2025 (12) TMI 1138 - HC - GST

GST s.70 summons for evidence and documents challenged for missing seal and guidelines breaches; petitions dismissed as premature

Summons issued under s.70 CGST Act were challenged as violating departmental guidelines, including absence of the department's seal. The HC held that s.70 ... Challenge to summons issued u/s 70 of the Central Goods and Services Tax Act, 2017 - violation of the guidelines issued by the Respondent from time to time - guidelines issued without having the seal of the office of the Respondent, which is in gross violation of the guidelines - HELD THAT:- As per the Oxford Dictionary of Law (2003), the terms “summons” has been defined as a Court Order to an individual to appear in Court, at a specific place and time. In Armour Security India Limited vs. Commissioner CGST Delhi East Commissionerate [2025 (3) TMI 316 - DELHI HIGH COURT], a writ petition had been filed challenging the summons issued by the CGST authorities, wherein the State GST authorities had already initiated proceedings against the petitioner therein, and the petitioner had averred that it was impermissible for the CGST authorities to commence any proceedings owing to Section 6(2)(b) of the CGST Act. Thus, it emerges that under Section 70 CGST Act, 2017, the officer is empowered 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 Civil Procedure Code, 1908. In terms of Section 70(2), every such inquiry referred to in sub-section (1) of Section 70 shall be deemed to be “judicial proceedings” within the meaning of Section 193 and Section 228 of the Penal Code, 1860. For the purposes of Section 70 CGST Act, a summons is issued primarily for gathering information and for providing an opportunity to produce documents, etc. - Hence, issuance of summons under Section 70 CGST Act cannot be considered to be initiation of proceedings against the Petitioners. In Jatin Gupta [2023 (8) TMI 1352 - DELHI HIGH COURT], Section 69 CGST Act, which pertains to the power to arrest provided under the Act was considered and it was observed that “The legislature in its wisdom has made it mandatory that before affecting the arrest of the accused, the commissioner should have reasons to be believe that a person has committed an offence under Section 132 of the CGST, it further provides that the officer authorized to arrest the person shall inform such person the ground of arrest.” The present Writ Petitions, are premature and liable to be dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether summons issued under Section 70 of the Central Goods and Services Tax Act, 2017, in the course of investigation, are liable to be quashed on the ground that they are allegedly mala fide, premature, or in violation of internal circulars/guidelines (including absence of DIN/seal). 1.2 Whether issuance of summons under Section 70 of the Central Goods and Services Tax Act, 2017 amounts to initiation of 'proceedings' against the noticee or is merely a step in an 'inquiry' for information gathering. 1.3 Whether, at the stage of issuance of summons and pending investigation, the Court should grant protection against coercive action including arrest, or order release of seized goods/documents. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of summons issued under Section 70 CGST Act, 2017 (including alleged violation of circulars/guidelines, absence of DIN/seal, and allegation of mala fides) Legal framework (as discussed) 2.1 Section 70 CGST Act, 2017 empowers the proper officer to summon any person whose attendance is considered necessary 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 Code of Civil Procedure, 1908. Under Section 70(2), such inquiry is deemed to be a 'judicial proceeding' within the meaning of Sections 193 and 228 of the Penal Code, 1860. Interpretation and reasoning 2.2 The Court noted that the purpose of a summons under Section 70 is to secure attendance for giving evidence or producing documents/other things and is an instrumentality of inquiry. 2.3 Relying on the decision in Armour Security India Limited and its affirmation by the Supreme Court, the Court treated a summons as a 'precursor' to possible proceedings and an information-gathering tool, distinct from assessment or adjudicatory steps under Sections 73/74 of the CGST Act. 2.4 The Court further relied on Kuppan Gounder P.G. Natarajan to emphasise that courts should not ordinarily restrain authorities from conducting investigation or proceedings at the stage of summons, as summons only provide an opportunity to the noticee to submit documents and statements, and entertaining writ petitions at such a 'budding stage' would paralyse statutory proceedings. 2.5 As to the complaint that one summon was handwritten, without DIN and seal, and contrary to departmental circulars, the Court accepted the Respondent's explanation that due to technical reasons DIN could not be generated at that time and that this fact was endorsed on the summon itself and acknowledged by the Petitioner. The Court did not treat such defects as rendering the summons void or non est, particularly in the context that the summons formed part of an ongoing investigation and were issued to ensure compliance with procedures relating to seized goods. 