Suresh Kumar P.P. VS The Deputy Director

The appellants, who are the Managing Director and Director of a company registered under the Companies Act and engaged in providing cable services as a Multi Service Operator (MSO) in compliance with the regulations set forth by the Telecom Regulatory Authority of India (TRAI), are challenging the legality of certain actions taken against them. They have filed an appeal alleging that they were subjected to illegal proceedings under the Central Goods and Services Tax Act, 2017 (referred to as ‘CGST Act’ for brevity).

According to the appellants, these proceedings were improperly executed, leading to their residences and offices being raided. During these raids, they claim to have been detained unlawfully and an amount of Rupees One Crore was extorted from them. The situation reportedly escalated to the point where their advocate had to intervene at midnight to secure their release.

In their writ petition, the appellants have requested the court to address several issues:

1. Setting Aside of Notice They seek the cancellation of Exhibit P2, a notice issued by the Senior Intelligence Officer (SIO) that required them to provide certain information. They argue that this notice was issued improperly and is not valid.

2. Invalidation of Search and Seizure Proceedings They request the invalidation of the search and seizure proceedings conducted under Section 67 of the CGST Act, which are evidenced by Exhibit P4. The appellants contend that these proceedings were conducted in violation of legal protocols.

3. Refund of Extorted Amount They seek the return of Rupees One Crore, which they allege was extorted from them during the aforementioned illegal actions.

Overall, the appellants are challenging the legitimacy of the enforcement actions taken against them and are seeking redress for what they describe as an abuse of power and unlawful conduct under the CGST Act.

In the case described, the petitioners have sought various forms of relief, including:

1. A Long Summary of Evidence Collected The petitioners request that the evidence collected by the 4th and 5th respondents be comprehensively summarized. This indicates the petitioners’ concern with how the evidence was gathered and presented, possibly implying a belief that the collection process might have been flawed or biased.

2. A Declaration on GST Liability The petitioners also seek a legal declaration that they are not liable to pay Goods and Services Tax (GST) on the revenue share retained by the Local Cable Operator (LCO). This point suggests a dispute over whether the revenue held by the LCO should be subject to GST, a matter that could have significant financial implications.

3. Compensation for Damage and Mental Agony The petitioners are asking for compensation due to the alleged damage to their reputation and the mental agony they claim to have suffered. This reflects their argument that the actions taken against them have had a profound negative impact on their personal and professional lives.

However, the learned Single Judge ruled against the petitioners, finding their writ petition to be premature. The judge determined that the petitioners failed to provide sufficient evidence to substantiate their claims of harassment. Without concrete evidence, the judge deemed it inappropriate to form an opinion on the allegations at that stage. Consequently, the judge refused to exercise discretion under Article 226 of the Constitution and declined the reliefs sought by the petitioners.

Following this setback, the petitioners filed an appeal against the Single Judge’s decision. In the appeal, they introduced additional documents, particularly orders of attachment concerning their bank accounts, which had been issued after the writ petition was dismissed. These documents were presented for the first time during the appeal process, as the attachment of their bank accounts occurred only after the writ petition had already been disposed of.

The appeal was heard by a bench that included Sri. Mathai M. Paikeday, a Senior Counsel, who represented the petitioners via video-conferencing. This indicates the petitioners’ continued efforts to challenge the initial ruling and to seek redress for what they perceive as injustices committed against them.

The petitioners in this case are appealing a decision made by a learned Single Judge, who dismissed their writ petition as premature. The petitioners had sought various reliefs, including a declaration that they were not liable to pay GST on the revenue share retained by the Local Cable Operator (LCO), and compensation for damages to their reputation and the mental agony they allegedly suffered due to the actions of the respondents.

The petitioners argued that they were being harassed by the respondent-officers and that these officers had acted beyond their authority. They claimed that their bank accounts had been improperly attached during an investigation, and they produced documents related to these attachments only during the appeal, as the attachments occurred after the writ petition was dismissed.

The Single Judge had refused to exercise discretion under Article 226, concluding that the petition was premature and lacked sufficient evidence to support the allegations of harassment. The Judge found it inappropriate to form an opinion on the claims of the petitioners without more concrete evidence.

