Agarwal Foundries VS Union Of India

In this case, the court heard from multiple legal representatives, including Mr. D. Prakash Reddy, Senior Counsel, supported by Mr. N. Naveen Kumar, for the petitioners, and Mr. B. Mukherjee, representing the Assistant Solicitor General of India for respondent No.1, along with Mr. Anurag Ojha, counsel for respondent Nos. 2 to 4. The petitioners have filed under Article 226 of the Indian Constitution, seeking relief from certain penal actions taken by the respondents under the CGST Act of 2017. Specifically, the petitioners challenge the invocation of penal provisions, including Section 69 of the CGST Act, against directors, employees, or agents of Petitioner No.1, such as Petitioners No. 2 to 4. These actions relate to a search conducted on Petitioner No.1’s premises on December 11, 2019, and the subsequent summons issued on February 24, 2022, under CBIC–DIN-202202CC00000000F565/21709 and CBIC-DIN-202202CC0000000F565/21710 to Petitioners No.2 and 3. The petitioners contend that these actions are illegal, arbitrary, and unconstitutional. Therefore, they are requesting the court to declare these actions unlawful and prevent the arrest of any directors, employees, or agents of Petitioner No.1, including Petitioners No.2 to 4. Additionally, the petitioners request any further orders deemed appropriate by the court in light of the circumstances of the case.

In this case, the petitioners, represented by learned Senior Counsel Mr. D. Prakash Reddy and counsel Mr. N. Naveen Kumar, have filed a petition under Article 226 of the Constitution of India, seeking specific reliefs against actions taken by the respondents, which include the Directorate General of GST Intelligence (DGGI). They have named several respondents, including the Union of India, represented by learned counsel Mr. B. Mukherjee and Mr. N. Rajeshwar Rao, as well as officials from the DGGI, represented by Mr. Anurag Ojha.

The petitioners challenge the legality of actions taken by the respondents following a search conducted on December 11, 2019, at the premises of Petitioner No.1, a private limited company engaged in the steel manufacturing industry and recognized as one of the highest GST payers in the State of Telangana. The petitioners include Petitioner No.1, the company, and Petitioners No.2 to 4, who are individuals connected to the company in various capacities. Petitioner No.2 is the Director of Petitioner No.1, Petitioner No.3 is a relative and proprietor of M/s. Gautam Trading Company, which trades with Petitioner No.1, and Petitioner No.4 is the brother of Petitioner No.2, with his own unrelated business.

The petition seeks to declare the respondents’ actions, including invoking penal provisions under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017, as illegal, arbitrary, and unconstitutional. The petitioners particularly contest the issuance of summons to Petitioner No.2 and Petitioner No.3 on February 24, 2022, following the raids, arguing that these actions were improper given the circumstances. Furthermore, they request the court to issue an order preventing the arrest of any directors, employees, or agents of Petitioner No.1, including Petitioners No.2 to 4, in connection with the case. In essence, the petitioners seek relief from what they consider to be coercive actions by the GST authorities, which they argue are unwarranted based on their compliance history and unrelated personal circumstances of the individuals involved.

The facts of the case indicate that during the search on December 11, 2019, the DGGI personnel raided both the business premises of Petitioner No.1 and the residential premises of Petitioner No.2. The nature of the allegations and the manner in which the raids were conducted have not been detailed yet in this portion of the document, but the petitioners contend that the raids and subsequent actions by the authorities were excessive and unjustified. Thus, they seek judicial intervention to halt further actions that may result in arrest or other penal measures against them.

