Seeking To Quash GST Summons During Inquiry Is Essentially Seeking Anticipatory Bail: Delhi High Court

The Delhi High Court has refused to interfere with GST summons issued to two Panipat-based traders, holding that summons under Section 70 of the CGST Act are meant only to aid an inquiry and do not amount to the start of coercive proceedings.

Dismissing the challenge, Justice Neena Bansal Krishna said that an attempt to quash summons at the inquiry stage is, in substance, an attempt to seek protection from arrest.

"Seeking setting aside of Summons, is essentially seeking interim protection or an anticipatory bail, during an inquiry stage, i.e. essentially at a stage when the Respondent is collecting information and evidence based on suspicion and cannot be equated with the initiation of proceedings" the court held.

The petition was filed by Naveen, proprietor of Aarti Traders, and his brother Suraj Kumar, after the Directorate General of GST Intelligence conducted searches at their premises and issued summons seeking documents and statements. The tax authorities alleged that the brothers were involved in clandestine trading of biri without payment of GST, with alleged evasion exceeding Rs39.2 crore. Suraj Kumar was arrested during the investigation and later released on bail.

The petitioners alleged that the summons were issued mechanically and in violation of departmental guidelines. They also claimed that Suraj Kumar was made to remain present for long hours during questioning and that repeated summons created an apprehension of arrest, even though no show-cause notice had been issued to them under the GST Act.

Rejecting these submissions, the court explained that Section 70 of the CGST Act empowers GST officers to summon any person whose attendance is considered necessary to give evidence or produce documents during an inquiry. Such an inquiry, the court said, is confined to fact-finding and precedes any decision on whether proceedings should be initiated.

In reaching this view, the court leaned on its earlier ruling in Armour Security (India) Ltd. v. Commissioner, CGST, which was later upheld by the Supreme Court. In that case, the top court had held that a summons is part of the investigative process and cannot be treated as the beginning of proceedings. As the Supreme Court put it, “a summons is not the culmination of an investigation, but merely a step in its course,” issued to gather information before any decision is taken.

The court also referred to the Supreme Court's decision in Radhika Agarwal v. Union of India to deal with the petitioners' fear of arrest. It noted that the GST law itself lays down checks on the power to arrest and that courts step in only when there is a real and specific apprehension. The Supreme Court had clarified that “the power to grant anticipatory bail arises when there is apprehension of arrest,” and not merely because summons have been issued during an inquiry.

Holding that the writ petition was premature, the court dismissed it while leaving it open for the petitioners to approach the appropriate forum at a later stage if the investigation results in further action.

For Petitioner: Advocates Hitanshi, Yash Tewari

For Respondent: Senior Advocate Anurag Ojha with Advocates Dipak Raj, Vipul Kumar