JSK Marketing Limited VS Union of India  

In this legal case, the petitioners are represented by Mr. Mathew Nedumpara and Ms. Nikita Panhalkar, Advocates. The respondents include parties represented by Mr. Pradeep Jetly, a senior counsel with Mr. J.B. Mishra, Advocate for respondent Nos. 1 to 4, and Mr. Rahul Punjabi, Advocate for respondent No. 5.

The petitioners have approached the court by filing a petition under Articles 226 and 227 of the Constitution of India. These articles allow individuals to seek judicial review of actions taken by the government or its officials. Specifically, the petitioners are seeking a stay (a legal halt) on certain proceedings and any related penal actions that have been initiated against them. These proceedings were triggered by a summons issued on April 3, 2019, by an Intelligence Officer from the Directorate of GST Intelligence.

The summons in question was issued under section 83 of the Finance Act, 1994, in conjunction with section 14 of the Central Excise Act, 1944. These sections give authorities the power to summon individuals and enforce compliance with tax laws. The petitioners are contesting the legal validity of these proceedings and are requesting the court to intervene by staying further action until the matter is resolved.

In this case, the petitioners, represented by Mr. Mathew Nedumpara and Ms. Nikita Panhalkar, sought a stay on proceedings and related penal actions initiated under the provisions of the Finance Act, 1994, Central Excise Act, 1944, and the Central Goods and Services Tax Act, 2017. These proceedings were triggered by a series of summonses issued by the Directorate of GST Intelligence, requiring the petitioners to provide oral and documentary evidence concerning alleged GST evasion. The first summons was issued on April 3, 2019, followed by others on April 15, 2019, October 31, 2019, August 4, 2020, and October 12, 2020. The petitioners are a company (Petitioner No.1) engaged in trading consumer goods, FMCG products, cameras, and batteries for over 34 years, with Petitioner No.2 serving as its Managing Director. On April 3, 2019, the Directorate General of GST Intelligence conducted a raid on the company’s premises, as well as those of respondents 6 and 7, seizing various documents, books of accounts, and hard disks as part of an investigation into tax evasion. A panchnama documenting the raid was signed by the Senior Intelligence Officer of the Mumbai Zonal Unit. Concurrently, respondent No.3, Bombay Sales Agency, a financial creditor of Petitioner No.1, invoked section 7 of the Insolvency and Bankruptcy Code, 2016, by filing an application with the National Company Law Tribunal (NCLT) in Mumbai. The petitioners challenge the actions taken by the GST authorities, arguing that the investigation and the subsequent legal actions, including the insolvency proceedings, are procedurally and substantively flawed.

This case involves a petition filed under Articles 226 and 227 of the Constitution of India, where the petitioners sought to stay the proceedings and prevent consequential penal action against them. These proceedings were initiated following the issuance of multiple summonses by the Directorate of GST Intelligence, starting with a summons on April 3, 2019, under section 83 of the Finance Act, 1994, read with section 14 of the Central Excise Act, 1944, and section 174 of the Central Goods and Services Tax Act, 2017 (CGST Act). These summonses required the petitioners to provide oral and documentary evidence related to alleged evasion of Goods and Services Tax (GST). The petitioners are a company engaged in the trading of consumer goods, and their Managing Director, who is also a petitioner, was repeatedly summoned between April 2019 and August 2020 to testify regarding the evasion of GST and service tax. The case further involves a significant development where the Directorate General of GST Intelligence conducted a raid on April 3, 2019, seizing several documents, books of accounts, and electronic data for investigation purposes. During this period, one of the financial creditors of the petitioners, Bombay Sales Agency, initiated insolvency proceedings against the petitioner company by filing an application with the National Company Law Tribunal (NCLT) under section 7 of the Insolvency and Bankruptcy Code, 2016. The NCLT admitted this application on September 23, 2019, declared a moratorium under section 14 of the Code, and appointed an Interim Resolution Professional (IRP) to oversee the company’s assets, directing that they should not be liquidated until the completion of the insolvency process. Despite this moratorium, the GST authorities continued to issue summonses to the petitioners to provide evidence related to the tax evasion inquiry. This sequence of events forms the crux of the petitioners’ appeal, where they challenge the continued summons and investigation by the GST authorities amid ongoing insolvency proceedings.