In the appeal, the petitioners, represented by Senior Counsel Sri. Mathai M. Paikeday, argued that the entire proceedings were illegal and that they had suffered greatly due to the actions of the respondent-officers. They contended that the officers conducted an audit under Section 65 and then initiated an investigation under Section 67 without reasonable cause. They described a surprise raid on their offices and residences, which lasted from early morning until midnight. During this raid, the petitioners were allegedly taken into illegal custody, denied basic amenities, and coerced into paying one crore rupees, which they claim was done under duress.

The petitioners challenged the validity of Exhibit P3, which documented the payment, arguing that it was not made voluntarily but under pressure. They also contested Exhibit P4, an order of seizure, asserting that it was issued without proper jurisdiction. The petitioners claimed that the officer in charge (SIO) acted beyond their legal powers by seizing documents and taking actions based on insufficient grounds.

The petitioners are seeking a reversal of the Single Judge’s findings and relief from the actions taken against them, which they argue were conducted unlawfully and caused significant harm to their business and personal reputations.

In this legal case, the petitioners sought several remedies against what they perceived as unlawful actions by the respondents, specifically the authorities involved in a GST-related investigation. The primary reliefs requested by the petitioners included a declaration that they were not liable to pay GST on the revenue share retained by the Local Cable Operator (LCO), and compensation for damages to their reputation and the mental agony they suffered. They also sought a declaration against the retention of information and documents by the fourth and fifth respondents.

The matter was initially brought before a Single Judge, who dismissed the writ petition as premature. The Judge found that the petitioners had not provided sufficient evidence to support their claims of harassment and misconduct by the respondents. Without concrete evidence, the Judge deemed it inappropriate to make any determinations on the allegations at that stage, and therefore, declined to exercise discretion under Article 226 of the Constitution, which allows High Courts to issue certain writs. The petitioners subsequently appealed this decision.

During the appeal, the petitioners introduced new evidence, including documents related to the attachment of their bank accounts, which occurred after the original writ petition was dismissed. This new evidence was crucial as it was not available during the initial hearing.

The appeal was heard by a panel of judges, where the petitioners were represented by Senior Counsel Sri. Mathai M. Paikeday, who argued that the actions of the respondent-officers were illegal and caused significant harm to the appellants. The counsel highlighted that the investigation and subsequent actions taken by the officers were beyond their legal authority. The appellants contended that the investigation under Section 67 of the GST Act was initiated without reasonable cause, while an audit under Section 65 was still pending, which they argued was illegal and amounted to harassment.

The petitioners further alleged that the respondents conducted a surprise raid on their offices and residences, during which they were subjected to unlawful detention and denied basic amenities. They claimed that they were coerced into making a payment of one crore rupees under duress, evidenced by Exhibit P3. Additionally, they argued that the seizure of documents under Exhibit P4 was without jurisdiction, as the satisfaction required for such an action should have been reached by an officer of a higher rank than the one involved.

The appellants also challenged the validity of the summons issued to them, arguing that the summons lacked the mandatory Document Identification Number (DIN) as required by regulations issued by the Central Board of Indirect Taxes and Customs. The absence of this DIN rendered the proceedings invalid, according to the appellants. They further argued that the attachment of their bank accounts was also illegal and should be set aside.

Moreover, the appellants contended that the simultaneous conduct of an audit and an investigation was not permissible under the law. They asserted that the audit initiated under Section 65 should have been concluded before any investigation under Section 67 could begin.

The petitioners emphasized that the payment of one crore rupees was forcibly obtained in violation of the GST rules, specifically pointing to Rule 87 of the CGST Rules, 2017, which governs the manner of payments to the department.

The case thus revolves around the legality of the actions taken by the GST authorities, the procedural lapses alleged by the petitioners, and the broader implications of these actions on the petitioners’ rights. The appeal sought to overturn the Single Judge’s decision and obtain the reliefs initially sought, along with additional compensation for the harm suffered during the process.

