RCI INDUSTRIES & TECHNOLOGIES LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS UNION OF INDIA AND OTHERS

Seeking to conclude the process of adjudication within the shortest possible time – petition has a chequered history – handing over copies of documents seized by the Respondent from the Petitioner during a search – HELD THAT:- The Court is of the considered view that the search proceedings which took place on 7th March, 2020 without the authority of law and cannot be sustained. The Panchnama drawn up on 7th March, 2020 is hereby quashed – Notwithstanding that Petitioner No.2 may have earlier appeared pursuant to the summons issued and may have provided documents, it is directed that the Petitioner No. 2 will now appear before the Senior Intelligence Officer of the DGGSTI at Gurugram on 25th March, 2020 at 11 a.m. He will be provided with the list of documents/ information that is required by the Respondents and Petitioner No.2 will cooperate in providing that information within a reasonable time to be provided to him by the Respondents.

In order to ensure that there is strict compliance with the above directions, the Court lists the present petition for further hearing on 17th April, 2020.

No.- C. W. P. No. 7145 of 2020

Dated.- March 18, 2020

Citations:

  1. M/s RCI Industries & Technologies Ltd. Versus Union of India & anr. – 2020 (3) TMI 1371 – PUNJAB AND HARYANA HIGH COURT
  2. M/s. RCI Industries & Technologies Ltd. Versus Directorate General of Goods and Service Tax Intelligence, Gurugram and Another – 2020 (5) TMI 193 – PUNJAB AND HARYANA HIGH COURT

DR. S. MURALIDHAR and AVNEESH JHINGAN, JJ.

Tarun Gulati , Senior Advocate with  Surender Kumar  and  A. K. Babbar  for the petitioners.

Sourabh Goel , Senior Panel Counsel for Union of India for the respondents.

JUDGMENT

Notice of motion.

2. Mr. Sourabh Goel, Senior Panel Counsel for Union of India accepts notice on behalf of the Respondents.

3. This petition has a chequered history. Petitioner No.1/Company was earlier before this Court with CWP No.18523 of 2019 which was disposed of by an order dated 18th February, 2020, noting the circumstances under which the Petitioner had approached the Court seeking directions to the Respondent i.e. the Directorate General of Goods and Service Tax Intelligence, Gurugram, to conclude the process of adjudication within the shortest possible time after issuing a show cause notice etc. The Court noted that the main prayer in the petition was about the Respondent handing over copies of documents seized by the Respondent from the Petitioner during a search conducted on 9th July, 2018 at the Head Office as well as godown of the Petitioner.

4. On the issue of safeguard from arrest, the Court noted that a summons dated 6th February, 2020 had been issued to the Petitioner informing it that the personal appearance of its Managing Director i.e. Mr. Rajeev Gupta (Petitioner No.2 herein) was not required.

5. The Court then specifically noted in para 4 of its order that “As regards any future apprehension of arrest of any person, it is clarified that the respondents shall act in accordance with law.”

6. In view of the above development, the petition was disposed of on 18th February, 2020, limiting the attachment to amounts which were lying to the credit of the Petitioner in its Cash Credit Accounts, at the time of freezing.

7. On the very next date i.e. 19th February, 2020 another summons was issued, this time to Mr. Rajeev Gupta, the Managing Director of Petitioner No.1, who is Petitioner No.2 herein. This led to a further Writ Petition being filed i.e. CWP No. 5762 of 2020 (O&M), which came to be disposed of by this Court on 2nd March, 2020 by the following order :-

“This petition has been filed against impugned summon dated 19.02.2020 (Annexure P-7) to quash the impugned summon dated 06.02.2020 (Annexure P-8) being malafide and in violation of guidelines issued by respondent.

Notice of motion.

On the asking of the Court, Mr. Satya Pal Jain, Additional Solicitor General of India with Mr.Sourabh Goel, Sr. Panel Counsel accepts notice on behalf of the respondents.

The contention of the learned counsel for the petitioner is that the Managing Director has already appeared 10 times.

Today the learned Additional Solicitor General appearing with Mr. Sourabh Goel, Sr. Panel Counsel has very fairly stated that as per the last summons which were served upon to the petitioner (which he has received) it has been clarified that the Managing Director need not appear in person but the representative who appears with the documents must be in a position to answer the queries, and in the absence thereof the requirement for the presence of the Managing Director may arise.

In view of this clarification nothing survives.

Petition stands disposed of.

Since the main case has been decided, the pending civil miscellaneous application, if any, also stands disposed of.”

8. It now appears that on 6th March, 2020, a summons was issued to Mr. Rajeev Gupta asking him to appear on 16th March, 2020 at 11:00 a.m. in the office of Respondent No.1. However, on the very next day i.e. 7th March, 2020 in the early hours at around 6:00 a.m., a search was conducted at the residential premises of Mr. Rajeev Gupta. The Panchnama drawn up at his residential premises the search has been enclosed as Annexure P-9 to the present petition.

9. One of the grievances in the present petition is that with the Petitioners being prepared to cooperate with the Respondents, there was no need for the Respondent to resort to an extreme step of conducting search and, that too, without following the due process under the Central Goods and Service Tax Act, 2017 and, in particular, Section 67 thereof, which requires that the proper officer, not below the rank of Joint Commissioner, pursuant to an inspection carried out under Section 67(2) to have “reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place.”

10. Mr. Tarun Gulati, learned Senior Counsel appearing for the Petitioners reiterates the submissions earlier made in the above writ petitions before this Court that the Petitioners have always been willing to cooperate with the Respondents in providing whatever the documents and information are sought for and that there was no warrant whatsoever to resort to the extreme measure of a search only to record a statement of the Managing Director of the Petitioner No.1.

11. Mr. Sourabh Goel, learned Senior Panel Counsel appearing for the Respondents submits that the authorized representative of Petitioner No.1, who had earlier appeared before the Respondents, was not cooperative and was not providing the requisite information sought for by the Respondents. It is further pointed out that a different officer of Petitioner No.1 appears on each occasion and is unable to provide requisite information.

12. However, Mr. Goel does not dispute that the procedure outlined under Section 67 of the Act was perhaps not resorted to in going in for a search of the residential premises of Petitioner No.2. Further having issued summons to Petitioner No.2 to appear on 16th March, 2020, there was absolutely no need to resort to a search on the very next date.

13. The Court is of the considered view that the search proceedings which took place on 7th March, 2020 without the authority of law and cannot be sustained. The Panchnama drawn up on 7th March, 2020 is hereby quashed.

14. At the same time, against the background present litigation the Court cannot be unmindful of the need for investigation to proceed in accordance with law, for which purpose the cooperation of the Petitioners is essential. Notwithstanding that Petitioner No.2 may have earlier appeared pursuant to the summons issued and may have provided documents, it is directed that the Petitioner No. 2 will now appear before the Senior Intelligence Officer of the DGGSTI at Gurugram on 25th March, 2020 at 11 a.m. He will be provided with the list of documents/ information that is required by the Respondents and Petitioner No.2 will cooperate in providing that information within a reasonable time to be provided to him by the Respondents.

15. In order to ensure that there is strict compliance with the above directions, the Court lists the present petition for further hearing on 17th April, 2020.

16. Till such time, no coercive steps of arresting Petitioner No.2 shall be resorted to. However, it is made clear that if the Court is satisfied that the Petitioners are not cooperating with the Respondents in providing the requisite documents/ information, the Court may be constrained to reconsider extending such protection to the Petitioner No.2.

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