The Delhi High Court has refused to quash the summons against a person accused of creating numerous fake firms and availing Input Tax Credit (ITC) fraudulently. The court observed that there should be reasonable apprehension of coercion by the GST Department for 'summons proceedings' to be conducted through CCTV Cameras.

The single bench of Justice Rajnish Bhatnagar has refused to quash the summons on the grounds that ​​the investigation is still at a nascent stage and that the present case involves fraud of Rs 350 crores approximately and around 200 firms are involved in placing fraudulent ITC.

Pursuant to some intelligence received that a group of unscrupulous persons in collusion with some custom house agents (CHAs) were actively involved in evasion of GST by making exports from some non-existent firms, Senior Intelligence Officer, Director General of GST, Ghaziabad Regional Unit commenced inquiry and carried out certain searches at the purported premises of one M/s Heritage International at Delhi. 

The search was carried out at the office premises of petitioner/accused, wherein documents related to the firms of petitioner were seized. It was alleged that the mastermind involved in the creation of numerous fake firms and a huge amount of fraudulent Input Tax Credit has been availed. 

Senior counsel for the petitioner contended that the instant petition raises pivotal issues relating to a case of forum-hunting by Senior Intelligence Officer, Director General of GST, Ghaziabad Regional unit who has not only indulged in abuse of the powers of arrest etc. vested in him but also chosen the jurisdiction of the Court in Meerut when no cause of action arose in the said jurisdiction. 

It is further submitted that the offenses under the CGST Act are compoundable and are not serious in nature. It is further submitted that the entire evidence present in the instant case is based on documents and thus, petitioner's custodial interrogation is not required.

However, the counsel for the respondents/ department urged that the investigation is at a very nascent stage and the allegations against the petitioner are grave and serious in nature. The fraud involved in the instant case is of Rs 350 crores approximately and around 200 firms are involved in placing fraudulent Input Tax Credit. 

It is further submitted that these firms are not solely based in Delhi but in Ghaziabad and Noida as well and that the factory of the petitioner is also situated in Ghaziabad, thus, the contention of the learned senior counsel for the petitioner that the jurisdiction of Meerut has been chosen wrongly is baseless and without any merit. 

"Upender Singh, a bank official at ICICI Bank, Kamla Nagar has revealed in his statement that he had opened accounts for these 200 firms without physical verification at the behest of the petitioner and his father," the counsel for the department added.

The court, while refusing to accept the petitioner's contention, said, "as far as the relief prayed for by the senior counsel for the petitioner with regard to the audio/videography of the proceedings to be carried out by the respondents, in the presence of petitioner's lawyer at a visible distance, beyond audible range, inter-alia, by way of installation of appropriate CCTV cameras, is concerned, the same is untenable in law as in the instant case, the petitioner has failed to raise any reasonable basis to apprehend coercion by the respondents herein against the petitioner."