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P&H High Court Quashes Summons in GST Inquiry: Explains Scope & Use of S. 70 of CGST Act

Introduction

In the case of Rakesh Janghu v. Union of India[i], the Hon’ble Punjab & Haryana High Court (‘the Court’) disposed of a writ petition filed by the petitioner under a. 226/227 of the Constitution of India. The petitioner sought quashing of inquiry proceedings initiated under the Central Goods & Services Tax Act, 2017 (‘CGST Act’) concerning multiple summons issued by the respondents. The Court’s decision in this case involves a nuanced examination of various aspects addressing the petitioner’s cooperation, sufficiency of documents furnished, and the appropriateness of utilizing s. 70 of the CGST Act for ongoing enforcement. The resultant directive provides insight into judicial perspectives on concluding GST inquiries and balancing individual rights and investigative requirements.


Facts of the Case

  • The petitioner, in this case, filed a writ petition under a. 226/227 of the Constitution of India, challenging the inquiry proceedings initiated against him by the respondents under the CGST Act. The petitioner was aggrieved by the issuance of multiple summons under s. 70 of the CGST Act, all related to the same cause of action.

  • The petitioner contended that he had consistently appeared before the respondents during the investigation, asserting that as per his knowledge and belief, the services provided to the government medical college in question, were exempted from the provisions of GST.

  • On the other hand, the respondents argued that the services were not only provided to one government medical college but also to two hospital-cum-medical colleges in Haryana. It was contended that GST was not charged and that there were issues with GST compliance by the petitioner’s firm, M/s Believe Solution Services. The respondents argued that further investigation was necessary due to the petitioner’s alleged non-compliance and inadequate submission of details.


Held

  • The Court quashed the summons and noted that the petitioner had been cooperating with the investigation, and various directions had been issued in previous orders. Further, the petitioner had deposited Rs. 5 crores with the department under protest, provided necessary details, and appeared before the competent authority as required. The Court observed that the purpose of summoning the petitioner for the inquiry appeared to be satisfied and that it was now for the respondents to proceed further in accordance with the law.

  • Finally, the Court held that the provisions of s. 70 of the CGST Act could not be continued to be used indefinitely for enforcing the presence of the petitioner. Given the circumstances and the availability of sufficient records from the concerned government institutions, the Court concluded that no useful purpose would be served by calling the petitioner in response to further summons under s. 70 of the CGST Act. The Court disposed of the writ petition with the observation that the respondents were at liberty to proceed in accordance with the law, including the issuance of a show cause notice if deemed necessary, and to continue further based on the material already gathered and statements recorded from officials.


Analysis

The decision exhibits a thorough examination of the petitioner’s plea to quash inquiry proceedings under the CGST Act. Acknowledging the petitioner’s consistent cooperation and proactive engagement in the investigative process, the Court scrutinized the necessity and fairness of multiple summons issued on the same cause of action. The decision expresses concern about the continued use of s. 70 of the CGST Act for enforcing the petitioner’s presence indefinitely.


In conclusion, by disposing of the writ petition with specific observations, the Court strikes a balance between granting liberty to the respondents to proceed in accordance with the law while signalling a commitment to preventing undue harassment and ensuring a fair and efficient investigative process.


End Note


[i] [2023] 157 taxmann.com 12 (Punjab & Haryana)


Authored by Prashant Singh, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.

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