Akhil Krishan Maggu VS Deputy Director, Directorate General of GST Intelligence

In this legal case, Akhil Krishan Maggu (Petitioner No. 1) and his father Sanjeev Maggu (Petitioner No. 2) have filed a petition under Article 226 of the Constitution of India seeking to quash the summons issued on August 28, 2019, by the Senior Intelligence Officer (SIO) of the Directorate General of GST Intelligence (DGGI). The summons, referenced as Annexure P-11, calls into question the legal actions and involvement of Petitioner No. 1, who is a practicing lawyer specializing in taxation.

The petitioners’ case revolves around Petitioner No. 1’s professional activities as an advocate. Specifically, Petitioner No. 1 had represented four exporters who had initially made certain statements to the DGGI but later retracted those statements. Acting on behalf of these exporters, Petitioner No. 1 filed writ petitions before the Delhi High Court challenging actions taken by the DGGI. The respondents in this case, which include the DGGI, allege that these four exporters had fraudulently availed substantial amounts of benefits or incentives under the GST regime.

The crux of the petitioners’ argument is that the summons issued to them are an overreach of the investigative powers of the DGGI. They contend that the issuance of these summons is not only unjustified but also an attempt to intimidate and harass Petitioner No. 1 due to his role as a legal representative for the four exporters. The petitioners argue that such actions undermine the independence and the role of an advocate in representing their clients’ interests, and they see this as a violation of legal principles and protections provided under the Constitution of India.

The petitioners seek the intervention of the court to quash the summons, arguing that the DGGI’s actions are an abuse of power and are intended to obstruct the legitimate legal representation of their clients. They believe that the summons are being used as a tool of coercion rather than a legitimate part of an investigative process.

The petition thus raises significant issues regarding the limits of investigative authority, the protection of advocates in the exercise of their professional duties, and the balance between enforcement of tax laws and protection of constitutional rights. The outcome of this case could have broader implications for the legal community, particularly in how advocates are treated when representing clients in matters involving significant financial disputes with government authorities.

In this legal case, Akhil Krishan Maggu (Petitioner No. 1) and his father Sanjeev Maggu (Petitioner No. 2) have filed a petition under Article 226 of the Indian Constitution seeking to quash a summons dated August 28, 2019, issued by the Senior Intelligence Officer (SIO) of the Directorate General of GST Intelligence (DGGI). The petitioners allege the summons is unjust and request intervention from the court.

Petitioner No. 1 is a practicing lawyer in the field of taxation. His involvement in the matter began when he represented four exporters in filing writ petitions before the Delhi High Court against the DGGI. These exporters had retracted their initial statements and were accused by the DGGI of availing substantial refunds of Integrated Goods and Services Tax (IGST) under false pretenses, claiming they were dummy owners of export firms.

On August 15, 2019, the DGGI conducted a search at the Gurugram residence of Ramesh Wadhera, who was identified as an alleged dummy owner of these export firms and a neighbor to the petitioners. Upon Wadhera’s request, the petitioners visited his residence, leading to a commotion with DGGI officials. Following this incident, the police, prompted by the DGGI, registered a First Information Report (FIR) against both petitioners under Sections 186 and 353 of the Indian Penal Code (IPC) at the DLF Police Station in Gurugram. The petitioners were subsequently arrested on the same day and released on bail after a week on August 22, 2019.

Further developments occurred on August 27, 2019, when the DGGI re-recorded the statements of the alleged dummy exporters, who this time implicated the petitioners along with Wadhera and another individual, Mukesh Kumar. The following day, the DGGI conducted a search of the petitioners’ Gurugram residence. Although the petitioners were not present at the time, the DGGI took Petitioner No. 1’s younger brother to their office and arrested him on August 29, 2019.

On September 2, 2019, the DGGI filed another FIR against Petitioner No. 2 under Sections 186, 34, and 353 of the IPC, accusing him of obstructing the officials’ duties by calling the police during the search of his residence on August 28, 2019. Additionally, the DGGI issued a summons on August 28, 2019, directing the petitioners to appear before the SIO to provide statements regarding the dummy export firms.

In response to these actions and fearing further coercive measures, the petitioners approached the court with their current writ petition. On September 10, 2019, the court, while issuing a notice of motion, instructed the petitioners to comply with the summons and appear before the Senior Intelligence Officer of the DGGI.

