2023(11)LCX0353
Jagannathdham Superstructures Private Limited
Versus
Deputy Director Directorate General of Goods and Service Tax
W.P.(C) No. 25400 of 2022 decided on 29-11-2023
IN THE HIGH COURT OF
ORISSA AT CUTTACK
W.P.(C) No.25400 of 2022
along with
W.P.(C) Nos.27573 of 2022, W.P.(C) No.799 of 2023,
W.P.(C) No.800 of 2023 and W.P.(C) No.1339 of 2023
(In the matters of applications under Articles 226 and 227 of the Constitution of India, 1950)
(In W.P.(C) No.25400 of 2022)
Jagannathdham
Superstructures ….
Petitioner(s)
Pvt. Ltd., Bhubaneswar
-versus-
Deputy Director,
Directorate
…. Opposite Part(s)
General of Goods and Service Tax
Intelligence, Bhubaneswar and
Another
Advocates appeared in this case through Hybrid Arrangement Mode:
For Petitioner (s) : Mr. S.K. Acharya, Advocate
For Opposite Part(s) : Mr. T.K. Satapathy, Sr. SC for Revenue
(In W.P.(C) No.27573 of 2022)
M/s. SN Jyoti Associates
Pvt. Ltd., …. Petitioner(s)
Bhubaneswar
-versus-
The Intelligence Officer,
DG, GST …. Opposite Part(s)
Intelligence, Bhubaneswar and
others
Advocates appeared in this case through Hybrid Arrangement Mode:
For Petitioner (s) : Mr. R.P.
Kar, Sr. Advocate
Along with associates
For Opposite Part(s) : Mr. T.K. Satapathy, Sr. SC for Revenue
(In W.P.(C) No.799 of 2023)
Jagannathdham
Superstructures ….
Petitioner(s)
Pvt. Ltd., Bhubaneswar
-versus-
Assistant/Deputy Director,
…. Opposite Part(s)
Directorate General of Goods and
Service Tax Intelligence,
Bhubaneswar and another
Advocates appeared in this case through Hybrid Arrangement Mode:
For Petitioner (s) : Mr. S.K. Acharya, Advocate
For Opposite Part(s) : Mr. T.K. Satapathy, Sr. SC for Revenue
(In W.P.(C) No.800 of 2023)
Jagannathdham
Superstructures ….
Petitioner(s)
Pvt. Ltd., Bhubaneswar
-versus-
Assistant/Deputy Director,
…. Opposite Part(s)
Directorate General of Goods and
Service Tax Intelligence,
Bhubaneswar and another
Advocates appeared in this case through Hybrid Arrangement Mode:
For Petitioner (s) : Mr. S.K. Acharya, Advocate
For Opposite Part(s) : Mr. T.K. Satapathy, Sr. SC for Revenue
(In W.P.(C) No.1339 of 2023)
Shree Equipments and
Engineers, …. Petitioner(s)
Bhadrak
-versus-
Deputy Director,
Directorate
…. Opposite Part(s)
General of Goods and Service Tax
Intelligence, Bhubaneswar
Advocates appeared in this case through Hybrid Arrangement Mode:
For Petitioner (s) : Mr. S.K. Acharya, Advocate
For Opposite Part(s) : Mr. T.K. Satapathy, Sr. SC for Revenue
CORAM:
DR. JUSTICE S.K. PANIGRAHI
MR. JUSTICE G. SATAPATHY
DATE OF HEARING:-21.09.2023
DATE OF JUDGMENT: -29.11.2023
Dr. S.K. Panigrahi, J.
1. Since common question of facts
and law are involved in all the above-mentioned Writ Petitions, the same were
heard together and are being disposed of by this common judgment. However, this
Court felt it apposite to deal the W.P.(C) No.25400 of 2022 as the leading case
for proper adjudication of all these cases.
2. The Petitioners in W.P.(C) No.25400 of 2022 and W.P.(C) No.1339 of 2023
challenge the rejection letters issued by the Deputy Director, DGGI (Opposite
Party No.1), refusing to grant certified copies of the order sheet/note sheet
and search warrant. The Petitioners in W.P.(C) No.27573 of 2022, W.P.(C) No.799
of 2023 and W.P.(C) No.800 of 2023 challenge the show-cause notices for
non-payment of GST on “Works Contract Services” issued by the Deputy Director,
DGGI.
I. FACTUAL MATRIX OF THE CASE:
3. The Petitioner in W.P.(C) No.25400 of 2022 is a private limited company
registered under the Companies Act, 1956 having registered office at Bhubaneswar,
within the jurisdiction of this Court. The Opp. Party No. 1 is the Deputy
Director of the DGGI, Bhubaneswar, hence, amenable to the writ jurisdiction of
this Court.
