Dhruv Krishna Maggu VS Principal Director General DGGI (HQRS)

This legal matter, which was conducted in a hybrid mode (i.e., a combination of physical and virtual presence), revolves around the petitioner, Dhruv Krishan Maggu, seeking the return of several items seized by the Directorate General of GST Intelligence (DGGI). The items in question include a laptop, computer, various documents, and other materials confiscated during a search operation conducted on August 28, 2019. This search was officially documented in a panchnama (a record of the proceedings during the search) dated August 28, 2019.

To provide a clearer understanding of the context, it is essential to delve into the background of this case. The DGGI’s involvement stems from a communication it received in February 2019 from the Chief Manager of Allahabad Bank, located in Jawala Heri Market, Paschim Vihar. This communication alerted the DGGI headquarters to some unusual and potentially suspicious financial activities. Specifically, it pertained to certain high-value transactions involving the refund of GST (Goods and Services Tax) that had been credited to four newly opened bank accounts.

The peculiar aspect of these transactions was that the refunded GST amounts were being withdrawn almost immediately after being credited, raising suspicions about the legitimacy of the activities and the identities of the account holders. This pattern of behavior triggered concerns about possible tax evasion or fraudulent activities, prompting the DGGI to investigate further.

In response to these concerns, the DGGI conducted the search operation on August 28, 2019, during which the petitioner’s laptop, computer, documents, and other items were seized. The petitioner, Dhruv Krishan Maggu, is now seeking the return of these seized items through legal proceedings. The case, therefore, centers on the legality and propriety of the seizure, the rights of the petitioner to reclaim his property, and the broader implications of the DGGI’s investigation into the suspected GST-related irregularities.

This legal battle highlights the delicate balance between the state’s power to investigate potential financial crimes and the rights of individuals to retain their personal property, particularly when such property is seized during the course of an investigation. The outcome of this case could set important precedents regarding the procedures and limitations on government agencies when conducting searches and seizures in similar contexts.

In the present case, Dhruv Krishan Maggu, the petitioner, seeks the return of his laptop, computer, documents, and other items that were seized by the Directorate General of GST Intelligence (DGGI) during a search conducted on August 28, 2019. The hearing was conducted through a hybrid mode, which means it involved a combination of in-person and virtual proceedings.

The background of the case reveals that the DGGI had received a communication in February 2019 from the Chief Manager of Allahabad Bank, located in Jawala Heri Market, Paschim Vihar. The communication informed the DGGI Headquarters about certain suspicious high-value transactions related to GST refunds that had been credited to four newly opened bank accounts. It was noted that the refunded amounts were being withdrawn immediately by the account holders, raising suspicions. Additionally, all the firms associated with these transactions shared the same address. As a result of these findings, the bank accounts belonging to four firms—M/s Monal Enterprises, Aircon Overseas, Micra Overseas, and Ganeshi Inc.—were frozen. The total amount credited to these accounts was a substantial sum of ₹10,32,21,718.

Subsequent investigations and searches revealed that the four firms were non-functional and non-existent. The DGGI recorded statements from the proprietors, including Mr. Deepak Kumar Mishra, Mr. Santosh Prasad, and Mr. Manoj Kumar. These individuals claimed they had no knowledge of the transactions and had merely provided their identification documents, such as PAN cards and Aadhaar cards, to one Mr. Mukesh Kumar, who had then used these documents to open accounts and sign numerous papers. The investigation further uncovered that a total of 23 fake firms had been established using the names of individuals who were, in reality, laborers, drivers, cooks, street hawkers, and other low-income workers. These fake firms were involved in fraudulently obtaining IGST refunds amounting to over ₹63 crores.

