal Unit, Ahmedabad; and/or

(B) To issue a writ of certiorari or any other writ, order or direction, quashing and setting aside the summons dated 21.10.2019, 27.11.2019 and 23.11.2020 issued by Directorate General of Goods and Service Tax Intelligence, Zonal Unit, Ahmedabad; and/or

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(C) To grant an ex-parte, ad-interim order in favour of the petitioner, staying the proceedings of the impugned investigation bearing F.No.DGGI/AZU/Gr.A/12(4)/118/ 2019-20 and stay of any coercive action, during the pendency of the matter;

(D) To pass any other and further orders as may be deemed fit and proper; and

(E) To provide for the costs of this petition."

4. This Court passed the following order on 22 nd December 2020 :

"1. We have heard Ms.Anjali Manish, the learned counsel assisted by Mr.Chetan Pandya, the learned counsel appearing for the writ applicant.

2. It appears that the writ applicant is the sole proprietor of a proprietary concern running in the name of M/s. S. H. Exports having its office and place of business at New Delhi.

It is pointed out that the proprietary firm has been registered under the provisions of the Central Goods and Services Tax Act, 2017 (for short, "the CGST Act, 2017") at Delhi and is under the jurisdictional control of the Central Excise and Service Tax, Central Tax Delhi South. It appears from the materials on record that the office of the Delhi South Commissionerate has initiated some investigation against the writ applicant. Summons in the past were issued to the writ applicant under Section 70 of the CGST Act, 2017 by

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the office of the Delhi South Commissionerate. The learned counsel would submit that her client has abided by the summons issued in the past by the Delhi South Commissionerate and various documents have been taken in custody by the office of the Delhi South Commissionerate.

3. The cause of action in filing this writ application is the summons received by the writ applicant from the Directorate General of Goods and Services Tax Intelligence, Zonal Unit, Ahmedabad under Section 70 of the CGST Act, 2017. The argument canvassed is that the proper officer under the provisions of the CGST Act, 2017 is the Joint Commissioner, Central GST, Delhi South Commissionerate, who not only issued summons to the writ applicant under Section 70 of the CGST Act, 2017, but also granted the permission to search the business premises of the writ applicant on the basis of his reasonable belief. In such circumstances, according to the learned counsel, the Directorate General of Goods and Services Tax Intelligence, Zonal Unit, Ahmedabad ought not to have issued any summons under Section 70 of the CGST Act, 2017 with respect to the very same investigation, as it has no jurisdiction to issue any summons. It is argued that an authority, otherwise, lacks jurisdiction to conduct any inquiry or investigation, cannot issue a summons under Section 70 of the CGST Act, 2017.

4. The learned counsel, to fortify the above noted submissions, seeks to rely upon on the decision of the Bombay High Court in the case of Safi Khan Khokhar vs. State of Maharashtra reported in 2019 (20) GSTL 513 (Bom) and also on a decision of the Supreme Court in the case of

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Commissioner of Customs vs. Sayed Ali reported in (2011) 3 SCC 537. Thus, the principal argument canvassed by the learned counsel appearing for the writ applicant is with regard to the jurisdiction of the Directorate General of Goods and Services Tax Intelligence, Zonal Unit, Ahmedabad.

5. Let Notice be issued to the respondents, returnable on 11th January 2021. Till the next date of hearing, the respondents Nos.2 and 6 respectively shall not take any coercive action against the writ applicant. The respondents shall be served directly through Email. In the meantime, Mr. Chetan Pandya, the learned counsel on record appearing for the writ applicant shall serve one copy of the entire paper book to Mr. Devang Vyas, the learned Additional Solicitor General of India so that appropriate instructions can be obtained and the Court can proceed with the hearing of the matter on the next date i.e. 11 th January 2021. The Court intends to hear this matter finally as a neat question of law has been raised. On the returnable date, notify this matter on top of the Board."

5. We have heard Ms.Anjali Manish, the learned counsel assisted by Mr.Chetan K.Pandya and Ms.Priyanshi Manish, appearing for the writ-applicant, and Mr.Devang Vyas, the learned Additional Solicitor General of India, appearing for the respondents.

