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2019 (3) TMI 1187 - HC - GSTValidity of summons issued by the Commissioner of GST - it is the case of Petitioner that the tax has not been determined in accordance with Section 73 and 74 of the Act and till the tax is determined, Department has no right to summon the Petitioner or arrest the Petitioner under Section 69 of the Act - Held that - It is pertinent to note that it is clear case of the Department that the Petitioner and its sisters concerns have availed input tax credit to the tune of ₹ 328,36,73,701/- on the basis of fake invoices, out of which ₹ 40,53,58,772/- is the fraudulent input tax credit claimed by Petitioner No.2 of which Petitioner No.1 is the Managing Director - The Petitioners Writ Petition is confined to technicalities as also to the fact that the Petitioner No.1 was residing abroad and was not involved in day to day affairs of the company. This Court is not convinced by the arguments advanced by the counsel for the Petitioner for the very reason that Petitioner No.1 is the Director of the company since 08.08.2012 and has been receiving managerial remuneration from the company to the tune of about ₹ 60 lakh per annum. Petitioner No.1 became the Managing Director of Petitioner No.2 on 30.05.2018, hence contention of counsel for the Petitioner that he was not involved in day to day affairs of the company, cannot be accepted. The contention that the tax is to be first determined under Section 73 74 of the Act does not have any force for the very reason that in an offence committed under Section 132 of the Act determination of tax is not required and the Department can proceed straight away by issuing summons or if reasonable grounds are available by arresting the offender. Since offence under Section 132 is made out and Senior Officials of Company are behind bars, Petitioner being Managing Director is responsible and Department has the right to proceed under Section 69 and 70 of the Act - petition dismissed - decided against petitioner.
Issues:
Petition seeking quashing of summons by Central Goods and Service Tax Department and prevention of coercive action against Petitioners. Detailed Analysis: 1. The Petitioners sought to quash the summons issued by the Commissioner of Central Goods and Service Tax Department and prevent coercive action against them. The raid conducted by the Department revealed alleged fraudulent activities by the Company in availing input tax credit. 2. The Petitioner No.1, the Managing Director of the Company, was appointed after the demise of his father. Concerns were raised about his potential arrest if he appeared in response to the Department's notice. 3. The Petitioner argued that he had been a law-abiding citizen, depositing a substantial amount of GST, and expressed concerns about potential damage to his reputation if coercive action was taken. 4. The Petitioner's counsel cited legal precedents to support their argument that the arrest should not be based on whimsical grounds and emphasized the need for credible material before taking such action. 5. The Department opposed the writ petition, highlighting the substantial fraudulent input tax credit claimed by the Petitioner and related concerns. 6. The Department contended that the Petitioner's actions warranted summoning and possible arrest under the relevant sections of the Goods and Services Tax Act. 7. The Court considered various legal judgments and cases cited by both parties, emphasizing the need for proper procedure and evidence before taking coercive actions. 8. The Court noted the substantial amount of fraudulent input tax credit claimed by the Petitioner and related firms, indicating a clear case of wrongdoing. 9. The Court dismissed the Writ Petition, citing the lack of merit in the Petitioner's arguments and the evidence of fraudulent activities by the Company. 10. A cost of ?1,00,000 was imposed on the Petitioners, to be deposited with the Rajasthan High Court Legal Services Authority within four weeks. This detailed analysis covers the issues raised in the judgment, the arguments presented by both parties, the legal precedents cited, and the final decision of the Court.
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