Prakash Chandra Purohit vs Union Of India
2022 Latest Caselaw 3707 Raj

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Misc. Stay Petition No.2754/2022 in D.B. Civil Writ Petition No. 2750/2022

Prakash Chandra Purohit S/o Sh Shankar Lal Purohit, Aged About 53 Years, Resident Of Behind Miraj Complex, Upli Oden, Nathdwara, Rajsamand, Former Managing Director Of Miraj Business Development Pvt Ltd.

----Petitioner Versus

1. Union Of India, Through Revenue Secretary, Department Of Revenue, Ministry Of Finance, Government Of India, New Delhi 110001.

2. Central Board Of Indirect Taxes And Customs, Department Of Revenue, Government Of India Through Commissioner.

3. Directorate General Of Gst Intelligence (Dggi), Hqrs, Through Principal Director 1St And 2Nd Floor, Wing Number 06, West Block, 08 Rk Puram, New Delhi, Delhi 110066.

4. Directorate General Of Gst Intelligence (Dggi), Jaipur Zonal Unit, Jaipur, C-62, Sarojini Marg, Panch Batti, Ashok Nagar, Jaipur, Rajasthan 302001 Through Additional Director General.

5. Senior Intelligence Officer, Dggi, Jaipur Zonal Unit, C-62, Sarojini Marg, Panch Batti, Ashok Nagar, Jaipur, Rajasthan 302001.

----Respondents connected with D.B. Civil Misc. Stay Petition No.2755/2022 in D.B. Civil Writ Petition No. 2751/2022

M.L. Paliwal S/o Shri D.C. Paliwal Ji, Aged About 63 Years, Resident Of Uparli Oden, Nathdhawara, Rajasthan

----Petitioner Versus

1. Union Of India, Through Revenue Secretary, Department Of Revenue, Ministry Of Finance, Government Of India,

(2 of 7) [CW-2750/2022]

New Delhi 110001.

2. Central Board Of Indirect Taxes And Customs, Department Of Revenue, Government Of India Through Commissioner.

3. Directorate General Of Gst Intelligence (Dggi), Hqrs, Through Principal Director 1st And 2Nd Floor, Wing Number 06, West Block, 08 RK Puram, New Delhi, Delhi 110066.

4. Directorate General Of Gst Intelligence (Dggi), Jaipur Zonal Unit, Jaipur, C-62, Sarojini Marg, Panch Batti, Ashok Nagar, Jaipur, Rajasthan 302001 Through Additional Director General.

5. Senior Intelligence Officer, Dggi, Jaipur Zonal Unit, C-62, Sarojini Marg, Panch Batti, Ashok Nagar, Jaipur, Rajasthan 302001.

----Respondents

For Petitioner(s) : Mr. Vikas Balia, Sr. Adv. assisted by Mr. D.P.S. Charan Mr. Vikram Choudhary, Sr. Adv.

assisted by Mr. Mr. Vinay Kothari, through V.C.

Mr. Sharad Kothari, Mr. Amit Desai, Sr. Adv. assisted by Mr. Rishabh Sancheti, through V.C.

Mr. Rishi Sehgal, Mr. Lalit Pareek, Mr. Priyanshu Arora, Mr. Aditya Gupta For Respondent(s) : Mr. Rajvendra Saraswat, Mr. Mukesh Rajpurohit, ASG with Mr. Kinshuk Jain Mr. Naneet Singh Bikh, through V.C.

HON'BLE ACTING CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA HON'BLE MR.JUSTICE MADAN GOPAL VYAS

Order

Reserved on 25.02.2022 Pronounced on 09.03.2022

Heard on stay applications for interim relief filed by the

petitioners namely, Prakash Chandra Purohit in Civil Writ Petition

(3 of 7) [CW-2750/2022]

No.2750/2022 and petitioner namely, M.L. Paliwal in Civil Writ

Petition No.2751/2022.

Learned senior counsel appearing for the petitioners in the

aforesaid two petitions have prayed for interim protection against

an apprehended action of arrest pursuant to the proceedings

initiated by Director General of GST Intelligence and its offices in

the matter of alleged evasion of GST.

Learned senior counsel appearing for the two petitioners

would submit that the petitioners have been issued summons

under Section 70 of the Central Goods and Services Tax Act, 2017

(hereinafter referred to as the 'CGST Act') to appear before the

GST authorities, even though these two petitioners have no role to

play in the alleged evasion of GST, in the course of manufacturing

activities and other business activities of M/s. Miraj Products

Private Limited (hereinafter referred to as 'M/s. MPPL'), nor they

have any iota of involvement in the alleged clandestine supply of

packaging material involving M/s. MPPL and/or M/s. Montage

Packaging Sales Private Limited (hereinafter referred to as 'M/s.

MPSPL'). It is submitted that earlier Director of M/s. MPPL,

namely, Shri Vinay Kant Ameta was issued summons and when he

appeared, he arrested and harassed until he was granted bail by

the Court. Later on, some other arrests have been made, which

show that the respondent authorities are bent upon harassing not

only those who are involved in the manufacturing and other

business activities of M/s. MPPL, but also others like the

petitioners who have no connection whatsoever in the alleged

clandestine supply and evasion of GST.