6. The writ-applicant is aggrieved by the fact that the investigation is being conducted by two different agencies, i.e. the Principal Commissioner of Central Excise and Service Tax,

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Central Tax, Delhi, and simultaneously, by the officers of the Directorate General of Goods and Service Tax Intelligence, Zonal Unit, Ahmedabad (Gujarat). To put it in other words, the grievance redressed is that with respect to one subject matter two authorities are conducting the inquiry.

7. Section 70 of the CGST Act, 2017, reads as under :

"Section 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.

(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a "judicial proceedings" within the meaning of Section 193 and Section 228 of the Indian Penal Code."

8. It must be pointed out that despite the fact that the enquiry by the officers of the GST Commissionerate is not a criminal proceeding, it is nevertheless a judicial proceeding. This can be seen from the sub-section (2) of Section 70 of the CGST Act 2017 referred to above.

9. Under sub-section (1) of Section 70 of the CGST Act, 2017, the "proper officer" under the CGST Act, 2017, has the power to summon a person either to give evidence or to produce a

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document. The power has to be exercised in the manner as provided in the case of a Civil Court under the CPC. In other words, the "proper officer" under the Act can be taken to have been conferred with the powers conferred upon the Civil Court under Order XVI CPC.

10. The interesting part of Section 70 is sub-section (2) of Section 70. This sub-section declares every enquiry to which Section 70(1) relates, to be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code. As a consequence, a person who is summoned under Section 70(1) of the CGST Act, 2017, to give evidence or to produce document, becomes liable for punishment if he intentionally gives false evidence or fabricates false evidence or intentionally offers any insult or causes any interruption to any public servant.

11. Therefore, even if the enquiry before the "proper officer" under the CGST Act, 2017, is not by its nature, a criminal proceeding, it is nevertheless a judicial proceeding and hence, the person summoned is obliged not to give false evidence nor to fabricate evidence. He is also obliged not to insult and not to cause any interruption to the "proper officer" in the course of such proceedings.

12. The principal argument of the learned counsel appearing for the writ-applicant is that the power to summon any person under Section 70 of the CGST Act lies with a "proper officer". If a "proper officer" considers any person necessary either to give evidence or produce a document or any other thing in any

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inquiry, then the summons can be issued by the "proper officer" of that case and he would be empowered to record the statement of such person.

13. Our attention was drawn to the definition of the term "proper officer" as provided under Section 2(91) of the Act. It reads thus :

"Section 2(91) : "proper officer" in relation to any function to be performed under this Act, means the Commissioner or the officer of the Central Tax who is assigned that function by the Commissioner in the Board."

14. It has been argued before us that as the inquiry has been undertaken by the concerned jurisdictional commissionerate, i.e. the Commissionerate (South) at Delhi, there is no good and justifiable reason for the Directorate General of Goods and Service Tax Intelligence, Zonal Unit, Ahmedabad, to undertake a parallel inquiry with respect to the same subject matter and issue summons under Section 70 of the Act.

15. Mr.Devang Vyas, the learned Additional Solicitor General of India, has vehemently opposed this writ-application submitting that the same is not maintainable in law as all it seeks is to question the legality and validity of a summons issued under Section 70 of the Act. Mr.Vyas has tried to justify the issue of summons by the Directorate General of Goods and Service Tax Intelligence, Zonal Unit, Ahmedabad, by explaining the following in the affidavit-in-reply filed on behalf of the respondents nos.1, 2 and 6 respectively. We quote the relevant observations thus :

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"The case against petitioner is intricately linked with the investigation being conducted by DGGSTI against M/s SSM Exports which is not under the jurisdiction of CGST, Delhi South Commissionerate as entire goods have been purchased by the petitioner from M/s SSM Exports and the investigations conducted so far indicate that ITC availed by M/s SSM Exports is irregular as explained in para 5.4 hereinabove The tax paid, by M/s SSM Exports by utilising fraudulent/irregular ITC, on the supply made to the petitioner was availed as ITC by the petitioner. And thereafter the refund of the said ITC was sought by/sanctioned to the petitioner. Accordingly, the said refund also, prima-facie, appears to be vitiated and if the refund is granted without proper investigation the Revenue's interest will be jeopardized.

