Delhi High Court ruled that GST summons under Section 70 cannot be routinely challenged through writ jurisdiction, holding they are investigative tools, not adjudication. Justice Neena Bansal Krishna stressed safeguarding liberty while permitting robust investigation of serious economic offences.
NEW DELHI: The Delhi High Court clarifies that GST summons cannot be routinely challenged through writ jurisdiction. While safeguarding liberty through statutory and constitutional checks, the Court emphasised that economic offences require effective investigation without premature interference.
Justice Neena Bansal Krishna held that summons are merely a step in inquiry, not adjudication or recovery proceedings. While safeguarding liberty through statutory and constitutional checks, the Court emphasised that economic offences require effective investigation without premature interference.
Factual Background of the Case:
The petitioners, Naveen and Suraj Kumar, are real brothers engaged in the trading of Udaan brand biri through a proprietary concern, M/s Aarti Traders. Naveen, a person with disability, is the registered proprietor, while Suraj assisted in marketing and logistics. The petitioners claimed regular filing of GST returns and compliance with statutory obligations.
On 22–23 March 2024, the DGGI conducted search and seizure operations under Section 67(2) CGST Act at the petitioners’ premises and connected locations, including transporters and the Old Delhi Railway Station parcel office. Documents, mobile phones, and allegedly non-duty-paid biri were seized.
Summons under Section 70 CGST Act were thereafter issued to both petitioners. Suraj Kumar was arrested during investigation and later released on bail by the Sessions Court. Naveen challenged subsequent summons dated 20 May 2024, alleging mechanical issuance, procedural irregularities, illegal detention, and violation of departmental circulars relating to DIN and summons protocol
Arguments of Parties:
The petitioners contended that the summons and investigation suffered from mala fides, procedural illegality, and abuse of power, raising the following arguments:
- The summons allegedly violated Circular No. 128/47/2019-GST and Circular No. 122/41/2019-GST, which mandate issuance of summons with DIN and discourage mechanical or repetitive summons. Documents without DIN, it was argued, are deemed invalid.
- Suraj Kumar was allegedly detained till late night hours and coerced into signing statements, contrary to safeguards under criminal jurisprudence and investigative guidelines.
- Relying on MakeMyTrip v. Union of India (Delhi HC) and Cleartrip Pvt. Ltd. v. Union of India (Bombay HC), it was argued that arrest should not precede assessment or adjudication. Similar principles were cited from Jayachandran Alloys v. Superintendent of GST (Madras HC) and Akhil Krishnan Maggu v. DGGI (P&H HC).
- Interim protection granted in similar matters by the Delhi High Court and bail orders of the Supreme Court in Ashwani Oberoi v. State of Haryana and Suraj Vijay Agarwal v. State of Maharashtra were invoked to claim parity.
- Placing reliance on Radhika Agarwal v. Union of India, the petitioners asserted that arbitrary summons and prior arrest of Suraj created a reasonable apprehension of arrest justifying writ protection.
The DGGI opposed the writ petition, asserting that:
Summons under Section 70 are investigative tools and do not amount to initiation of proceedings or determination of liability.
- The investigation revealed a well-organised clandestine trading network involving biri worth over Rs 39 crore, transported through misdeclaration and hawala channels.
- Both petitioners had tendered statements admitting to procurement without tax invoices, and the petitioner had deposited tax via DRC-03, amounting to an admission.
- Reliance was placed on Jatin Gupta v. DGGI (Delhi HC) and Tarun Kumar v. Directorate of Enforcement (Supreme Court), holding that courts should not interfere when investigation is ongoing, particularly in economic offences by observing that there are inherent safeguards in Section 69 prior to the affecting arrest of the accused persons.
- Arrest powers are hedged with safeguards such as “reasons to believe” and communication of grounds of arrest, rendering apprehensions speculative.
- The Respondent contended that the alleged GST evasion reflects a systematic and continuous pattern of fraud, far exceeding routine tax violations and posing a serious risk to the GST framework. It was further asserted that the Petitioner has obstructed the investigation through non-cooperation and has therefore approached the Court without bona fides. Reliance was placed on State of Gujarat v. Choodamani Parmeshwaran Iyer (2023 INSC 972), holding that anticipatory bail is impermissible at the summons stage, and on Tarun Kumar v. Assistant Director, Directorate of Enforcement (2023 INSC 1006), wherein economic offences were recognised as requiring stricter judicial scrutiny.
Observations of Court:
- Nature of Summons Under Section 70 CGST Act:
The Court held that summons are merely a step in inquiry, not adjudication or recovery proceedings. Relying heavily on Armour Security (India) Ltd. v. Commissioner CGST (Delhi HC) and its affirmation by the Supreme Court, the Court reiterated that summons are intended to gather information and cannot be equated with initiation of proceedings under Sections 73 or 74 CGST Act.
In Armour Security (India) Ltd, it was held that-
“A summons is not the culmination of an investigation, but merely a step in its course. It is in this context that the legislature has used the term “inquiry” in Section 70, as at the stage of issuing a summons, the Department is primarily engaged in gathering information regarding a possible contravention of law, which may subsequently form the basis for proceedings against an assessee.”
The Court also relied on G.K. Trading Company v. Union of India (Allahabad HC), which clarified that the term “inquiry” in Section 70 is distinct from “proceedings” under the Act.
- Arrest Safeguards and Article 21:
Addressing apprehension of arrest, the Court referred to Section 69 CGST Act, which mandates “reasons to believe” before arrest. The judgment placed reliance on the Supreme Court’s final ruling in Radhika Agarwal v. Union of India, holding that anticipatory bail or protection may be granted only when there is a concrete and imminent apprehension of arrest, not merely issuance of summons.
Radhika Agarwal case held that-
“In appropriate cases, application for anticipatory bail can be allowed, which may also be conditional. It is not essential that the application for anticipatory bail should be moved only after an FIR is filed, as long as facts are clear and there is a reasonable basis for apprehending arrest.”
- Prematurity of the Writ Petition:
The Court held that seeking quashing of summons or blanket protection at the inquiry stage effectively amounts to seeking anticipatory bail without satisfying statutory thresholds. Since investigation was ongoing and the petitioners had alternative remedies at later stages, the writ petition was held to be premature.
Final Order:
The summons dated 06.05.2024, 20.05.2024, and 28.05.2024 were issued solely for recording the Petitioners’ statements and for calling relevant documents and invoices relating to the goods seized during the search.
No illegality was found in their issuance, and the Respondent acted strictly within its statutory authority.
Since Petitioner No.2 has already been granted bail, the challenge to the summons effectively amounts to seeking anticipatory or interim protection at the inquiry stage, which is impermissible.
The writ petition, being premature, lacks merit and is accordingly dismissed, with liberty reserved to the Petitioners to seek appropriate remedies at the appropriate stage.
Case Title: Naveen & Suraj Kumar v. DGGI W.P.(CRL) 1872/2024
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