In the case, Mr. D. Prakash Reddy, Senior Counsel, and Mr. N. Naveen Kumar represented the petitioners, while Mr. B. Mukherjee, on behalf of the Assistant Solicitor General of India, and Mr. Anurag Ojha represented the respondents. The petition, filed under Article 226 of the Indian Constitution, sought relief from the actions of the respondents, specifically regarding the invocation of penal provisions under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017. These provisions pertain to the directors, employees, and agents of Petitioner No. 1, including Petitioners 2 to 4, in connection with a search conducted on December 11, 2019, and subsequent summonses issued on February 24, 2022. The petitioners argued that these actions were illegal, arbitrary, and unconstitutional. They requested the court to prevent any arrests of the directors, employees, or agents of Petitioner No. 1 and sought further appropriate orders from the court.

Petitioner No. 1 is a private limited company engaged in steel manufacturing for the past 28 years, recognized as a significant GST payer in the State of Telangana. Petitioner No. 2 is the company’s director, while Petitioner No. 3, a relative of Petitioner No. 2, runs a separate business but trades with Petitioner No. 1. Petitioner No. 4, the brother of Petitioner No. 2, has an independent business unrelated to Petitioner No. 1.

On December 11, 2019, officials from the Directorate General of GST Intelligence conducted simultaneous raids on the business and residential premises of Petitioners 1 and 2. The petitioners claimed that during these raids, officials physically assaulted Petitioners 2 and 3. As a result, the petitioners filed W.P. No. 28268 of 2019 to protect themselves from further harm. The respondents, in their counter-affidavit, denied these allegations. After hearing both sides, the court ruled in favor of the petitioners on November 6, 2020, and issued specific directions.

The petitioners contended that they had cooperated with the ongoing investigation and paid over Rs. 290 crores in taxes between April 2021 and December 2021. The respondents did not challenge the court’s 2020 order, allowing it to attain finality. However, despite this, Respondent No. 4 issued summons under Section 70 of the CGST Act, demanding the petitioners’ appearance.

In this case, the petitioners were represented by Mr. D. Prakash Reddy, a Senior Counsel, along with Mr. N. Naveen Kumar, while the respondents were represented by Mr. B. Mukherjee, appearing on behalf of the Assistant Solicitor General of India, and Mr. Anurag Ojha for respondent Nos. 2 to 4. The petition was filed under Article 226 of the Indian Constitution, wherein the petitioners sought several reliefs. They asked the Court to declare as illegal and unconstitutional the actions of the respondents, including invoking penal provisions under Section 69 of the CGST Act, 2017, against directors, employees, and agents of the first petitioner company, following a search conducted on December 11, 2019, and subsequent summons issued in February 2022. Additionally, they requested that the Court restrain the respondents from arresting any of the involved individuals, and they sought any further relief deemed appropriate by the Court.

Petitioner No. 1 is a private company engaged in steel manufacturing for over 28 years and is registered with the GST authorities in Telangana, where it has been recognized as a top GST payer. Petitioner No. 2 is its Director, while Petitioner No. 3 is the proprietor of Gautam Trading Company and a relative of Petitioner No. 2, though not involved in the business affairs of Petitioner No. 1. Petitioner No. 4 is the brother of Petitioner No. 2 and has a separate business unrelated to Petitioner No. 1.

On December 11, 2019, the Directorate General of GST Intelligence conducted raids on the business and residential premises of Petitioner Nos. 1 and 2. During these raids, it was alleged that Petitioner Nos. 2 and 3 were physically assaulted by officials, prompting them to file a writ petition in 2019 to protect themselves from further violence. This earlier writ petition was decided in favor of the petitioners by this Court on November 6, 2020, directing the respondents to follow certain measures. The petitioners claimed to have complied with the investigation, paying over Rs. 290 crores in taxes from April to December 2021. The respondents accepted the Court’s order without appealing to a higher forum, thereby giving the decision finality.

In early 2022, summons were issued to the petitioners under Section 70 of the CGST Act, requiring them to appear in person before the authorities. However, due to the death of a close family member from COVID-19, the petitioners challenged the summons and obtained a Court order allowing them to appear at a later date. Fearing arrest upon their appearance, the petitioners filed the current writ petition. On March 4, 2022, the Court instructed the petitioners to appear physically before the authorities on March 8, 2022, while directing further procedural steps.

