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2022 (7) TMI 135 - HC - GSTValidity of simultaneous raids and search - action of respondent Nos.2 to 9 in harassing, manhandling and assaulting petitioner Nos.2 to 4 purportedly conducted in furtherance of inquiry proceedings - seeking direction to transfer of conduct of enquiry F.No.574/CE/198/2019/INV initiated against 1st petitioner to 10th respondent or any other unit/wing established under the CGST Act - compliance with the principles of natural justice - HELD THAT - Regarding manhandling and assaulting the directions issued in the earlier order 2020 (11) TMI 269 - TELANGANA HIGH COURT observed. In the context of extreme bitterness between the parties as recorded by this Court in its order dated 06.11.2020, the apprehension of arrest expressed by the petitioners cannot be brushed aside. However respondents in their counter affidavit has made a categorical statement that there is no question of causing arrest of the petitioners since respondents are primarily concerned with recovery of revenue. That apart, it is the clear stand of the respondents that as on today, alleged GST evasion of the petitioners would be to the tune of approximately Rs.9.00 crores. From the affidavits filed by the respondents it is evident that investigation is on. Petitioners being taxable persons under GST are required to cooperate with the investigation which the petitioners state they are cooperating, though disputed by the respondents. While the respondents are empowered to investigate alleged GST evasion, however such investigation cannot be for an indefinite period. At one point of time it has to come to an end, whereafter if the materials/evidence demands, appropriate order is required to be passed by the adjudicating authority. That stage is yet to be reached. Even assuming that Rs.9.00 crores may be adjudicated as the GST not paid or evaded by petitioners, petitioners have the right to file appeal under Section 107(1) of the CGST Act and under Section 107(6) of the CGST Act if the petitioners deposit 10 per cent of the disputed tax, its appeal would be admitted for adjudication. This is a right provided by the statute. As against the alleged GST evasion of Rs.9.00 crores, petitioners have paid till date Rs.4.10 crores which is much higher than the statutory requirement of depositing 10 per cent in the event of filing of appeal. In view of the above admitted facts, while petitioners shall cooperate with the investigation and shall respond to any summons that may be issued by the respondents, the interim order passed by this Court on 04.03.2022 that no coercive steps should be taken by the respondents in the course of investigation shall continue till conclusion of the investigation - Petition disposed off.
Issues Involved:
1. Legality of the penal provisions under Section 69 of the CGST Act, 2017. 2. Apprehension of arrest of the directors/employees/agents of the petitioner company. 3. Alleged physical assault by GST officials during the search operations. 4. Compliance with the previous court order dated 06.11.2020. 5. Cooperation of the petitioners with the ongoing investigation. 6. Determination of GST evasion and deposit of the disputed amount. Issue-wise Detailed Analysis: 1. Legality of the Penal Provisions under Section 69 of the CGST Act, 2017: The petitioners sought a declaration that the respondents' action in resorting to penal provisions, including Section 69 of the CGST Act, 2017, was illegal, arbitrary, and unconstitutional. This was in relation to the search conducted on the premises of Petitioner No.1 on 11.12.2019 and subsequent summons issued on 24.02.2022. 2. Apprehension of Arrest of the Directors/Employees/Agents of the Petitioner Company: The petitioners requested the court to direct the respondents not to arrest any directors, employees, or agents of Petitioner No.1, including Petitioners No.2 to 4. The respondents, in their counter affidavit, stated that there was no proposal for the arrest of the petitioners and that the primary objective was to recover legitimate government revenue from tax evaders. The court noted that the investigation was ongoing and that the petitioners were required to cooperate. 3. Alleged Physical Assault by GST Officials During the Search Operations: The petitioners alleged that during the search operations on 11.12.2019, GST officials physically assaulted Petitioners No.2 and 3. The court previously addressed this issue in W.P.No.28268 of 2019, where it was noted that there were conflicting versions of the events, but prima facie evidence suggested the possibility of violence. The court had issued directions to ensure no acts of violence or torture were used against the petitioners. 4. Compliance with the Previous Court Order Dated 06.11.2020: The court's order dated 06.11.2020, which had attained finality, directed that the respondents should not use violence against the petitioners, and that the investigation should be transferred to another official. The court reiterated these directions and noted that the respondents had accepted the order. 5. Cooperation of the Petitioners with the Ongoing Investigation: The respondents alleged that the petitioners were not cooperating with the investigation. However, the petitioners contended that they had been cooperating and had deposited Rs.4.10 crores to show their bona fides. The court emphasized that the investigation could not be indefinite and that the petitioners were required to cooperate with the investigation. 6. Determination of GST Evasion and Deposit of the Disputed Amount: The respondents claimed that the investigation revealed GST evasion of approximately Rs.9.00 crores. The petitioners had deposited Rs.4.10 crores, which was more than the statutory requirement of 10% of the disputed tax for filing an appeal under Section 107(6) of the CGST Act. The court noted that this deposit was made without admitting any further liability and cited the Supreme Court's interim order in a similar case, which granted protection subject to a 10% deposit of the disputed amount. Conclusion: The court disposed of the writ petition with the direction that the petitioners should continue to cooperate with the investigation and respond to any summons issued by the respondents. The interim order that no coercive steps should be taken against the petitioners during the investigation was to continue until the conclusion of the investigation. The court's decision was influenced by the past history between the parties and the finality of the order dated 06.11.2020. No costs were awarded, and any pending miscellaneous applications were closed.
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