Facts of the Case

The petitioner, an accountant rendering services to about 122 companies including filing GST returns and invoices for input tax credit, and stated to be 90% physically challenged, was issued a series of summons by the Directorate General of GST Intelligence (DGGI), Hyderabad Zonal Unit, under Section 69 of the CGST Act, 2017, in connection with an investigation into alleged fraudulent availment of input tax credit by around 151 taxpayers. The petitioner had earlier sought anticipatory bail in Crl.P.No.10430 of 2023, which was rejected on 14.11.2023. He thereafter filed the present writ petition seeking to restrain the DGGI from interfering with his liberty and from issuing further summons without following Section 41-A CrPC and the Supreme Court's directions in Arnesh Kumar vs State of Bihar.

Issues Involved

  1. Whether the safeguards under Section 41-A CrPC and Section 438 CrPC apply to a person merely summoned under Section 69(1) of the CGST Act.
  2. Whether repeated summons, in light of the petitioner's physical disability, warranted writ interference.

Petitioner's Arguments

  • As an accountant acting on client instructions, he had no role in the alleged fraudulent availment of input tax credit by the companies he served.
  • Being 90% physically challenged, he could not be expected to manipulate documents to facilitate the fraud, and repeated summons requiring him to wait until late evenings amounted to harassment.
  • Protection under Section 41-A CrPC and the Arnesh Kumar guidelines was warranted.

Respondent's Arguments

  • The writ was effectively an attempt to secure anticipatory bail-type protection after the petitioner's Section 438 CrPC application had already been rejected.
  • Statements of about 18 taxpayers, and specifically of one Shaik Ajmal describing the petitioner as his business partner sharing 50% of the illegal ITC margin, indicated the petitioner was the alleged mastermind of the racket.
  • The petitioner routinely delayed appearance and sought adjournments on varying pretexts, hampering a time-sensitive investigation involving 151 taxpayers.

Court Order-Findings

  • Relying on the Supreme Court's ruling in State of Gujarat vs Choodamani Parameshwaran Iyer, the Court held that Section 438 CrPC cannot be invoked by a person merely summoned under Section 69(1) CGST Act, since no FIR is registered at that stage; the only recourse is Article 226, exercised sparingly.
  • Also relying on Poolpandi vs Superintendent, Central Excise, the Court held that discomfort of interrogation does not by itself justify writ interference.
  • Found no strong case to restrain the summons, given the scale and stage of the investigation.
  • Considering the petitioner's physical disability, directed that he be called for investigation only on Mondays and Fridays during office hours, and directed him to render full cooperation.
  • Writ petition disposed of without costs; connected miscellaneous petitions closed.

Important Clarification

  • A person merely summoned under Section 69(1) of the CGST Act cannot invoke Section 438 CrPC for anticipatory bail, since no FIR precedes such a summons; the only available remedy against apprehended coercive action is a writ under Article 226, which courts exercise sparingly and will not ordinarily use to restrain a bona fide statutory investigation.

Sections Involved

  • Section 69, CGST Act, 2017 — power to arrest in specified offences.
  • Section 41-A, Cr.P.C. — notice of appearance before arrest.
  • Section 438, Cr.P.C. — anticipatory bail, held inapplicable at the summons stage.

Decision-In Favour of

Department, in substance — the challenge to the summons was rejected and the investigation permitted to continue, though the Court granted the petitioner limited procedural accommodation (Monday/Friday appearance) given his disability. This is not a clean win for the assessee.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: WP No.34106 of 2023
  • CNR: Not available
  • Coram: Hon'ble Sri Justice P. Sam Koshy and Hon'ble Sri Justice N. Tukaramji
  • Decision Date: 19-12-2023

Link to Download the Order

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