Facts of the Case

Rakesh Janghu, proprietor of M/s Believe Solution Services, filed a writ petition before the High Court of Punjab and Haryana at Chandigarh under Articles 226/227 of the Constitution, seeking to quash inquiry proceedings initiated by the CGST authorities under the Central Goods and Services Tax Act, 2017, and to have the investigation concluded. He was aggrieved by eight successive summonses issued under Section 70 of the Act between 23.06.2020 and 02.08.2022, all on the same cause of action, concerning services rendered to SHKM Government Medical College, Nuh, and Bhagat Phool Singh Government Medical College, Khanpur Kalan, Sonipat, which he believed were exempt from GST. The department's case was that GST had initially not been charged on these services; statements of college officials were recorded under Section 70 on 29.09.2020; the petitioner subsequently began charging GST and raising demands from the colleges but did not furnish proper details, necessitating further summonses. The petitioner had deposited Rs.5 crore with the department under protest and had appeared and furnished documents pursuant to earlier court directions dated 09.03.2023, 28.07.2023 and 05.09.2023, with his last appearance recorded on 28.09.2023.

Issues Involved

  1. Whether repeated issuance of summons under Section 70 of the CGST Act, over more than two years on the same cause of action, was permissible once the petitioner had already appeared, deposited money under protest, and furnished the required documents and statements.
  2. Whether the inquiry proceedings could be directed to be concluded by the Court.

Petitioner's Arguments

  • Had been consistently appearing before the department pursuant to the investigation and providing the documents and information sought.
  • Believed in good faith, based on his knowledge and belief, that the services rendered to the government medical colleges were exempt from GST.
  • The repeated summonses (eight in all) on the same cause of action amounted to unwarranted harassment, and the inquiry ought to be concluded.

Respondent's Arguments

  • Services were rendered by the petitioner's firm to two government medical colleges, and statements of college officials recorded under Section 70 on 29.09.2020 revealed that GST had not been charged on these services, warranting further inquiry.
  • The petitioner subsequently started charging GST and raising demands from the colleges but was not submitting proper details, so continued summons and investigation were necessary.

Court Order/Findings

  • Having regard to the fact that the petitioner had deposited Rs.5 crore under protest, appeared multiple times, and furnished the necessary documents and details as directed by earlier court orders, the Court held that the purpose of summoning the petitioner for the inquiry stood satisfied, and Section 70 of the CGST Act cannot be used to enforce a taxpayer's presence for all time, particularly where sufficient departmental records from the two government institutions were already available.
  • The writ petition was disposed of with these observations; no useful purpose would be served by further summoning the petitioner in pursuance of the summons already issued.
  • Liberty was reserved to the respondents to proceed in accordance with law, including issuance of a show cause notice if required, based on the material and statements already gathered.

Important Clarification

Section 70 of the CGST Act empowers the department to summon a person for inquiry, but this power cannot be exercised repeatedly and indefinitely on the same cause of action once the summoned person has cooperated, appeared and furnished the required material. Courts will curtail further summons in such circumstances, while preserving the department's liberty to issue a show cause notice based on material already collected.

Sections Involved

  • Section 70 of the CGST Act, 2017 — power to summon persons to give evidence and produce documents in an inquiry.
  • Sections 73/74 of the CGST Act, 2017 — demand provisions under which a subsequent show cause notice may be issued, liberty for which was reserved to the Department.

Decision – In Favour of

The decision is in favour of the Assessee to the extent that further repetitive summons under Section 70 were curtailed and the inquiry was held to have served its purpose. However, liberty was reserved to the Department to issue a show cause notice on the material already gathered, and no finding was made on the underlying GST exemption or demand, so the disposal is best described as favouring the Assessee procedurally while leaving the substantive tax question open.

Related Case Laws

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

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case No.: CWP-27780-2022
  • CNR: 2023:PHHC:136073-DB
  • Coram: Hon'ble Mr. Justice G.S. Sandhawalia and Hon'ble Ms. Justice Harpreet Kaur Jeewan
  • Decision Date: 18 October 2023
  • Disposal Nature: Disposed of with observations; inquiry effectively concluded

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.