In the case at hand, the petitioners sought several declarations and remedies from the court. Specifically, they requested: (i) that the information collected by the 4th and 5th respondents be declared unauthorized, (iv) a declaration that they are not liable to pay Goods and Services Tax (GST) on the revenue share retained by Local Cable Operators (LCOs), and (v) compensation for damage to their reputation and for the mental agony they have suffered.

The learned Single Judge, however, found the writ petition to be premature. The Judge noted that the petitioners failed to provide sufficient evidence to substantiate their claims of harassment. Given the lack of supporting material, the Judge determined it was inappropriate to form any opinion on the allegations at that stage and, therefore, refused to exercise discretion under Article 226. Consequently, the reliefs sought by the petitioners were denied. Dissatisfied with these findings, the petitioners appealed the decision, presenting further documents that were issued in the course of the investigation and related to the attachment of their bank accounts. These documents were not part of the original writ petition as the attachment occurred after its disposal.

In the appeal, the petitioners were represented by Senior Counsel Sri.Mathai M.Paikeday, who argued via video-conferencing, supported by Advocate Sri.Sandeep Gopalakrishnan. The respondents were represented by Sreelal N Warrier, learned Standing Counsel for the Department and its officers, and Sri.Mohammed Rafiq, learned Counsel appearing for the State GST Department.

The Senior Counsel for the petitioners, Sri.Mathai M.Paikeday, contended that the entire proceedings were illegal, causing the appellants untold misery due to the respondent officers’ actions, which were allegedly beyond their authority. He pointed out that an audit was initiated under Section 65, as evidenced by Exhibit P5 dated 15.05.2020. However, while this audit was still pending, an investigation under Section 67 was initiated without reasonable cause. The counsel argued that a surprise raid was conducted at the appellants’ offices and residences, starting early in the morning and lasting until midnight. During this time, the appellants were allegedly taken into illegal custody and deprived of basic amenities. They were also coerced into parting with a sum of Rupees One Crore, as evidenced by Exhibit P3, which the appellants claimed was made under duress.

The counsel further argued that Exhibit P4, the order of seizure, was without jurisdiction because the Senior Investigation Officer (SIO) had not satisfied the requirement of having “reasons to believe” that the documents annexed therein needed to be seized. Section 67 specifically mandates that such reasons must be entered by an officer not below the rank of a Joint Commissioner, which the SIO was not. Additionally, the summons issued to the appellants, as seen in Annexures A2 and A3, did not include a Document Identification Number (DIN), which is a mandatory requirement as per Annexure A6 issued by the Central Board of Indirect Taxes and Customs. There was also no evidence that a DIN was generated within the prescribed 15-day period as required under para 5 of Annexure A6. Therefore, the counsel contended that the Section 67 proceedings were invalid on their face, and as a result, the attachment of the bank accounts, as evidenced by Annexures A7 and A8, should also be set aside. The counsel also argued that parallel proceedings of audit and investigation could not be conducted simultaneously and that the audit initiated under Section 65 should have been concluded before any investigation was initiated.

Further, the counsel argued that the cheque of Rupees One Crore was taken forcefully, in violation of the Central Goods and Services Tax (CGST) Rules, 2017. Specifically, Rule 87 mandates that an Electronic Cash Ledger must be maintained for each person liable to pay amounts under the Act, and any deposit must be made using a prescribed form. No such form was generated in this case, which the counsel argued was evidence of the duress under which the cheque was issued. The counsel also challenged the Department’s claim that the appellants sought to avail benefits under Section 74(5) of the Act, asserting that Exhibit P3, which indicated the protest under which the cheque was issued, pointed to the threats and coercion involved in obtaining the cheque. The counsel argued that the Department’s failure to encash the cheque, despite sufficient funds being available in the account, supported the contention that the respondents were not empowered to accept the cheque. The counsel emphasized that without a determination of tax and a demand raised under Sections 49 and 50, the Department or its officers could not accept any deposit.

In summary, the petitioners challenged the legality of the proceedings initiated by the respondent officers, alleging that they were conducted without proper authority and in violation of the prescribed procedures. They sought to have the actions of the respondent officers invalidated and their bank accounts released from attachment, while also seeking compensation for the damages they had suffered.

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