The case revolves around a petition filed under Article 226 of the Constitution of India by a group of petitioners, represented by Mr. D. Prakash Reddy and Mr. N. Naveen Kumar, who sought various legal remedies against actions taken by the respondents, including officials from the Directorate General of GST Intelligence. The petitioners, involved in the steel manufacturing business, claim that the respondents initiated punitive actions under Section 69 of the CGST Act, 2017, following a raid on their premises on 11th December 2019. The raid, which included alleged physical assaults on some of the petitioners, led to the issuance of summons against them. In response, the petitioners argue that these actions were illegal, arbitrary, and unconstitutional, and have sought relief from the court to prevent their potential arrest. The petitioners, who assert that they have been cooperating with the investigation and have paid over Rs. 290 crores in taxes, challenge the legality of the summons issued in February 2022. They claim that, during this period, a family member passed away due to COVID-19, which complicated their ability to comply with the summons. Despite an earlier court order directing the petitioners to respond to the summons, they now fear arrest and have filed a writ petition seeking protection. The respondents, on the other hand, have submitted a counter-affidavit, stating that their investigation revealed significant GST evasion, amounting to approximately Rs. 9 crores, by the petitioners and associated entities. However, they also clarified that there is no immediate proposal for the arrest of the petitioners, making the petitioners’ request for protection against arrest premature. The court had previously directed the petitioners to appear before the investigating authorities and granted interim protection from any coercive actions, a directive that has been extended multiple times as the case progresses.

In this case, senior counsel Mr. D. Prakash Reddy, along with Mr. N. Naveen Kumar, represented the petitioners, while Mr. B. Mukherjee, counsel for respondent No. 1, and Mr. Anurag Ojha, counsel for respondents Nos. 2 to 4, were heard. The petitioners filed under Article 226 of the Constitution, seeking several key reliefs: firstly, to declare the actions of the respondents regarding invoking penal provisions under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017, against the directors and employees of Petitioner No. 1 as illegal, arbitrary, and unconstitutional. This arose from a search conducted on December 11, 2019, followed by summons issued in 2022. The petitioners, representing a company involved in steel manufacturing and recognized as a major GST payer, contended that such actions were excessive and unwarranted.

The petitioners highlighted their compliance with tax obligations, stating that they had paid significant amounts in taxes. However, they also recounted how the search involved physical assault on some individuals, which led them to seek the court’s intervention previously. That earlier writ petition was resolved in the petitioners’ favor, and the order had attained finality. Nonetheless, when further summons were issued in early 2022, coinciding with the death of a family member, the petitioners again approached the court to challenge these summons.

The petitioners expressed their apprehension about potential arrest upon complying with the summons, which led them to file the current writ petition seeking protection against arrest. Responding to the petition, the court initially directed the petitioners to appear physically while ensuring no coercive steps would be taken against them. The respondents, in their counter affidavit, emphasized that the writ petition was premature and inadmissible, arguing that the petitioners were using it as a means to secure anticipatory bail. They asserted that the investigation had uncovered tax evasion amounting to approximately Rs. 9 crores, with potential for the figure to increase. While they acknowledged the power to arrest under the CGST Act, they clarified that it is exercised only under specific conditions and with necessary approval. The respondents contested the petitioners’ claim of cooperation with the investigation, stating that the petitioners had not fully complied with the ongoing inquiry.

Despite these allegations, the petitioners maintained their position, filing a reply affidavit and expressing their willingness to deposit substantial sums to demonstrate their good faith. They had already deposited Rs. 1.1 crore and were prepared to deposit an additional Rs. 3 crore to further show their bona fides, as noted in court proceedings. This ongoing legal tussle reflects a complex situation involving accusations of significant GST evasion, procedural disputes, and efforts by the petitioners to avoid coercive actions while continuing their business operations.

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