In view of the above facts, it is on record that only one agency is pursuing the investigation against the petitioner and the petitioner's contention is therefore baseless and devoid of any merits, accordingly, the petition filed by the petitioner is not maintainable.

6.5.2 With reference to the contention raised by the petitioner, as summarised in sub-paragraph 6.5 (iii) above, it is most respectfully submitted before this Hon'ble Court that:

The investigation into the affairs of the petitioner were initiated by the DGGSTI October 2019 and meanwhile the investigations into the affairs of M/s SSM Exports, the sole supplier of the petitioner, were also initiated. Summons were

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being issued to the petitioner till 09.12.2019 however, no one appeared in person for one reason or other. Meanwhile, the investigation was being conducted into the affairs of the sole supplier of the petitioner and searches were conducted at various premises located in Delhi NCR. So merely if summons were not issued does not mean that there was no investigation being carried out by DGGSTI. Moresoever, due to COVID pandemic no summons were issue to the petitioner till November 2020. The summons issued by DGGSTI has no relevance with the petition filed by the petitioner before the Hon'ble High Court of Delhi. Now since it is clear that only one agency, i.e. DGGSTI is investigating the petitioner's case, the petitioner should not have any further grievances in this regard.

6.5.3.With reference to the contention raised by the petitioner, as summarised in sub-paragraph 6.5 (iv) above, it is most respectfully submitted before this Hon'ble Court that :

The conditions for availing Input Tax Credit are stipulated under the provisions of Section 16 of the CGST Act, 2017. The same is reproduced below :

"16.(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

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(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,--

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

(b) he has received the goods or services or both.

Explanation.--For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services--

(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.

(c) subject to the provisions of section 41 or section 43A, the tax charged in respect of such supply has been actually paid to the Government, either in cash or

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through utilisation of input tax credit admissible in respect of the said supply; and

(d) he has furnished the return under section 39:"

From the above it is clear that to avail the ITC two of the prime conditions as per Section 16(2)(c) are that (i) the tax charged in respect of such supply should have been actually paid and (ii) goods and services should have been actually received. In the present case the ITC availed by the supplier and used by the supplier to make supply to the petitioner appears to be fraudulent as the goods appear to have not been received by the supplier. So, the petitioner is ineligible to avail the ITC on the strength of such invoices. Accordingly, the refund of such accumulated ITC is also appears to be recoverable. Thus the contention of the petitioner that the present case is about refund of accumulated ITC only is also incorrect in as much as this present investigation is primarily into the vitiated ITC passed on by the sole supplier of the petitioner, the availment of such ITC by the petitioner and resultant filing of refund of such accumulated ITC.

7. The petitioner has so far not appeared before DGGSTI for on reason or other. It is pertinent to mention that the Hon'ble High Court of Gujarat in case of Vimal Yashwantgiri Goswami vs. State of Gujarat has held the arrest of accused proper in GST cases. Accordingly, it is humbly submitted that the petitioner may be directed to join the investigation and the interim relief granted to the petitioner may pleased be withdrawn."

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16. Thus, the stance of the respondents is that the impugned summons issued by the DGGSTI has no relevance or any bearing with the writ-application filed by the writ-applicant before the High Court of Delhi.

17. Mr.Vyas, in support of his aforesaid submission, seeks to rely upon a decision of the Delhi High Court in the case of National Building Construction Company Limited vs. Union of India and others [Writ Petition (Civil) No.1144 of 2016, decided on 16.11.2018], more particularly, the observations made in paragraphs-33 and 56 :

"33. Exercise of discretionary power relating to procedure can be challenged on limited number of grounds, like patent and gross misuse, ex facie grave disproportionate hardship and inconvenience to the person when a more convenient and acceptable mode for compliance is available, or mala fides in exercise of power etc. Courts would, however, not interfere merely because the authority has exercised discretion that is not acceptable to the assessee. The choice whether or not to exercise power of special audit, summons etc. is for the respondents to decide and exercise, and not for the petitioner to direct."

