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#GSTCase-239-Round up of Case on Search and Seizure- Summon at Odd Hours; Whether audit and investigation can continue simultaneously and whether amount can be collected in adhoc at the time of inspection; Whether “cash” is covered within the ambit of “things” and Retraction of Confessional Statement

Case-1-Agarwal Foundries (P.) Ltd. v. Union of India-[2020] 121 134-HIGH COURT OF TELANGANA
Subject-Search, seizure, Summon at Odd Hours
a) No Use of Violence-In view of this statutory regime already in place, it would be futile for the respondents to claim any liberty to torture or use physical violence during the course of search, investigation or interrogation under the CGST Act, 2017 against persons suspected of tax evasion like the petitioners or their employees.
b) Service of Summon at 00:30 Hours-It bears a date 12-12-2019 and asks the 2nd petitioner to appear before 4th respondent at 00:30 hrs on 12-12-2019.
84. This prima-facie indicates that it was issued after midnight on the intervening night of 11-12-2019 and 12-12-2019 asking the 2nd petitioner to appear at the ungodly hour of 00:30 hrs on that day.
85. What was so important to be recorded at such a time, which cannot wait till the morning of 12-12-2019, is not disclosed by the respondents.
86. We shall here refer to the plea in para 35 of the counter filed by the respondents 1 to 4 and 10 in this regard. They state as follows:
” …it was imperative to record statement of Shri Pramod Agarwal ( in pursuance of summons issued under sec.70 of the CGST Act, 2017) on the spot as preliminary investigation clearly suggested his role in the tax evasion by petitioner no. 1. The petitioner no. 2 was available at the spot i.e the Corporate Office of petitioner no. 1. He was served the summons in his office. There is no bar to making enquiries under sec.70 of the GST Act, 2017 in the night itself…”
87. We are unable to accept this explanation offered by the respondents to justify the issuance of summons to the 2nd petitioner after the midnight of 11-12-2019 i.e., after 00:00 hrs on 12-12-2019 and asking him to appear before the 4th respondent at 00:30 hrs on 12-12-2019.
In our opinion, the respondents cannot contend that they will interrogate the persons suspected of committing any tax evasion as per their sweet will forceably keeping them in their custody for indefinite period. If it is done, it has to be construed as informal custody and the law relating to an accused in custody has to be expressly or impliedly applied. If accused can get all the benefits under Art.22 of the Constitution, a person in such informal custody can say that he is also entitled to get relief under Art.21 of the Constitution of India. This view has been taken by the Gujarat High Court in Jignesh Kishorbhai Bhajiawala v. State of Gujarat 2017 Crl.L.J.1760 para 19 at pg.1777 while dealing with similar actions of authorities under the Prevention of Money Laundering Act, 2002. In view of the admitted fact that the search operations were continued well past midnight and summons were issued to 2nd petitioner to appear at 00:30 hrs on 12-12-2019, we do not accept the plea of the respondents that they did not act contrary to established procedure, that the search proceedings were carried out under proper and applicable law and procedure, and no harm or damage were made to any human/person or property and no sentiments were hurt.
c) Presence of Advocate during the Summon although at a distance-In Birendra Kumar Pandey (9 supra), referred to in Jignesh Kishorbhai (6 supra), even though the decision in Poolpandi (4 supra) was also cited, the Supreme Court referred to its own decision in Senior Intelligence Officer, Directorate of Revenue Intelligence v. Jugal Kishore Samra [2011] 12 SC.C. 362 and held :
“Taking a cue, therefore, from the direction made in D.K. Basu and having regard to the special facts and circumstances of the case, we deem it appropriate to direct that the interrogation of the respondent may be held within the sight of his advocate or any other person duly authorized by him. The advocate or the person authorized by the respondent may watch the proceedings from a distance or from behind a glass partition but he will not be within the hearing distance and it will not be open to the respondent to have consultations with him in the course of the interrogations.” (emphasis supplied)
We hold that in the special facts and circumstances of the case, the petitioner nos.2 to 4 or their employees shall be examined in the visible range of their counsel, though not in hearing range.