In a legal dispute involving complex tax and insolvency issues, petitioners sought relief from summonses issued by the Directorate General of GST Intelligence. The petition was filed under Articles 226 and 227 of the Constitution of India, challenging the issuance of multiple summonses that required the petitioners to provide both oral and documentary evidence regarding alleged GST evasion. The initial summons was issued on April 3, 2019, under section 83 of the Finance Act, 1994, in conjunction with section 14 of the Central Excise Act, 1944, and section 174 of the Central Goods and Services Tax Act, 2017. This was followed by additional summons on April 15, 2019; October 31, 2019; August 4, 2020; and October 12, 2020, each calling for further evidence related to the GST investigation.

Petitioner No.1, a company engaged in trading consumer goods and other products, has been in business for 34 years. Petitioner No.2, the Managing Director of Petitioner No.1, was specifically summoned to provide evidence. On April 3, 2019, the Directorate General of GST Intelligence conducted a raid on the company’s premises and those of other related entities, seizing documents and hard drives for GST evasion investigation. Concurrently, Bombay Sales Agency, a financial creditor, filed for insolvency proceedings against Petitioner No.1 with the National Company Law Tribunal (NCLT), which admitted the application on September 23, 2019, and appointed an Interim Resolution Professional, placing a moratorium on the company’s assets.

The GST investigation continued with further summons issued to Petitioner No.2 on subsequent dates. On August 31, 2020, the petitioners filed a suit and a writ petition challenging the insolvency order and seeking an injunction. Despite ongoing legal actions, additional summons were issued on October 12, 2020, requiring Petitioner No.2 to provide detailed transport documents, payment particulars, and sales/purchase invoices. The petitioners filed a writ petition on October 16, 2020, challenging these summonses and seeking a stay of the proceedings. They also filed an Interim Application on December 16, 2020, to include new summons issued on November 13, 2020, demanding further evidence and documentation.

The petitioners, represented by Mr. Mathew Nedumpara and Ms. Nikita Panhalkar, have sought a stay on proceedings and penal actions initiated against them following summons issued by the Directorate General of GST Intelligence (respondent No.2) under various provisions of the Finance Act, Central Excise Act, and Central Goods and Services Tax (CGST) Act, related to allegations of GST evasion. The relevant facts include that Petitioner No.1, a company trading in consumer goods and FMCG products for 34 years, and Petitioner No.2, its Managing Director, were subjected to a raid on April 3, 2019. During this raid, various documents and electronic records were seized for a GST investigation. Concurrently, Bombay Sales Agency (respondent No.3), a financial creditor, invoked insolvency proceedings against Petitioner No.1 under the Insolvency and Bankruptcy Code, 2016. The National Company Law Tribunal (NCLT) admitted the application, declared a moratorium, and appointed Ms. Palak Swapnil Desai as Interim Resolution Professional, preventing asset liquidation until the insolvency process was complete. Following the raid, respondent No.2 issued multiple summons to Petitioner No.2 (April 3, April 15, October 31, 2019, August 4, 2020, and October 12, 2020) for oral and documentary evidence related to the GST evasion investigation. On August 31, 2020, the petitioners filed legal suits challenging the NCLT’s order and seeking an injunction. The petitioners’ writ petition, filed on October 16, 2020, sought to challenge the summons and stay the proceedings. They also filed an interim application on December 16, 2020, to address additional summons issued on November 13, 2020. The petitioners argue that to effectively cooperate with the investigation, they need access to the seized materials, which respondent No.2 has refused to provide, alleging this refusal violates natural justice principles. The petitioners claim they are prepared to cooperate fully but require access to the seized evidence to do so effectively.

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