2021 (2) TMI 688 - HC - GST

Summon Order - Initiation of inquiry under section 70 of the CGST Act, 2017 - petitioners allege that they are co-operating with the CGST Authorities in the inquiry yet, they are being harassed being summoned to New Delhi and kept waiting for hours amidst the pandemic - HELD THAT - It appears from the writ petition that a summons was issued under section 70 of the CGST Act to the petitioners on 7th December, 2020. A list of twelve documents have been provided to be produced by the petitioners. The said summons directed the petitioners to be present before the concerned officer on 16th December, 2020. The petitioners say that the petitioners had appeared before the concerned officer and produced the documents as enumerated in Annexure-A to the said summons. A further summons has been issued under section 70 of the CGST Act on 7th January, 2021. After going through the two lists, it appears that the documents are not in common and as such, a presumption is there that the documents which were asked to be produced by the summons dated 7th December, 2020 has been produced by the petitioner and only after considering the same further documents as mentioned in the summons dated 7th January, 2021 have been directed to be produced. It cannot be, therefore, at this stage, said that the petitioners are not co-operating in the inquiry - the learned advocate for the respondent nos. 3, 7 and 10 is, therefore directed to take instruction as to the basic documents apart from those already produced and asked to be produced which the officer concerned holding the inquiry under section 70 of CGST Act requires for the present to be produced by the petitioners for the inquiry. The Court requires this information for passing an appropriate order in the writ petition. Let this matter appear on 18th January, 2021, when the learned advocate for the respondent nos. 3, 7 and 10 shall apprise the Court about the list of the documents as stated herein.

Summary

Issues:
Challenge of action under section 70 of CGST Act by petitioners, dispute over tax rate (5% vs. 18%), allegations of harassment during inquiry, cooperation of petitioners, issuance of summonses, production of documents, need to minimize personal appearance during pandemic.

Analysis:
The judgment concerns a writ petition where the petitioners contested the actions taken by the Central Goods and Services Tax Authorities (CGST Authorities) under section 70 of the Central Goods and Services Tax Act, 2017. The petitioners, a flour mill engaged in composite supply for the Public Distribution System (PDS) in West Bengal, claimed a tax liability of 5%, while the CGST Authorities asserted it to be 18%. The CGST Authorities initiated an inquiry under section 70, alleging non-cooperation by the petitioners, who refuted the claim, stating they were being harassed during the process, especially in light of the ongoing pandemic.

The State argued that regardless of the perspective adopted for scrutinizing the transaction, the maximum tax rate applicable should be 5% as per the State GST levied. They emphasized the necessity for the petitioners to cooperate in the inquiry process. The court noted the issuance of summonses on two occasions, with different sets of documents to be produced by the petitioners. However, it observed that the documents requested were not entirely overlapping, indicating that the petitioners had complied with the first set of requirements and were now directed to produce additional documents.

Given the current circumstances of the pandemic, the court deliberated on the possibility of minimizing the personal appearance of one of the petitioners by initially focusing on document production. It directed the advocate for the respondents to ascertain the essential documents required by the inquiry officer under section 70 of the CGST Act, apart from those already submitted or requested, to facilitate a well-informed decision by the court. The matter was scheduled for further consideration on 18th January, 2021, for the respondents' advocate to provide the necessary information regarding the required documents for the ongoing inquiry.