"56. In view of the aforesaid discussion, it is held as under:

(i) Central Excise Officers of DGCEI have all India jurisdiction and can issue notices and enquire into the matters relating to service- tax against any assessee/ person even if the said person or assessee is registered with one or multiple Commissionerates.

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(ii) Notice under Section 14 of the CE Act i.e. Central Excise Act can be issued even if proceedings under Section 73 of the Fin Act i.e. Finance Act, 1994 are not pending. However the notice should relate to matters and issues relating to provisions of services and imposition of service tax.

(iii) The petitioner should comply with the notices issued or would be issued by the Central Excise Officers, DGCEI to furnish evidence and documents pertaining to the PMC charge i.e. Project Management Consultancy Charge in respect of Commissionerate/ registration except those subject matter of show cause notice dated 13th March, 2015 issued by the Commissionerate of Central Excise and Service Tax, Patna.

(iv) Interim orders are accordingly, vacated except and limited to evidence and documents, subject matter of demand-cum-show cause notice dated 13th March, 2015 issued by the Patna Commissionerate.

(v) Period between 10th February,2016 when the stay order was passed till the pronouncement of the judgement would be excluded for purpose of computing limitation period specified for issue of show cause notice under Section 73(1) of the Fin Act."

18. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether we should interfere at the stage of issue of summons under Section 70 of the CGST Act, 2017.

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19. The judgment of the Supreme Court in the case of Commissionerate of Customs, Calcutta vs. M.M.Exports, 2007 (212) ELT 165 (SC), takes the view that the High Courts should not interfere at the summons stage except in exceptional cases, the reason being that the department has not decided and taken a firm opinion whether or not to issue a show-cause notice.

20. One more decision of the Supreme Court is in the case of Union of India vs. Rajnish Kumar, Tuli, in the Special Leave Criminal Appeal No.30 of 2010. In the said case, the appeal arose out of the order passed by the Punjab and Haryana High Court, directing the concerned officers of the Directorate of Revenue Intelligence to examine and record the evidence of the respondent therein at their office at Ludhiana. A case was registered by the Ahmedabad Zonal Unit, DRI, on the allegation of misuse of the advance licence scheme and summons were issued under Section 108 of the Customs Act, 1962. The Supreme Court took note of the decision in the case of Dukhishiyam Benupani, Asstt. Director, Enforcement Directorate (FERA) vs. Arun Kumar Bajoria, reported in (1998) 1 SCC 52, and held that the learned Single Judge of the Punjab and Haryana High Court could be said to have passed the order without properly appreciating the decision of the Supreme Court in the case of Arun Kumar Bajoria (supra). Ultimately, the appeal filed by the Union of India was allowed, leaving it open to the Directorate of Revenue Intelligence to issue appropriate summons to the respondent for his appearance at an appropriate place. By applying the law laid down in the aforementioned Supreme Court's decision, the only conclusion

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that can be arrived at by this Court is to held that a writ petition challenging a summon, is not maintainable.

21. In view of the aforesaid, we are not inclined to entertain this writ-application. However, before parting with this order, we may draw the attention of the respondents to the observations made by the Delhi High Court in the case of National Building Construction Company Limited (supra). We quote the observations made in paragraph-34 as under :

"34. However, we have reservation on the language used in some of the notices/summons requiring presence of the Managing Director and senior officer of the petitioner with threats or warning that they would be punished or prosecuted. Presence of senior officer may not be necessary when legal issues arise for consideration. Assessee on such issues depends and relies on professional advice. Even when facts are to be ascertained and documents are required, personal presence of senior officer may not be necessary unless there are compelling reasons. The respondents would be well advised to refrain and not use and give threats. The letters/notices must be appropriately worded. In a given case they may refer to the penal or prosecution provisions to ensure compliance but they should not intimidate and be minatory.

22. We are also of the view that the two decisions upon which strong reliance has been placed on behalf of the writ-applicant :

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one, in the case of Shafi Khan Khokhar (supra), and another, in the case of Sayed Ali (supra) are of no avail to the writ-applicant.

23. In the result, this writ-application fails and is hereby rejected. The interim protection earlier granted stands vacated.

(J. B. PARDIWALA, J.)

(ILESH J. VORA, J.) /MOINUDDIN

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