2022 (2) TMI 1000 - HC - GST

Zonal jurisdiction of inquiry investigation - transfer of such inquiry/investigation from Ghaziabad Regional Unit to Respondent No. 2 - territorial jurisdiction of the proceedings being carried out by the Respondent No. 3 - fake and fraudulent input tax credit - creation of numerous fake firms - HELD THAT - It is trite law that at the stage of show cause notice, summons, chargesheet or notice to appear, constitutional courts would not interfere as to interject the proceedings and thereby, prevent the authorities from proceeding with. Perusal of the various provisions of CGST Act which have been discussed in various judgments time and again demonstrate that the summons for appearance issued under Section 70 of the CGST Act and the authorization for arrest issued under Section 69 (1) of the CGST Act, do not fall within the ambit of the definition of Criminal Proceedings , because criminal proceeding commences, only after the launch of prosecution. It is pertinent to mention that Section 132 (1) of CGST Act lists out about twelve different types of offences under Clauses (a) to (l) and five out of these twelve offences are cognizable and non-bailable in view of Section 132 (5) of CGST Act and the remaining seven offences are non-cognizable and bailable in view of Section 132(4) of the CGST Act. Jurisdiction - HELD THAT - In exercise of its jurisdiction under Section 482 Cr.P.C. cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed question of facts. The issues involving facts raised by the petitioner by way of defence is a matter of investigation/inquiry and the same will have to be adjudicated on merits of the case and not by way of invoking jurisdiction under Section 482 Cr.P.C. at this stage - The parameters of the jurisdiction of the High Court in exercising jurisdiction under Section 482 Cr.P.C, are now almost well-settled. Although it has wide amplitude, but a great deal of caution is also required in its exercise. The requirement is the application of well-known legal principles involved in each and every matter adverting back the facts of the present case, this Court does not find any material on record which can be stated to be of sterling and impeccable quality warranting invocation of the jurisdiction of this Court under Section 482 Cr.P.C. at this stage of issuance of summons. More so, the defence raised by the petitioners in the petition requires evidence, which cannot be appreciated, evaluated or adjudged in the proceedings under Section 482 of Cr.P.C. Keeping in view the fact that the investigation is still at a nascent stage and that the present case involves fraud of ₹ 350 crores approximately and around 200 firms are involved in placing fraudulent Input Tax Credit coupled with the fact that one Upender Singh, a bank official at ICICI Bank, Kamla Nagar, has levelled specific allegations against the petitioner and has stated that at the behest of the petitioner and his father, he had opened accounts for these 200 firms without physical verification and further, looking into the conduct of the petitioner, the petitioner is not entitled to any relief from this court - there are no flaw or infirmity in the territorial jurisdiction of the proceedings being carried out by the Respondent No. 3. Petition dismissed.

Issues Involved:
1. Quashing of the action by Respondent No. 3 due to alleged jurisdictional overreach.
2. Transfer of inquiry/investigation to Delhi jurisdiction.
3. Territorial jurisdiction over the proceedings.
4. Quashing of summons issued against the petitioner.
5. Directions for audio/video recording of proceedings in the presence of the petitioner’s lawyer.

Issue-wise Detailed Analysis:

1. Quashing of the Action by Respondent No. 3 Due to Alleged Jurisdictional Overreach:
The petitioner sought to quash the actions of Respondent No. 3, alleging that the inquiry was beyond its zonal jurisdiction. The court noted that the allegations against the petitioner involved the creation of numerous fake firms and fraudulent Input Tax Credit (ITC) claims amounting to ?350 crores. The court found that the investigation was at a nascent stage and involved multiple jurisdictions, including Ghaziabad and Noida. The court held that the jurisdictional challenge was baseless and without merit, emphasizing that the investigation's complexity justified the involvement of multiple jurisdictions.

2. Transfer of Inquiry/Investigation to Delhi Jurisdiction:
The petitioner alternatively requested the transfer of the investigation to Delhi. The court observed that the firms involved were not solely based in Delhi but also in Ghaziabad and Noida. It was noted that the petitioner's factory was situated in Ghaziabad, which provided a valid basis for the jurisdiction of Respondent No. 3. The court held that the transfer of the investigation was unwarranted, given the multi-jurisdictional nature of the case.

3. Territorial Jurisdiction Over the Proceedings:
The petitioner argued that the territorial jurisdiction for the proceedings should be vested with the courts at Delhi. The court referred to the Notification No. 14/2017, which conferred all-India jurisdiction on officers of the Directorate General of GST Intelligence (DGGI). The court concluded that the territorial jurisdiction of the proceedings being carried out by Respondent No. 3 at the Ghaziabad Regional Unit was valid and found no flaw or infirmity in this regard.

4. Quashing of Summons Issued Against the Petitioner:
The petitioner sought to quash the summons dated 02.02.2022 and 07.02.2022, alleging malice and lack of substantive evidence. The court noted that the investigation was ongoing and that the summons were part of the inquiry process. It was emphasized that the court could not interfere with the investigation at this stage by granting protection to the petitioner. The court held that the issuance of summons under Section 70 of the CGST Act was justified and did not warrant quashing.

5. Directions for Audio/Video Recording of Proceedings in the Presence of the Petitioner’s Lawyer:
The petitioner requested that all proceedings, including the recording of statements, be audio/video-graphed in the presence of the petitioner’s lawyer at a visible distance. The court referred to precedents where such relief was granted under special circumstances where there was a real and live apprehension of coercion. In this case, the court found no reasonable basis for the petitioner’s apprehension of coercion by the respondents. It was held that the relief sought was untenable in law and could not be granted as a matter of right.

Conclusion:
The petition was dismissed, and no grounds were found for quashing the actions of the respondents or the summons issued against the petitioner. The court upheld the territorial jurisdiction of the proceedings at the Ghaziabad Regional Unit and denied the request for audio/video recording of the proceedings in the presence of the petitioner’s lawyer. The court emphasized that the investigation was at a nascent stage and involved serious allegations of fraud, justifying the ongoing inquiry and the actions taken by the respondents.

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