TaxTMI 
TaxTMI 
TaxTMI 
The Hon’ble Chhattisgarh High Court inHarsh Wadhwani Proprietor Vijay Laxmi Trade Company, Santosh Wadhwani Authorised Representative of Vijay Laxmi Trade Company Versus Additional Director General Directorate General of GST Intelligence Raipur, Deputy Commissioner Of State Tax Raipur, Superintendent/ appraiser/senior Intelligence Officer Directorate General Of GST Intelligence Raipur, Joint Commissioner State Tax Division-02, Raipur, Union Of India, State Of Chhattisgarh, Commissioner Of Commercial Tax GST Department Raipur, Principal Commissioner CGST And Central Excise Raipur. - 2025 (10) TMI 1180 - CHHATTISGARH HIGH COURT held that traders facing charges for evasion of taxes in alleged fake Input Tax Credit (“ITC”) claims, be protected from any coercive action as long as they are cooperating with the investigation.
Facts:
M/s. Vijay Laxmi Trade Company, Raipur (Chhattisgarh), (“the Petitioner”) filed a claim of ITC for the Financial Year (“FY”) 2024-25, to which the Additional Director General Directorate General of GST Intelligence, Raipur, (“the Respondent”) issued a notice under Section 70 of the Central Goods and Services Act, 2017(“the CGST Act”), for alleged evasion of taxes by claiming fake ITC. The Respondent also issued summons to the Petitioner with respect to two parties namely, M/s. Taj Enterprises and M/s. Agastya Enterprises (“the Firms”).
Aggrieved, the petitioner filed the present writ petition. The petitioner submitted that they are ready to cooperate in enquiry and record their oral evidence by satisfying all the queries needed by the respondent pertaining to aforesaid two firms. In this light, the petitioner prayed to direct the respondent to not take any coercive steps against the petitioners pertaining to the aforesaid two firms and to withdraw the negative balance/block created in the electronic credit ledger (“ECrL”) of the petitioner.
Issues:
Whether the coercive actions be taken against the accused, in cases where he is willing to cooperate in the fake ITC probe?
Held:
- Directed that, the petitioners shall remain present before the investigation officers whenever required.
- Held that, if the petitioners cooperate in the investigation, the respondent shall not take any coercive steps against the petitioners or associated firms in respect to aforesaid two firms.
Our Comments:
Section 70 of the CGST Act:
Power to summon persons to give evidence and produce documents.––
(1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908). 1(1A) All persons summoned under sub-section (1) shall be bound to attend, either in person or by an authorised representative, as such officer may direct, and the person so appearing shall state the truth during examination or make statements or produce such documents and other things as may be required.
(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceeding” within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).
In a similar case in Nannapaneni Krishnamurth, Madala Vishnu Vardhana Rao Versus State of Andhra Pradesh, CID Police Station, Deputy Superintendent of Police, Assistant Commissioner (ST) - 2021 (5) TMI 599 - ANDHRA PRADESH HIGH COURT, the Hon’ble Andhra Pradesh High Court held no coercive steps will be taken against the petitioners, including arrest, as and when they appear before the Investigating Officer.
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