The counter affidavit filed by the respondents reveals several allegations related to the fraudulent IGST refunds. It names several individuals, including Dhruv Krishan Maggu (the petitioner), Mr. Ramesh Wadera, Mr. Sanjeev Maggu, and his brother, Mr. Akhil Krishan Muggu, as being involved in the fraudulent scheme to obtain and siphon off these GST refunds. The counter affidavit also notes that FIRs (First Information Reports) have been registered in connection with these fraudulent activities. The affidavit further details that the search and seizure conducted at the premises located at B-773, Sushant Lok-1, Gurugram, Haryana, resulted in the confiscation of computers, laptops, documents, and other items on August 28, 2019.

The petitioner, Dhruv Krishan Maggu, now seeks the return of the seized items, asserting that they are his personal property and unrelated to the alleged fraudulent activities. However, the DGGI maintains that the seized items are essential to their ongoing investigation into the extensive fraudulent activities involving fake firms and fraudulent GST refunds.

In this case, the petitioner, Dhruv Krishan Maggu, has approached the court seeking the return of his laptop, computer, documents, and other items that were seized by the Directorate General of GST Intelligence (DGGI) during a search conducted on August 28, 2019, as recorded in a panchnama dated the same day. The hearing was conducted in a hybrid mode, allowing for both in-person and remote participation.

The background of the case stems from a communication received by the DGGI from the Chief Manager of Allahabad Bank, Jawala Heri Market, Paschim Vihar, in February 2019. The communication highlighted suspicious transactions related to the refund of Goods and Services Tax (GST) credited to four newly opened bank accounts. The account holders were withdrawing the refund amounts immediately, raising suspicion. All four firms linked to these transactions—Monal Enterprises, Aircon Overseas, Micra Overseas, and Ganeshi Inc.—were found to share the same address. This raised further concerns, leading the DGGI to freeze the bank accounts, which held a total of approximately ₹10.32 crore. Subsequent searches at the common address of the four firms revealed that they were non-functional and non-existent entities.

The DGGI recorded the statements of the alleged proprietors, namely Deepak Kumar Mishra, Santosh Prasad, and Manoj Kumar, who denied knowledge of the firms’ activities. They stated that they had merely provided their personal identification documents, such as PAN cards and Aadhaar cards, to a person named Mukesh Kumar, and had signed several documents without fully understanding their purpose. The investigation uncovered that 23 fake firms had been established in the names of individuals who were actually laborers, drivers, cooks, and street hawkers. These fake firms were allegedly used to fraudulently obtain Integrated Goods and Services Tax (IGST) refunds amounting to more than ₹63 crore.

The respondents, in their counter affidavit, allege that several individuals, including the petitioner Dhruv Maggu, Ramesh Wadera, and Dhruv Maggu’s brother, Akhil Krishan Maggu, were involved in the scheme to fraudulently claim IGST refunds and siphon off the funds. FIRs have been filed in connection with these fraudulent activities. The affidavit details that during the investigation, a search was conducted at the premises located at B-773, Sushant Lok-1, Gurugram, Haryana, on August 28, 2019. During this search, the DGGI seized various items, including computers, laptops, and documents, which the petitioner now seeks to have returned. The petitioner has requested the court to issue a writ of mandamus, directing the respondents to release the seized items unconditionally.

Akhil Krishnan Maggu, the counsel for the petitioner, argued that he had previously represented the four firms in question and had sought to unfreeze their bank accounts in a related case, which was ultimately withdrawn. He contends that because of his involvement in that case, his family is being unfairly implicated in the current proceedings. He pointed out that despite significant time having passed since the seizure—allegedly on August 15, 2019—his client’s computer, laptops, and documents have not been returned. He referenced Section 67(7) of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), which mandates that seized goods should be returned within six months. The counsel also argued that the authorities had already taken a backup of the data, and therefore, the main laptop should be released to the petitioner.

In response, Mr. Ravi Prakash, counsel for the respondents, provided a detailed explanation of the legal provisions under Section 67 and Section 74 of the CGST Act, 2017. He argued that the seizure was conducted in accordance with the law and that the retention of the seized items was justified based on the ongoing investigation and the seriousness of the allegations. The case hinges on the interpretation of the legal provisions related to the seizure and retention of goods under the CGST Act, as well as the petitioner’s right to the return of his property. The court’s decision will likely address the balance between the petitioner’s rights and the authorities’ obligation to conduct a thorough investigation into the alleged GST fraud.

