Yasho Industries Ltd. VS Union of India

The petitioners, through a petition under Article 226 of the Indian Constitution, have challenged a summons dated April 12, 2021, issued under Section 70 of the Central Goods and Services Tax Act, 2007 (CGST Act). The summons required the petitioners to provide evidence and produce documents as part of an inquiry against them. Additionally, the petitioners sought a directive against Respondent No. 3 to refund or recredit INR 3 crore, which they had paid on February 9, 2021, via Form GST DRC-03. They also requested the court to quash an impugned circular dated July 5, 2017, which dealt with assigning functions to officers as “proper officers” under the CGST Act and its rules.

The petitioners include a public limited company involved in manufacturing and exporting specialized chemicals, with its factory located in Vapi, and the factory manager of the said company. The company is a holder of Advance Authorization Licenses, which likely relate to tax exemptions or benefits for exporters. The petition reflects the company’s concerns regarding the legality of the summons and related tax implications.

The petitioners have filed a writ petition under Article 226 of the Indian Constitution challenging a summons dated April 12, 2021, issued under Section 70 of the Central Goods and Services Tax Act, 2007 (CGST Act). This summons required the petitioners to provide evidence and produce documents for an inquiry against them. Additionally, the petitioners sought directions against Respondent No. 3 to refund or re-credit INR 3 crore, which was paid by the petitioners on February 9, 2021, using Form No. GST DRC-03. The petitioners also sought to quash a circular dated July 5, 2017, which assigned functions to officers as “proper officers” under the CGST Act and its rules.

The first petitioner is a public limited company engaged in the manufacture and export of specialized chemicals with a factory in Vapi, Gujarat. The second petitioner is the factory manager of the company. The company holds Advance Authorization Licenses under the Foreign Trade Policy 2015-2020. The Directorate of Revenue Intelligence (DRI) in Kolkata initiated an inquiry against the petitioners and other importers for allegedly incorrectly availing benefits under the Export Oriented Unit (EOU) Scheme and claiming a refund of duties paid on exported goods. The petitioners, aggrieved by the DRI’s communication, filed a writ petition in the Bombay High Court. The Bombay High Court issued a notice to the respondents on January 8, 2021.

Further, on February 9, 2021, officers from Respondent No. 3 visited the petitioners’ manufacturing unit in Vapi concerning the ongoing inquiry, during which INR 3 crore was recovered from the petitioners due to alleged incorrect Integrated Goods and Services Tax (IGST) claims.

The petitioners have filed a petition under Article 226 of the Constitution of India challenging a summons dated April 12, 2021, issued under Section 70 of the Central Goods and Services Tax Act (CGST Act), 2007. This summons required the petitioners to provide evidence and documents related to an inquiry against them. Additionally, the petitioners sought directions for the refund or re-credit of INR 3 Crore, which they had paid under protest on February 9, 2021, through Form GST DRC-03. They also requested the court to quash a circular dated July 5, 2017, that assigned certain functions to officers as “proper officers” under the CGST Act and its rules.

The first petitioner is a public limited company engaged in manufacturing and exporting specialized chemicals, with its factory located in Vapi, Gujarat. The second petitioner is the Factory Manager of this company. The petitioner company holds Advance Authorization Licences under the Foreign Trade Policy 2015-2020. The Directorate of Revenue Intelligence (DRI), Kolkata Zonal Unit, initiated an inquiry against the petitioner and other importers, alleging that they had wrongly availed benefits under the Export Oriented Unit (EOU) Scheme as per certain Customs Notifications, and simultaneously claimed refunds of duties paid on exported goods. Aggrieved by this, the petitioners filed a writ petition in the Bombay High Court, which issued a notice to the respondents on January 8, 2021.

During the ongoing inquiry, officers from respondent No.3 visited the petitioners’ Vapi manufacturing unit on February 9, 2021, and recovered INR 3 Crore from them, alleging incorrect IGST refunds. The petitioners claim that this payment was made under extreme pressure and protest. Subsequently, respondent No.3 issued the impugned summons under Section 70 of the CGST Act, asking the petitioners to appear on April 21, 2021, to provide evidence and documents related to the inquiry, including details about the advance authorization under which the IGST refund was claimed. The petitioners contend that they are being subjected to two parallel investigations—one by the DRI, Kolkata Zonal Unit, and the other by respondent No.3—leading to their current petition.

