Cable Operator Challenges GST Authority, Court Upholds SearchSuresh Kumar PP and Aboobacker Sidhique vs. Directorate General Intelligence”
The Simultaneous proceedings under audit and Investigation are valid under the GST Act 2017.
Suresh Kumar PP, a cable operator, has filed a writ petition to challenge an order by a Single Judge. The order in question was issued by the Directorate General, calling for an investigation during an ongoing audit under the Central Goods and Services Tax (CGST) Act. Suresh Kumar contends that he is not liable under the GST Act and, therefore, no tax applies to him. He alleges harassment, claiming that he was coerced into giving a cheque of one crore rupees as a deposit against alleged tax evasion and penalties. He seeks a refund of the uncashed cheque, an apology from the GST department, and a halt to any further raids, asserting that the act does not apply to his cable business.
Facts of the Case:
Suresh Kumar PP and Aboobacker Sidhique operate as cable operators, providing services to the public. They believe that they were subjected to unlawful proceedings under the CGST Act of 2017. Their premises were raided, and they were detained. They were also forced to provide a cheque of one crore rupees. Their demands are:
- Quash the notice from the Senior Intelligence Officer (SIO) demanding information.
- Invalidate the search and seizure action under the CGST Act.
- Refund the one crore rupees collected from them.
- Obtain a declaration from the Director General of GST that local cable operators are not liable to tax under the act.
- Seek compensation for damage to their reputation and mental distress.
The GST Authorities assert that their actions against Suresh Kumar were lawful, citing provisions from the Integrated Goods and Services Tax (IGST) Act of 2017:
- Search and seizure under section 67.
- Audit under section 65.
- Demand for cheque or deposit for potential tax and penalty under section 75(5).
- Use of Rule 142 of the CGST Act for intimation of proceedings. The GST department claims that they have the right to act against tax evasion, suppressed information, and improper stock declarations.
Suresh Kumar and his partner argue that they are local cable operators and exempt from the IGST/GST Act. They condemn the Commissioner’s actions, including detention and demanding one crore rupees, as unlawful and harassing. They call for setting aside the Single Judge’s order and the SIO’s notice, compensation for damage to their reputation, and the refund of the one crore rupees paid.
Observation and Judgement:
The court dismissed the appeal against the Single Judge’s order, upholding the validity of the search and seizure procedure. The court found nothing amiss in conducting search and seizure during concurrent audit and investigation.
Suresh Kumar and his partner misunderstood the application of the law, leading them to file the petition. The claim of extortion falls flat as the uncashed cheque negates it. The relevant sections for unregistered persons are Sections 62, 63, and 64, addressing tax determination and payment issues. Section 74 deals with fraud and intentional misrepresentation. The penalty under Section 74 varies from 15% of tax (pre-notice) to 25% (post-notice), and 50% of tax after the order is served.