In September and October 2019, both Petitioners engaged in a series of interactions with the Directorate General of GST Intelligence (DGGI). On September 11 and 12, 2019, they appeared before the Respondent, but on the 12th, Petitioner No. 2 was transferred to the Directorate of Revenue Intelligence in New Delhi and subsequently arrested. He was placed in judicial custody on September 13, 2019, where he remains to this date.

Petitioner No. 1 continued to comply with summons from the DGGI, appearing on September 28, October 1, October 7, October 11, and October 16, 2019. However, his statements were not recorded on most of these dates. Only on October 7 did he successfully tender his statement.

The Petitioners’ counsel argues that the actions against them are a form of vendetta with no substantive evidence linking them to any fraudulent activities supposedly carried out by four dummy exporters or Ramesh Wadhera, the alleged owner. The counsel highlights that during the Petitioners’ initial period in judicial custody and since Petitioner No. 2’s re-arrest on September 13, no statements have been recorded, which suggests a motive to malign the Petitioners rather than conduct a fair investigation.

The counsel asserts that the Respondents are acting out of spite, particularly in reaction to writ petitions filed before the Delhi High Court on behalf of the four exporters and incidents at Ramesh Wadhera’s residence. Despite an extended investigation, the Respondents have failed to produce any incriminating evidence against the Petitioners. The counsel contends that the sole aim of the Respondents is to coerce Petitioner No. 1 into confessing involvement in a refund scam, rather than pursuing a just and evidence-based inquiry.

The petitioners were involved in a series of legal confrontations with the Directorate General of GST Intelligence (DGGI) and the Directorate of Revenue Intelligence (DRI). Petitioner No. 2 was handed over to the DRI and arrested on September 12, 2019, followed by judicial custody starting from September 13, 2019. Despite multiple appearances by Petitioner No. 1 before the DGGI on several dates in September and October 2019, his statements were not recorded.

The counsel for the petitioners argued that the actions taken against them were driven by vendetta, highlighting that there was no concrete evidence linking the petitioners to any fraudulent activities. They pointed out that Petitioner No. 2’s statements were not recorded while he was in custody and that the DGGI’s intentions seemed to be to tarnish the petitioners’ reputations. The counsel suggested that the DGGI was implicating the petitioners out of spite due to previous legal actions taken against them and disturbances caused at Ramesh Wadhera’s residence. The respondents allegedly failed to gather evidence against the petitioners despite their prolonged custody and repeated interrogations.

In contrast, the counsel for the respondents contended that Petitioner No. 1 was uncooperative and involved in fraudulent activities, particularly in creating bogus firms to claim IGST refunds. They emphasized that Petitioner No. 1 was exploiting his position as a former customs clearing agent and should be interrogated without court protection.

During a court session on October 24, 2019, the counsel for the respondents submitted sealed investigation records. The court noted the absence of statements from the petitioners and other key individuals, such as Dhruv Maggu, Ramesh Wadhera, and Mukesh Kumar, which were necessary to determine the petitioners’ involvement. Additionally, while the statements of dummy exporters recorded on August 27, 2019, were presented, earlier statements from May 13, 2019, which did not implicate the petitioners, were not produced. This suggested a possible attempt to selectively present evidence.

Overall, the case highlighted a contentious legal battle with claims of vendetta, uncooperative behavior, and selective evidence presentation, centering on allegations of fraudulent refund claims involving dummy exporting firms.

In this case, the petitioners appeared before the Directorate General of GST Intelligence (DGGI) on September 11 and 12, 2019. On September 12, 2019, the DGGI handed over Petitioner No. 2 to the Directorate of Revenue Intelligence (DRI) in New Delhi, where he was subsequently arrested. On September 13, 2019, Petitioner No. 2 was sent to judicial custody and remains there to this date. Petitioner No. 1 continued to appear before the DGGI on several occasions in September and October 2019, but his statements were not consistently recorded.

The petitioners’ counsel argued that this case is one of vendetta, with no evidence linking the petitioners to any fraud involving four alleged dummy exporters and one Ramesh Wadhera. They claimed that the respondents did not record the petitioners’ statements while they were in judicial custody and that the continued judicial custody of Petitioner No. 2 without recording his statement suggests a malicious intent to tarnish their reputation. The petitioners’ counsel suggested that the respondents’ actions were retaliatory due to writ petitions filed by the four exporters and incidents at Wadhera’s residence. They claimed there is no evidence against the petitioners, yet the respondents persistently targeted them, pressuring Petitioner No. 1 to confess to involvement in a refund scam.