Case-2-Suresh Kumar P.P. v. Deputy Director, Directorate General of GST Intelligence (DGGI)-[2020] 120 173 –High Court of Kerala
Subject-Whether audit and investigation can continue simultaneously and whether amount can be collected in adhoc at the time of inspection
a) Audit and Investigation being continued simultaneously-We do not find any infirmity in the audit and investigation proceeding being continued simultaneously. But the learned Standing Counsel informs us that in the wake of the investigation commenced, the audit would not be proceeded with.
b) Collection of Amount Adhoc-When an investigation is in progress and the premises of any person is being searched and seizure effected; again at any time, in the course of the proceedings, the person is enabled payment of tax, interest and penalty at the reduced rate of penalty so as to save himself from a higher penalty. In the course of inspection, often a generation of the prescribed form and deposit in accordance with the Rules may not be possible. This is why section (sic rule) 87(3) proviso speaks of the restriction for deposit upto ten thousand rupees per challan, in case of over the counter payments being exempted in situations under clauses (a), (b) and (c) of that proviso. Sub-clause (c) of the proviso to section 87(3) reads as under:
“(c) Proper officer or any other officer authorised for the amounts collected by way of cash, cheque or demand draft during any investigation or enforcement activity or any ad hoc deposit”.
An officer above the rank of a Joint Commissioner or one authorized by such officer carrying out the investigation or enforcement activity is so exempted and can deposit any amounts collected, by way of cash, cheque or demand draft, during the investigation or enforcement activity. This does not require generation of the Forms prescribed. The proper officer or the one authorized, hence is enabled to receive cash, cheque or demand draft in the course of an investigation or enforcement activity from the tax payer. We do not find any extortion having been effected against the statute and Exhibit P3 specifically indicates that it is a voluntary payment, although it is made under protest.
Case-3-Smt. Kanishka Matta v. Union of India-[2020] 120 174 –High Court of Madhya Pradesh
Subject-Whether “cash” is covered within the ambit of “things” and Retraction of Confessional Statement
a) Meaning of Things – The core issue before this Court is that whether expression “things” covers within its meaning the cash or not. In the considered opinion of this Court, the CGST Act, 2017 has to be seen as a whole and the definition clauses are the keys to unlock the intent and purpose of the various sections and expressions used therein, where the said provisions are put to implementation. Section 2(17) defines “business” and section 2(31) defines “consideration”. In the considered opinion of this Court a conjoint reading of section 2(17), 2(31), 2(75) and 67(2) makes it clear that money can also be seized by authorized officer.
19. The word “things” appears in section 67(2) of the CGST Act, 2017 is to be given wide meaning and as per Black’s Law Dictionary, 10th Edition, any subject matter of ownership within the spear of proprietary or valuable right, would come under the definition of “thing” (page No. 1707). Similarly, Wharton’s Law Lexicon at page No. 1869 and 1870, the word “thing” has been defined and it includes “money”. It is a cardinal principle of interpretation of statute that unreasonable and inconvenient results are to be avoided, artificially and anomaly to be avoided and most importantly a statute is to be given interpretation which suppresses the mischief and advances the remedy (Interpretation of statute by Maxwel, 12th Edition, page No. 199 to 205). The same preposition of law is propounded in Craies on Statute Law, 7th Edition, page No. 94).
b) Retraction of Confessional Statement- Much has been argued by learned counsel for the petitioner in respect of “confessional statements” and the fact that the husband of the petitioner has retracted at a later stage. In the case of Surjeet Singh Chhabra v. Union of India 1996 71 (SC), the Hon’ble Supreme Court has held that “confessional statements” made before Customs Officer though retracted within six days is an admission and binding since Custom Officers are not Police Officers. In the present case also the statements were made confessing the guilt by the husband of the petitioner and later on he has retracted from that statement as stated in the writ petition and therefore, in light of the Hon’ble Supreme Court’s judgment no relief can be granted in the present writ petition on the basis of aforesaid ground keeping in view the judgment of Hon’ble Supreme Court.
23. A Division Bench of this Court in the case of R.S. Company v. CCE 2017 (351) ELT 264 (MP) has dealt with “confessional statements” and decided the matter in favour of the revenue and therefore, the ground raised in the present petition that the husband of the petitioner retracted the confessional statement does not help the petitioner nor her husband in any manner.
24. Learned counsel for the petitioner has placed reliance upon a judgment delivered in the case of Vinod Solanki v. Union of India [2009] 92 SCL 157 (SC). Heavy reliance has been placed in paragraph No. 23 and the same reads as under:—
“22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded. {See Pon Adithan v. Deputy Director, Narcotics Control Bureau, [1999] 6 SCC 1 : 1999 SCC (Cri.) 1051}”
The aforesaid case was a case under the Foreign Exchange Regulation Act, 1973 and the Hon’ble Apex Court has held that evidence brought on record by way of confession, which stood retracted must be substantially corroborated by other independent and cogent evidence, which would lend adequate assurance to the Court that it may seek to rely thereupon. In the present case, the authorities are at the stage of investigation. The evidence is being collected and therefore, at this stage, the judgment relied upon by learned counsel for the petitioner is of no help.