2.6 Allegations of 'tax terrorism', mala fide and ill-motive in issuance of summons and conduct of search/seizure were not accepted at this stage. The Court viewed the department's actions as part of an ongoing investigation into alleged clandestine trading and evasion, supported by search, seizure and recovery of goods and records, and requiring further inquiry and confrontation of evidence. Conclusions 2.7 Summons issued under Section 70 CGST Act, 2017 in the course of investigation are valid instruments of inquiry and are not liable to be set aside merely on alleged procedural irregularities (such as absence of DIN/seal in one summon) or on the allegation of mala fides, particularly when such summons serve the purpose of seeking information and ensuring proper handling of seized goods. 2.8 The Court declined to quash or set aside the impugned summons under Section 70 CGST Act, 2017. Issue 2 - Whether issuance of summons under Section 70 constitutes initiation of 'proceedings' against the noticee Legal framework (as discussed) 2.9 Section 70 CGST Act deals with 'Power to summon persons to give evidence and produce documents'. 2.10 The Court considered the interpretation of 'inquiry' in Section 70, as discussed in G.K. Trading Company and Armour Security (High Court and Supreme Court), and its distinction from 'proceedings' under the CGST Act. Interpretation and reasoning 2.11 Referring to G.K. Trading Company, the Court noted that the word 'inquiry' in Section 70 has a special connotation: it is a specific process to summon persons for giving evidence or producing documents, and cannot be intermixed with statutory steps that may precede or follow such inquiry. 'Inquiry' in Section 70 is not synonymous with 'proceedings' under Section 6(2)(b) or other provisions of the CGST framework. 2.12 Relying on Armour Security (as upheld by the Supreme Court), the Court underscored that: - A summons is not the culmination of an investigation but merely a step in its course, intended for information-gathering regarding possible contraventions of law. - At the stage of issuing summons, the Department is yet to determine whether any proceedings for recovery or assessment should be initiated, and such inquiry does not constitute 'proceedings' under the CGST Act. - The 'initiation of any proceedings' under the CGST Act refers specifically to issuance of a show cause notice or other statutory initiation steps, not the mere issuance of a summons. 2.13 The Court concluded that, even where search under Section 67 precedes the summons, the subsequent issuance of summons remains an evidence-gathering step; any further statutory proceedings must be separately and definitively initiated (e.g. by notice under Section 74). Conclusions 2.14 Issuance of summons under Section 70 CGST Act is an element of 'inquiry' for gathering information and does not, by itself, amount to initiation of 'proceedings' against the Petitioners under the CGST Act. 2.15 The challenge to summons on the footing that they represent improper or barred 'proceedings' was rejected. Issue 3 - Entitlement to protection against coercive action/arrest and for release of seized goods/documents at the summons stage Legal framework (as discussed) 2.16 Section 69 CGST Act (power to arrest) and Section 132 CGST Act (offences and classification as cognizable/non-bailable) were adverted to, particularly in the context of the Petitioners' contention that no assessment/liability had been crystallised and that alleged tax evasion had not crossed the statutory threshold. 2.17 The Court referred to Jatin Gupta, which dealt with safeguards under Section 69 CGST Act, noting that before arrest the Commissioner must have 'reasons to believe' that an offence under Section 132 has been committed and that the authorised officer must inform the person of grounds of arrest. Interpretation and reasoning 2.18 The Court observed that, in the present matter, only summons had been issued to the Petitioners and investigations were ongoing. No arrest had yet taken place, and no show cause notice or final determination of liability had been made against them. 2.19 In view of the statutory safeguards embedded in Section 69, the Court held that a mere apprehension of arrest at the investigation stage, consequent upon summons, is insufficient to invoke the extraordinary writ jurisdiction to pre-emptively bar coercive action. 2.20 The Court treated the writ petitions, in substance, as premature attempts to secure anticipatory protection and to interfere with an ongoing investigation premised on search, seizure and alleged clandestine activities, without the investigation having run its course or the statutory machinery having been invoked in full. 2.21 As to the prayer for release of seized goods and documents, the Court noted that the summons themselves were issued, inter alia, to ensure compliance with statutory procedures regarding the seized goods. Interference at this stage would disrupt the statutory process and was therefore not warranted. Conclusions 2.22 The Court declined to grant any blanket protection against coercive action (including arrest) at the stage of issuance of summons and ongoing investigation, holding the writ petitions to be premature. 2.23 The Court also declined to direct release of seized goods/documents at this stage, leaving such matters to be dealt with in accordance with the CGST Act and procedures during or after completion of the inquiry. 2.24 The writ petitions were dismissed as lacking merit and as premature, with liberty to the Petitioners to approach the appropriate forum at the appropriate stage in accordance with law.