Punjab & Haryana High Court Criticises GST Authorities Over Record Manipulation and Trader Arrest
“The Punjab and Haryana High Court on Friday directed the Chief Judicial Magistrate, Ludhiana to release a trader who was arrested by the Central GST authorities on Thursday in connection with an investigation in a tax evasion case.
“A Bench comprising Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor observed that GST authorities manipulated records and brushed aside pending judicial proceedings in relation to the matter while arresting Kuldeep Goyal of a firm named Ansh Steel Alloys.
“The Court in its order said, “We find the action of the respondents- department to be a brazen act of highhandedness where constitutional safeguards available to a citizen of this country have not been adhered to.”
“It further said that it will recommend initiation of departmental proceedings against Sugrive Meina, Principal Commissioner of CGST, Commissionerate, Ludhiana and Mohmad Saleem, SIO of CGST, Commissionerate, Ludhiana.
“Accordingly, it issued notices to the officers and sought their response as to why disciplinary action should not be initiated against them for their conduct in the matter.
“The order came on a plea filed by Goyal seeking quashing of the arrest memo and authorisation for arrest issued against him.
“The matter is related to a previous plea filed by Goyal’s firm wherein it was accused of claiming bogus Input Tax Credit (ITC) of ₹35 crores by issuing fake invoices and supplying credit to multiple persons.
“In May this year, Ansh Steel Alloys had approached the Court seeking directions to quash the attachment of its bank account done without any show cause notice. In response, the GST authorities had told the Court that Goyal has not been cooperating with the investigation.
“However, Goyal through his counsel informed the Court that all the required documents were provided to the authorities and he even appeared before them multiple times.
“He further informed the Court that on September 22 he again informed the court through his counsel that he would appear before the Adjudicating Authority at 11 am on September 23.
“The Court listed the matter of Ansh Steel Alloys on September 29 and directed the authorities to inform it about the progress made.
On September 23, however, the GST authorities issued summons to Goyal asking him to appear before the authority. He was arrested for allegedly giving away misleading replies. This prompted Goyal to come back to court with a separate plea challenging his arrest.
On September 25, Goyal through his counsel also submitted that he was illegally arrested by the investigating authorities. He was allegedly in their custody since 11 am on September 23 and produced before the Court to be arrested at 4:45 am on September 24.
The counsel for Goyal submitted that both the actions were taken by the GST authorities despite any knowledge of the judicial proceedings that were pending before the Court.
“The bench while passing the order noted this while the petition was being heard on Friday morning.
It said that Goyal was issued summons under Section 70 of the Central Goods and Service Tax Act- to remain present before the authorities on the same day at 12: 05 am, despite the fact that as per the court order he was available before the respondents since 11 am.
“The counsel appearing for the GST authorities informed the Court that there was no stay on Goyal’s arrest and the request for anticipatory bail was already rejected by the Court.
“He added that Goyal was arrested so that he does not indulge into further offences and also to preserve the evidence.
“The Court however wasn’t convinced by the counsel’s submission as it was already dealing with the case.
“Prima facie we find that instead of cooperating with the Court which was seized of the matter, action has been brazenly taken by the authorities despite our order dated 22.09.2021.
“The least that was expected on the part of the authorities was to have apprised the Court of any development and proceed against the petitioner with the leave of the Court particularly when the matter was pending consideration and was specifically listed for 29.09.2021 for the respondents to report back the status of investigation. The undue haste which has been shown by arresting the petitioner at 11: 00 am on 23.09.2021 and show cause him arrested on the next date at 4:45 in the morning, prima facie indicates brazen violation of Article 21 of the Constitution of India,”the Punjab and Haryana High Court said.
“The Bench added that the conduct of the respondents prima facie was an act to overreach the proceedings pending before the High Court. It then went on to summon the two officers. The officer who gave the authorization for arrest as well as the officer who arrested Goyal.
During the afternoon session, when both the officers were present before the Court, the bench made the following observations:
The Court said that they have showed scant respect to the judicial proceedings.
“The Authorities have not only brushed aside the Court’s proceedings but have also manipulated the records in relation to the summons.” The Court added.
“It was found that summons were issued to Goyal at 12: 05 am and the DIN was issued at 12:07 pm.
“The Bench pointed out that “Prima facie we find manipulation in the summons issued whereby the DIN is generated at 12: 07 pm while the summons containing reference of such DIN mention the time of appearance as 12:05 pm. If the time for appearance was 12: 05 pm, then the DIN ought to have been issued sometime prior to 12:05 pm.”
The Bench went on to add that “The reasons for authorising the arrest of the petitioner are wholly misplaced. The petitioner was present before the respondents along with all the record. The petitioner not only agreed to cooperate but was cooperating with the investigation when the respondents arbitrarily and illegally arrested him.
“The authorization to arrest the petitioner does not make any reference to the orders passed by this Court nor to the fact that the petitioner has already appeared before the respondents to assist the investigation.”
“The haste with which the authorization to arrest the petitioner has been signed leaves much to be desired. We otherwise find the action of the respondents to be colorable in nature to overreach the proceedings of this Court.”
Considering all these factors, the Bench ordered for the release of Goyal. However, it was made clear that the release was subject to the final orders passed by the Court on September 29.
Senior Advocate NS Boparai along with Advocates JS Bedi, Aakriti and Umang Goyal appeared for the petitioner.
Senior Standing Counsel Naman Jain appeared for the revenue.
Senior Standing Counsel Sourabh Goel along with Advocate Himanshi Gautam appeared for other respondents.
