2026 (2) TMI 108 - HC - GST

GST inquiry summons and evidence gathering distinguished from initiation of proceedings; anticipatory relief at investigatory stage denied and writ dismissed.

Summons issued for recording statements and producing invoices during a GST search were treated as an inquiry-stage evidence-gathering step, not the ... Summons u/s 70 as an inquiry and not the initiation of proceedings - Inherent safeguards and procedure for arrest u/s 69 - Anticipatory bail where apprehension of arrest exists - Distinction between evidence-gathering post-search and assessment/proceedings - HELD THAT:- It is submitted that all the transactions carried out by the Petitioners, are duly backed by relevant tax Invoices for which payments were made through banking channels only. It is claimed that the fraud committed in this case, is of an extraordinary nature, characterized by a persistent and ongoing practice of fraudulent evasion of Goods and Services Tax. This type of fraud transcends ordinary offenses and poses a significant threat to the integrity of the GST system. Furthermore, the Petitioner is derailing the investigation by not cooperating with the investigating authorities. Therefore, the recourse to present Writ Petition is improper, as the Petitioner has not approached the Court with clean hands. It is explained that the date of appearance was inadvertently mentioned as 03.05.2024 in the Summons dated 06.05.2024, and thus a fresh Summons dated 20.05.2024 had been issued to him. Further, the Petitioner did not comply with the said summons; instead issued an email dated 24.05.2024, attaching some Tax Invoices issued for a different month. In any case, the Summons dated 06.05.2024, 20.05.2024 and 28.05.2024 have all been issued for taking the statement of the Petitioners, and seeking the production of documents/ invoices against the goods seized during the search procedure conducted. There is no illegality in the said Summons to this extent, and the Respondent has acted well within its powers. Further, the Petitioner No. 2 has been released on bail vide Order dated 27.05.2024. Seeking setting aside of Summons, is essentially seeking interim protection or an anticipatory bail, during an inquiry stage, i.e. essentially at a stage when the Respondent is collecting information and evidence based on suspicion and cannot be equated with the initiation of proceedings, as discussed above. In view of the same, the present Writ Petition, is premature and liable to be dismissed. However, the Petitioners would be at liberty to approach the appropriate forum at the appropriate stage. Thus, this Court finds no merit in the Writ Petition which is dismissed in the aforesaid terms. Issues: (i) Whether the summons issued under Section 70 of the CGST Act, 2017 (challenged summons dated 06.05.2024, 20.05.2024 and 28.05.2024) are illegal and liable to be set aside; (ii) Whether the Court should direct release of papers/documents/goods seized on 23.03.2024 and restrain the respondent from detaining the petitioners in odd hours.Analysis: The Court analysed statutory scheme and precedents holding that a summons under Section 70 is a tool of inquiry to collect information and is not the initiation of proceedings for recovery; searches under Section 67 may lead to evidence which the Department may thereafter decide to act upon under assessment provisions. The Court noted safeguards in Section 69 concerning arrest and referred to authorities clarifying that anticipatory bail may be considered where apprehension of arrest is clear. The Court examined the facts including alleged procedural deficiencies in the panchnama and the respondents' account of materials seized and statements recorded, and concluded that summons were issued for recording statements and production of documents arising from search and investigation and were within the Department's powers. The petition was held to be premature to seek reliefs amounting to anticipatory bail or stay of investigative steps, and the petitioners were granted liberty to pursue appropriate remedies at the appropriate stage.Conclusion: The writ petition challenging the summons and seeking release of seized papers/goods and restraint on detention is dismissed. The Court found no illegality in issuance of the summons and declined to grant interim protection; the decision is against the petitioners and in favour of the Revenue.