Facts of the Case

  • The appellant, Monmohan Harlalka, challenged the action initiated by the Directorate General of GST Intelligence (DGGI) involving the repeated issuance of summonses for the exact same reasons.
  • The first summon was issued on June 21, 2021, directing the appellant to appear on June 25, 2021, to produce relevant documents and record oral/written statements. The appellant fully complied, appeared, and his statement was recorded.
  • After a prolonged gap of a year with no development, a second summon was issued on June 20, 2022, for the same reasons, for which the appellant sought an adjournment via email.
  • Subsequently, a third summon was issued on June 24, 2022, and a fourth summon on June 27, 2022.
  • The appellant submitted a representation on July 4, 2022, stating that he had already complied with the initial investigation in 2021 and argued that issuing multiple, vague summonses without specifying clear reasons amounted to harassment.
  • The Single Judge dismissed the initial writ petition (WPA No. 18077 of 2022) on August 24, 2022, leading the appellant to file this intra-court appeal (MAT 1516 of 2022) before the Division Bench.

Issues Involved

  • Whether the GST department is legally justified in issuing multiple, sequential summonses to a taxpayer for the exact same reason without clarifying the fresh grounds or the specific purpose of the continued appearance.
  • Whether the repeated issuance of vague summonses under the CGST Act, 2017, after the taxpayer has already fully complied and recorded a statement, constitutes unjustifiable harassment.

Petitioner’s Arguments

  • The appellant argued that he had consistently demonstrated complete cooperation with the authorities by appearing and providing written submissions during the initial summon in June 2021.
  • It was strongly contended that the subsequent chain of summonses lacked transparency, as the department failed to specify what fresh clarifications or documents were required.
  • The appellant asserted that the continuous issuance of identical summonses for the same old cause of action was highly oppressive and resulted in procedural harassment.

Respondent’s Arguments

  • The revenue department maintained that the investigation was ongoing and that the issuance of further summonses was necessary to unearth complete facts.
  • The respondents argued that the authorities possess the statutory power to call upon the person as many times as required to gather additional details or verify fresh materials discovered during the probe.

Court Order / Findings

  • The Division Bench, comprising Hon'ble Justice T.S. Sivagnanam and Hon'ble Justice Hiranmay Bhattacharyya, observed that the appellant had already duly responded to the first summon and provided his written submissions.
  • The Court explicitly ruled that the practice of issuing multiple, repetitive summonses for the exact same reason without specifying the exact purpose is not appreciated and cannot be sustained.
  • Consequently, the High Court allowed the appeal and set aside the order passed by the Single Judge.
  • The Court disposed of the writ petition by directing the GST authority to issue a fresh, clear notice specifying the exact purpose and grounds for which the appellant’s appearance is required, taking into account the statements already recorded on June 25, 2021. The appellant was directed to cooperate once such a specific notice is served.

Important Clarification

  • Procedural Safeguards Against Vague Summonses: The ruling clarifies that while the GST department holds the power to summon individuals for deeper investigation, they cannot use Section 70 as a tool for open-ended harassment. If a statement has already been recorded, any subsequent notice or summon must clearly state the specific purpose or fresh materials for which the taxpayer's presence is required.

Sections Involved

  • Section 70 of the Central Goods and Services Tax (CGST) Act, 2017 (Power to summon persons to give evidence and produce documents).
  • Letters Patent / Appellate Rules (Relating to Intra-Court Appeals: MAT 1516 of 2022).

Link to download the order - https://mytaxexpert.co.in/uploads/1783153790_825compressed.pdf

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