The petitioners, through their petition filed under Article 226 of the Indian Constitution, challenge the summons dated April 12, 2021, issued under Section 70 of the Central Goods and Services Tax (CGST) Act, 2007. This summons required the petitioners to provide evidence and produce specific documents as part of an inquiry initiated against them. Additionally, the petitioners seek a direction to the respondent No.3 to refund or allow recredit of INR 3 crore, which they paid on February 9, 2021, under protest, as per Form GST DCR-03. The petitioners also request the court to quash a circular dated July 5, 2017, related to the assignment of functions to officers under the CGST Act.

The petitioner No.1 is a public limited company engaged in manufacturing and exporting specialized chemicals, with a factory in Vapi, Gujarat. The company holds Advance Authorization Licenses under the Foreign Trade Policy 2015-2020. The Directorate of Revenue Intelligence (DRI), Kolkata Zonal Unit, had informed the Mumbai office of the petitioner on November 11, 2020, that an inquiry had been initiated against them and other importers for allegedly availing incorrect benefits under certain customs notifications and simultaneously claiming a refund of duty paid on exported goods. Aggrieved by this communication, the petitioners filed a writ petition before the Bombay High Court, which issued a notice to the respondents on January 8, 2021.

On February 9, 2021, officers from respondent No.3 visited the petitioners’ manufacturing unit in Vapi in connection with the inquiry and recovered INR 3 crore from them, allegedly due to incorrect Integrated Goods and Services Tax (IGST) refunds. The petitioners contend that this payment was made under extreme duress and under protest, as noted in the payment form. Subsequently, respondent No.3 issued a summons under Section 70 of the CGST Act, requiring the petitioners to appear on April 21, 2021, and provide evidence or documents related to their IGST refund claims and the import of duty-free raw materials.

The petitioners argue that they are subjected to two parallel investigations—one initiated by the DRI, Kolkata Zonal Unit, and the other by respondent No.3 under the CGST Act. Their legal counsel, Mr. Abhishek Rastogi, contends that the summons issued by respondent No.3 is beyond his jurisdiction, as the power to issue such summons under Section 70 of the CGST Act lies exclusively with the “Proper Officer” as defined in the Act. Mr. Rastogi further argues that the delegation of powers to the respondent No.3, a Senior Intelligence Officer with the Directorate General of Goods and Services Tax Intelligence (DGGI), is not supported by the necessary notification under Section 167 of the CGST Act. Thus, the petitioners seek relief from the court on these grounds.

The petitioners, a public limited company engaged in the manufacturing and exporting of specialized chemicals, have filed a petition under Article 226 of the Indian Constitution, challenging a summons issued on April 12, 2021, under Section 70 of the Central Goods and Services Tax (CGST) Act, 2007. The summons required the petitioners to produce documents and give evidence related to an inquiry initiated against them. Additionally, the petitioners are seeking a refund or recredit of INR 3 crore, which they claim was paid under duress on February 9, 2021, during a visit by officers from the Directorate General of Goods and Services Tax Intelligence (DGGI). They have also challenged a circular dated July 5, 2017, concerning the assignment of functions to officers as ‘proper officers’ under the CGST Act.

The company holds Advance Authorization Licenses under the Foreign Trade Policy 2015-2020. An inquiry was initiated by the Directorate of Revenue Intelligence (DRI) Kolkata Zonal Unit against the petitioners and other importers for allegedly incorrectly availing benefits under certain customs notifications while also claiming a refund of duty paid on exported goods. The petitioners, aggrieved by this inquiry, had earlier filed a writ petition in the Bombay High Court.

The petitioners argue that the payment of INR 3 crore was made under protest and due to extreme duress. The summons issued under Section 70 of the CGST Act required the petitioners to produce documents related to the advance authorization under which they claimed IGST refunds. The petitioners contend that they are subject to two parallel investigations, one by the DRI and the other by the DGGI.

Their legal counsel, Mr. Abhishek Rastogi, argues that the respondent No. 3, who issued the summons, lacked the proper jurisdiction. According to him, the power to issue summons under Section 70 of the CGST Act is vested exclusively in a ‘Proper Officer’ as defined by the Act, and the respondent No. 3, a Senior Intelligence Officer of the DGGI, did not have the authority to issue the summons without a specific assignment of such function by a Commissioner, as required by Section 167 of the CGST Act. The counsel further cited the Supreme Court’s decision in *Canon India Pvt. Ltd. vs. Commissioner of Customs* to emphasize the importance of proper delegation of authority.

The petitioners also challenge the validity of the circular dated July 5, 2017, arguing that Section 2(91) of the CGST Act, which the circular references, is merely a definition clause and does not confer any power to assign functions. They seek to have the circular quashed, arguing that the delegation of powers was not properly executed.

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