4. The Petitioner carries on business in providing works contract services and
for that purpose, the Petitioner obtained registration under the Central Goods
and Services Tax Act, 2017 and Odisha Goods and Services Tax Act, 2017 (for
short GST Act) and assigned with registration no. 21AAACJ8178K2ZC and prior to
the GST Act coming into effect from 1st July, 2017 the Petitioner was registered
under the repealed Service Tax Act (Chapter V of the Finance Act, 1994) assigned
with Service Tax Registration No. AAACJ8178KSD001.
5. On 14.06.2019, the Intelligence Officers of Directorate General of Goods and
Service Tax Intelligence ("DGGI"), Bhubaneswar Zonal Unit, Bhubaneswar by dint
of the search warrant no. 21/2019-20 dated 14.06.2019 issued by the Additional
Director, DGGI, inspected under sub- section (1) search under sub-section (2) of
Section 67 of the GST Act at the place of business of the Petitioner. By
exercising power u/s. 67(2) of the GST Act the Intelligence Officer of DGGI
seized the books of accounts and other documents of the Petitioner and issued an
order of seizure in FORM GST INS-02 along with Panchanama on the very same day
i.e., 14.06.2019.
6. After the search and seizure, summons was issued from time to time to the
Petitioner, and in response to which the Petitioner appeared before the
Intelligence Officer of DGGI and cooperated in the investigation proceeding in
every possible manner.
7. It was only after the investigation was completed by the Intelligence
Officers of DGGI, the Asst. Director of the DGGI issued two show cause notices
on 30.09.2021 and 18.10.2021 under the GST Act and Chapter V of the Finance Act,
1994 (Service Tax) respectively to the Petitioner and called upon the Petitioner
to show cause to the Assistant Commissioner, Central Tax & Central Excise,
Bhubaneswar - II Division, Bhubaneswar before whom the cases are pending for
adjudication.
8. On 13.07.2022 the Petitioner made application for grant of certified copies
of the following documents which are necessitated for filing of a detailed and
effective show cause reply; (i.) Certified copy of the search warrant no.
21/2019-20 dated 14.06.2019 issued by the Additional Director, DGGI for
conducting inspection/search & seizure at the place of business of the
Petitioner. (ii.) Certified copy of the Order Sheets/Note Sheets maintained in
connection with the inspection/search & seizure proceeding initiated against the
Petitioner.
9. When the Opp. Party No. 1 did not respond to the application dated
13.07.2022, the Petitioner filed a reminder application on 22.07.2022, in
response to which the Opp. Party No. 1 took his decision and issued the impugned
letter dated 19.08.2022 rejecting therein to provide the certified copies of the
documents sought for by the Petitioner on the ground that those documents are
internal official documents related to the investigation, which are not
disclosed/provided publicly, as the case has not attained finality. Hence, this
Writ Petition.
II. PETITIONER’S SUBMISSIONS:
10. Learned counsel for the Petitioner(s) earnestly made the following
submissions in support of his contentions:
(a) A search warrant is the foundation stone for the initiation of a search and seizure proceeding against a particular person. A search warrant is not a mere piece of paper, it is an authorization that gives power, jurisdiction, and authority of law to the Investigating Officers to conduct a search and seizure by using it to breach into the privacy of the searched person, which is otherwise protected under the Constitution of India. In the present case, the search warrant was issued by the Additional Director, DGGI, and by using that warrant against the Petitioner, the Intelligence Officers conducted a search and seizure operation at the place of business of the Petitioner on 14.06.2019. Certainly, the Addl. Director, DGGI issued the search warrant to his subordinates (Intelligence Officers) to conduct a search and seizure operation at the business premises of the Petitioner but that does not mean that the search warrant is their internal official document.
(b) In fact, as per law, the Petitioner has to be provided a copy of the search warrant in order to enable the investigation team to search the premises. The Intelligence Officers used the search warrant against the Petitioner to conduct a search and seizure operation because it is a statutory requirement that empowers them to perform a certain action; but what seems from the language of the Opp. Party No. 1 is that a search warrant is only an administrative/internal official requirement, and not a statutory requirement; if that would be so, then the Intelligence Officers have no power and jurisdiction to conduct search and seizure operation against the Petitioner based on an administrative/internal official document. Therefore, the impugned rejection letter is illogical, erroneous, and absurd.
