2021 (11) TMI 1011 - HC - GST

Request for transfer of files of enquiry to a place of petitioners' choice - seeking grant of copy of statements recorded by respondents in the process of investigation into non-collection of tax for outward supply of rice - Section 67 of the CGST/KGST Act - request of petitioner not considered - principles of natural justice - HELD THAT - While refusing to consider the request of the petitioners, the Proper Officer failed to state any reason. The officer had not mentioned that giving copy of the statements would cause prejudice to the investigation. The request of the petitioners for issuing copies of statements already recorded by the investigating officer, as mentioned earlier was refused to be considered. There is a marked distinction between refusing to consider and rejecting an application for reasons. The Proper Officer ought to have considered the request and either granted copies of the statements or rejected such requests for reasons to be recorded, rather than avoiding consideration of such request. Order XVI of the CPC deals with power to summon witnesses to give evidence or for production of documents. By conferring the power of summoning a witnesses to give evidence or to produce a document as provided in Order XVI of the CPC, the nature or character of the investigation or inquiry being conducted under Chapter XIV of the Act will not be changed. The power to summon or produce a document is distinct from the nature of proceedings conducted. Merely because the source of power to summon witnesses and power to direct production of documents is referable to CPC, that does not alter the nature of investigation or inquiry being conducted. It remains to be an investigation or inquiry. Therefore, the contention raised by the petitioners on the basis of section 70 of the Act is rejected. This Court is of the view that Ext.P10 order is liable to be set aside and the first respondent is directed to reconsider the application of the petitioners for giving a copy of the statements already obtained in the course of investigation and pass fresh orders - Petition allowed.

Summary

Issues:
Petitioners' request for transfer of files and copy of statements not considered by Proper Officer under the Central Goods and Services Tax Act, 2017.

Analysis:
The judgment revolves around four writ petitions filed by tax payers seeking the transfer of files and copies of statements related to an investigation on supply of goods under the Central Goods and Services Tax Act, 2017. The petitioners requested the transfer of files to an officer near their place of business due to the pandemic and copies of statements given by other persons summoned in the enquiry. The Proper Officer refused these requests stating that the case was under investigation and the requests could not be considered. The petitioners argued that transfer of files and providing copies of statements are part of their constitutional rights.

The Proper Officer, through a counter affidavit, claimed that sharing sensitive information during the enquiry stage could harm the investigation. The officer also argued that transferring files as per the petitioners' choice would disrupt the investigative process. During the hearing, the petitioners decided not to press for the transfer of files due to improved pandemic conditions, rendering that claim moot. The court examined Section 67(5) of the CGST/KGST Act, which allows the person from whom documents are seized to make copies unless it affects the investigation adversely.

The court found that the Proper Officer failed to provide reasons for denying the petitioners' request for copies of statements, which is essential for transparency and fairness. It emphasized that reasons for refusal must be clearly stated in the order itself, as per legal precedents. The court also discussed the distinction between documents seized under Section 67(5) and statements given under Section 70 of the Act, highlighting that the power to summon witnesses does not change the nature of the investigation.

Ultimately, the court set aside the order denying the petitioners copies of statements and directed the Proper Officer to reconsider the application. It referenced previous judgments where individuals were entitled to copies of seized documents when relied upon in proceedings. The court allowed three writ petitions in part, dismissing the relief for transfer of files, and closed the fourth petition solely seeking transfer of files.

In conclusion, the judgment emphasizes the importance of providing reasons for decisions, upholding individuals' rights to access relevant information during investigations, and clarifying the legal framework regarding summons and document production under the CGST/KGST Act.