In this case, the petitioner, Dhruv Krishan Maggu, has filed a petition seeking the return of his seized property, which includes a laptop, computer, documents, and other items. These were confiscated by the Directorate General of GST Intelligence (DGGI) during a search conducted on August 28, 2019. The search and seizure were documented in a panchnama (a legal document recording the search and seizure) on the same date. The hearing was conducted through a hybrid mode, allowing both in-person and virtual participation.

Background of the Case:
The issue began when the DGGI received a communication from the Chief Manager of Allahabad Bank, Paschim Vihar, about suspicious transactions involving GST refunds credited to four newly opened bank accounts. The accounts belonged to firms that shared the same address and the refund amounts were quickly withdrawn by the account holders. This raised red flags and prompted the DGGI to freeze the bank accounts of the four firms—Monal Enterprises, Aircon Overseas, Micra Overseas, and Ganeshi Inc. The total amount involved was approximately ₹10.32 crores. Subsequent investigations revealed that these firms were non-functional and likely existed only on paper.

The proprietors of these firms, Deepak Kumar Mishra, Santosh Prasad, and Manoj Kumar, were found to be unaware of any details related to the firms’ operations. They admitted to providing their identification documents, like PAN and Aadhaar cards, to a man named Mukesh Kumar and signing various documents without understanding their implications. The investigation further uncovered that a total of 23 fake firms had been created using the names of individuals who were laborers, drivers, cooks, and street vendors. These fake firms were allegedly involved in fraudulent IGST (Integrated Goods and Services Tax) refunds, siphoning off more than ₹63 crores.

Allegations Against the Petitioner 
The DGGI’s counter-affidavit alleges that the petitioner, along with several others, including Ramesh Wadera, Sanjeev Maggu, and Akhil Krishan Maggu, was involved in the fraudulent availing and siphoning of IGST refunds. FIRs (First Information Reports) have been registered against them. The counter-affidavit justifies the search and seizure of items from the petitioner’s premises, which is the subject of this petition.

The petitioner’s counsel, Akhil Krishnan Maggu, argues that the petitioner’s family is being wrongfully implicated because of his involvement in representing some of the firms in a previous case related to defreezing their bank accounts. He asserts that despite a significant amount of time having passed since the seizure on August 28, 2019, the seized items have not been returned. He cites Section 67(7) of the Central Goods and Services Tax Act, 2017 (CGST Act), which mandates that seized goods should be returned within six months. He also contends that since the authorities have already taken backups of the data, the main laptop should be returned to the petitioner.

**Response from the DGGI:
The counsel for the respondents, Ravi Prakash, counters that Section 67(7) of the CGST Act does not apply in this case because the items seized are not “goods” but “documents, books, or other things,” which fall under Section 67(2) of the Act. According to Section 67(2), these items can be retained as long as they are needed for an investigation or proceedings. He further explains that under Section 74(10) of the CGST Act, if tax is wrongly availed by fraud or willful misstatement, the proper officer has up to five years to pass an order, as opposed to three years under Section 73(10) when no fraud is involved. Since the period prescribed by these provisions has not yet lapsed, the respondents argue that they are acting in accordance with the law. Court’s Consideration:

The court heard the arguments from both sides and considered the relevant provisions of Sections 67 and 74 of the CGST Act. These sections outline the powers of the authorities concerning inspection, search, seizure, and determination of tax in cases involving fraud or suppression of facts.

In summary, this case revolves around the petitioner’s request for the return of his seized property, which is being contested by the DGGI on the grounds of an ongoing investigation into a large-scale GST refund fraud involving multiple fake firms. The court must weigh the petitioner’s right to the return of his property against the respondents’ need to retain the items for further investigation.

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