The respondents’ counsel contended that Petitioner No. 1 was uncooperative and involved in the fraud. They alleged that the petitioners, in connivance with Wadhera and Mukesh Kumar, created bogus firms to claim IGST refunds and that Petitioner No. 1 misused his position as a customs clearing agent.

During the investigation, sealed records were submitted to the court. The court reviewed these documents but found no statements from the petitioners or other key individuals, indicating a lack of evidence directly implicating the petitioners. The statements of the dummy exporters, who retracted their earlier statements, were recorded after the incident at Wadhera’s residence and the petitioners’ arrest by Gurugram Police. However, the earlier statements from May 2019, which did not implicate the petitioners, were not submitted.

The court noted relevant judicial pronouncements, particularly the Delhi High Court’s decision in the case of Make My Trip Vs. Union of India. This case emphasized that the power of arrest under the Finance Act, 1994, should be exercised with caution and not without following the proper procedure, including the issuance of a Show Cause Notice (SCN) or an enquiry, especially where an assessee has been regularly filing tax returns.

In conclusion, the petitioners argue that their continued judicial custody and the failure to record their statements suggest a vendetta by the respondents, while the respondents maintain that the petitioners are involved in fraudulent activities and are not cooperating with the investigation. The court found inconsistencies in the evidence presented, particularly the lack of statements from the petitioners and other key individuals.

On September 11 and 12, 2019, both petitioners appeared before the Directorate General of GST Intelligence (DGGI). On September 12, the DGGI handed Petitioner No. 2 over to the Directorate of Revenue Intelligence (DRI) in New Delhi, leading to his arrest the same day. Petitioner No. 2 was sent to judicial custody on September 13, 2019, and remains in custody to date. Petitioner No. 1 reappeared before the DGGI on September 28 and October 1, 2019, but his statement was not recorded. He made a statement on October 7, 2019, and appeared again on October 11 and 16, 2019, but further statements were not recorded.

The counsel for the petitioners argues that the actions against them are retaliatory, lacking evidence to connect them with any fraud involving dummy exporters or the alleged owner, Ramesh Wadhera. Despite the petitioners being in judicial custody following an FIR, no statements were recorded by the respondents, indicating a motive to arrest and damage their reputations. The respondents allegedly sought to implicate the petitioners due to writ petitions filed on behalf of four exporters and disturbances at Wadhera’s residence. The investigation has not produced any evidence against the petitioners, yet the respondents continue to pursue them, aiming to coerce Petitioner No. 1 into admitting involvement in a refund scam, despite even his father’s non-involvement. This intent is evident from the DGGI’s inaction while Petitioner No. 2 was in custody.

The counsel for the respondents claims Petitioner No. 1 is uncooperative and deserves no sympathy. They allege the petitioners, in collusion with Ramesh Wadhera and Mukesh Kumar, created fake firms to fraudulently claim IGST refunds. Petitioner No. 1, a former customs clearing agent, is accused of misusing his professional position, necessitating interrogation without court protection.

On October 24, 2019, the respondents’ counsel submitted investigation records in sealed cover. The documents reviewed did not include statements from the petitioners, Dhruv Maggu (Petitioner No. 1’s brother), Ramesh Wadhera, or Mukesh Kumar, all arrested individuals whose statements are crucial to establish the petitioners’ roles. The dummy exporters retracted their earlier statements, which were re-recorded on August 27, 2019, post-incident at Wadhera’s residence and the petitioners’ arrest by Gurugram Police. However, the original statements from May 13, 2019, were not produced, likely because they did not implicate the petitioners. Documents concerning Petitioner No. 2’s role as a Customs House Agent and Petitioner No. 1’s ‘H’ card status were irrelevant as Petitioner No. 1 joined the profession in 2017, and the issue pertains to GST, effective from July 1, 2017.

Judicial precedents, particularly the Delhi High Court’s ruling in Make My Trip vs. Union of India, outline the protocol for arrest under the Finance Act, 1994, applicable to the CGST Act, 2017. The decision emphasized the necessity of adhering to proper procedures before arrest, ensuring arrests are based on credible material and not arbitrary. The arrest should follow an adjudication process and credible determination of tax liability, with sufficient justification documented for any extreme measures.

In summary, the petitioners argue they are being unfairly targeted without evidence, while the respondents assert the petitioners’ involvement in fraudulent activities justifies their actions. The court must consider whether the respondents followed due process and whether the arrests were justified based on the available evidence and judicial guidelines.

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