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2022 (7) TMI 135 - HC - GST


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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