Number of decisions rendered by the Supreme Court and

High Courts are cited at the Bar by learned counsel for the

(4 of 7) [CW-2750/2022]

petitioners to impress upon this Court that in the absence of any

prima facie material even requiring issuance of summons and the

manner in which the respondent authorities are engaged in wild

goose chase, the petitioners may be protected against any arrest

till these petitions are decided by the Court, otherwise the purpose

of filing these petitions would be frustrated.

On the other hand, learned counsel appearing for the

respondents would argue that the petitions are based on

apprehension which has no basis. They would submit that the

petitioners have rushed to the Court at this stage when only

summons under Section 70 of the CGST Act have been issued. It

is argued that the respondents are holding investigation into

serious allegation of tax evasion. They would submit that acting

upon an intelligent input that M/s. MPSPL is indulged in racket of

huge GST evasion with hand holding of various tobacco

manufacturing units including M/s. MPPL by way of clandestine

supply of packaging material under the cover of invoices issued to

various fake firms registered either in Rajasthan or in Gujarat,

simultaneous searches were carried out by the officers of DGGI,

JZO, Jaipur at various places related to M/s. MPSPL, M/s. MPPL

and M/s. Montage Enterprises Private Limited, Haridwar on

22.04.2021 and during the course of search several incriminating

documents were seized.

He would submit that during the course of investigation so

far carried out, materials have been disclosed bearing involvement

of the two petitioners relating to various transactions also in the

aforesaid affairs. Therefore, it has become necessary to record

the statements of these two petitioners. He would submit that the

authorities have jurisdiction under the law to issue such summons

(5 of 7) [CW-2750/2022]

and the petitioners are duty bound to cooperate with the

investigation. With regard to the apprehension that the

petitioners would be unnecessarily arrested, it is argued that it

has no basis because though large number of persons alleged to

be involved in the business to the aforesaid companies were

issued summons, but only some of them were arrested and others

were not arrested but released after recording their statements.

On prima facie considerations, we find that these petitions

have been filed by the petitioners at the initial stage when

summons have been issued to them to appear before the

respondent authorities in the course of investigation being carried

out pursuant to searches carried out in various business

establishments in the matter of alleged huge GST evasion. At this

stage, after hearing learned counsel for the parties and various

judgments cited at the Bar, it cannot be said that the respondent

authorities had no jurisdiction or authority under the law to issue

summons under Section 70 of the CGST Act. The summons have

been issued to the petitioners in the two petitions in the course of

investigation into allegation of huge evasion of GST based on

search and raid carried out in various premises/manufacturing

units. It is not that without any material so far collected, all of a

sudden, summons have been issued to the petitioners.

While the petitioners' claim to be completely unconnected

with the affairs of various companies which are alleged to be

involved in GST evasion, according to the respondents, this matter

is still under investigation and the presence of these petitioners is

necessary to record their statements.

During the course of arguments, learned counsel for the

respondents submit that at present the only purpose of issuing

(6 of 7) [CW-2750/2022]

notice to the petitioners is to record their statements seeking to

extract the role of the petitioners in the affairs of the companies

involved in GST evasion. Learned counsel for the respondents

would further submit that the apprehension that everyone, who is

being called to give statement is being arrested, is not correct.

We also find that number of persons were issued summons

under Section 70 of the CGST Act and it is not a case that every

person has been arrested. Whether or not the petitioners are

involved in the alleged GST evasion would depend upon result of

the investigation which is being carried out.

Furthermore, the submission of learned counsel for the

petitioners that once Director of the companies involved in the

alleged GST evasion is arrested and complaint is filed against him,

no further action can be taken against any other person including

the petitioners, does not appeal to us.

Another submission that proceeding under Section 70 of the

CGST Act could be initiated only after a final assessment is carried

out, is also, on prima facie considerations, not borne out from the

statutory scheme of the CGST Act.

On prima facie considerations, we do not find that the

issuance of summons to petitioners is without jurisdiction and

authority of law. The action initiated by the respondents does not

appear to be actuated by any mala fide intention and further

taking into consideration the material disclosed during various

searches and raids conducted by the respondent authorities

involving M/s MPPL and M/s. MPSPL, we are not inclined to pass

any interim order in favour of the petitioners, keeping in view that

we are not dealing with an application for grant of anticipatory bail

(7 of 7) [CW-2750/2022]

but challenge to jurisdiction and authority of respondents in

issuing summons under Section 70 of the CGST Act.

Accordingly, the stay applications for interim protection are

rejected.

Learned counsel for the Union of India, in both the cases, is

granted two weeks' time to file reply.

These two writ petitions be listed for final disposal

immediately after two weeks.

(MADAN GOPAL VYAS),J (MANINDRA MOHAN SHRIVASTAVA),ACJ

C1&2-MohitTak/-

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