2022 (3) TMI 627 - HC - GST

Seeking interim protection against an apprehended action of arrest - alleged evasion of GST - HELD THAT - While the petitioners claim to be completely unconnected with the affairs of various companies which are alleged to be involved in GST evasion, according to the respondents, this matter is still under investigation and the presence of these petitioners is necessary to record their statements. It is not found that the issuance of summons to petitioners is without jurisdiction and authority of law. The action initiated by the respondents does not appear to be actuated by any mala fide intention and further taking into consideration the material disclosed during various searches and raids conducted by the respondent authorities involving M/s MPPL and M/s. MPSPL, any interim order cannot be passed in favour of the petitioners, keeping in view that an application for grant of anticipatory bail is not dealt with, but challenge to jurisdiction and authority of respondents in issuing summons under Section 70 of the CGST Act. The stay applications for interim protection are rejected - these two writ petitions be listed for final disposal immediately after two weeks.

Summary

Issues involved:
Interim protection against arrest under Section 70 of the CGST Act based on summons issued by GST authorities in the matter of alleged evasion of GST.

Analysis:
The petitioners sought interim protection against potential arrest following summons issued by the GST authorities in relation to alleged GST evasion by certain companies. The petitioners claimed they had no involvement in the alleged evasion activities and were not connected to the companies under investigation. They argued that the authorities were harassing individuals not directly involved in the evasion. The petitioners cited legal precedents to support their plea for protection against arrest until the petitions were decided by the Court.

The respondents contended that the investigation was based on substantial allegations of tax evasion involving multiple companies, including the ones connected to the petitioners. They highlighted that incriminating documents were seized during searches, indicating the petitioners' involvement in the transactions under scrutiny. The respondents justified the summons issued under Section 70 of the CGST Act as part of the ongoing investigation and emphasized the importance of recording the petitioners' statements.

Upon reviewing the arguments and legal references presented, the Court found that the petitions were filed at an early stage of the investigation when the summons were issued to the petitioners. The Court acknowledged the authority of the respondents to issue the summons under the law during an investigation into significant GST evasion. It noted that the summoning of the petitioners was not arbitrary and was based on collected materials during searches and raids.

The Court observed that while the petitioners claimed no connection to the companies involved in the evasion, the investigation was ongoing, and the presence of the petitioners for statement recording was deemed necessary by the respondents. The Court rejected the petitioners' argument that arrest of the companies' directors precluded action against others, including the petitioners. Additionally, the Court found no merit in the claim that Section 70 proceedings required a final assessment before initiation.

Considering the circumstances and the ongoing investigation, the Court declined to grant interim protection to the petitioners against potential arrest, emphasizing that the case did not concern anticipatory bail but rather challenged the jurisdiction and authority of the respondents in issuing the summons under Section 70 of the CGST Act. The Court rejected the stay applications for interim protection and granted the Union of India two weeks to file a reply, scheduling the final disposal of the writ petitions immediately after the said period.