(c) When a particular document is used against a person in any proceeding, on participation, if that person requested the authorities to provide him such document, then the authorities are duty bound to provide the same to that person concerned. In the present case, in response to the summons issued after the search and seizure, the Petitioner appeared before the Intelligence Officers, cooperated in the investigation, and finally, only after completion of the investigation, the show cause notices were issued; thereafter the Petitioner filed the application for certified copies which means at the time of filing the application the investigation by the DGGI had already attained finality, and is pending only before the Deputy/Assistant Commissioner, Central Tax & Central Excise, Bhubaneswar II Division, Bhubaneswar for adjudication / assessment. However, the Opp. Party No.1 refused to provide the certified copies of the search warrant and order sheets on the ground that "the documents are internal official documents which are not disclosed/provided publicly, as the case has not attained finality", which reasoning is completely unfounded, prejudiced, biased and creates reasonable doubts on the authenticity and legality of the search warrant as well as the order sheet.
(d) Since quasi-judicial proceedings has been commenced from the action taken under Section 67 of the CGST Act, the Opp. Party No.1 cannot deny the certified copies of the documents in the guise of internal official documents which are nothing but documents under the quasi- judicial proceedings and the Petitioner has every right to seek the certified copies of the said proceedings for filing of effective and detailed show cause reply, in absence of which there would be failure on the part of the Petitioner to file a detailed and effective show cause reply and as such the impugned action of the Opp. Party No. 1 is violative of the principles of natural justice and fair play.
(e) The phrase "As the case has not attained finality", this particular observation of the Opp. Party No.1 indicates that he has not verified the facts and records of the case before issuing the impugned rejection letter. The Petitioner's business premises were searched by the Intelligence Officers of DGGI u/s. 67 of the GST Act on 14.06.2019 and accordingly books of account were seized and the order of seizure was issued to the Petitioner. Thereafter, summons were issued from time to time u/s. 70 of the GST Act to which the Petitioner promptly responded during investigation and finally on completion of such investigation the Asst. Director of DGGI issued two show cause notices.
(f) At this juncture, the Petitioner humbly submits on two points i.e. the time of initiation and completion of proceeding under Sections 67 and 70 of the GST Act and power of DGGI under the GST Act in respect of search and seizure.
(g) In every quasi-judicial proceeding, there is a point of initiation and point of completion of a particular proceeding. Similarly, Section 67 of the GST Act, under which the Intelligence Officers of DGGI conducted search and seizure operation at the Petitioner's place of business commenced at 11.30 hrs. on 14.06.2019 and was concluded at 15.00 hrs. on 14.06.2019. Section 67 of the GST Act confines to the power of inspection, search and seizure and when the Intelligence Officer himself declared in the Panchanama under Annexure- 2 that the search operation concluded at 15.00 hrs. on 14.06.2019 then no proceeding of under Section 67 of the GST Act is pending against the Petitioner.
(h) After completion of search and seizure under Section 67 of the GST Act, further investigation was carried out by the Intelligence Officers of DGGI under Section 70 of the GST Act and finally on completion of such investigation the Asst. Director of DGGI issued two show cause notices under Annexures 3 & 4 and called upon the Petitioner to show cause to the Deputy/Assistant Commissioner, Central Tax & Central Excise, Bhubaneswar Division, Bhubaneswar before whom the cases are pending for adjudication. Earlier, the Central Board of Excise and Customs on 09.02.2018 vide Circular No. 31/05/2018- GST clarified that the DGGI shall exercise the powers only to issue show cause notices and such notices shall be adjudicated by the competent Central Tax Officer of the Executive Commissionerate in whose jurisdiction the assessee is registered.
(i) Therefore, it is absolutely clear that the DGGI can issue a show cause notice only after completion of the investigation. And once the DGGI issued a show cause notice then it shall be adjudicated by the competent Central Tax Officer of the Executive Commissionerate in whose jurisdiction the assessee is registered; that means the case may be pending before the Adjudicating Authority but it has attained finality at the end of DGGI.
(j) In the present case, after completion of the investigation the Asst. Director of DGGI issued the show cause notices under Annexures 3 & 4 on 30.09.2021 and 18.10.2021 whereas the Petitioner applied for the certified copies of the Order Sheet/Note Sheet and search warrant (in connection with the search and seizure not adjudication) on 13.07.2022 after lapse of more than six months from the date of issuance of the last show cause notice. Therefore, the Opp. Party No.1's claim that "the case has not attained finality" is absurd, unjust, illogical and accordingly, the impugned rejection letter under Annexure-7 is liable to be quashed in the interest of justice.
(k) In the order sheet there is a recording about notices issued to the persons or other concerned parties, details of hearings, and other matters with which the person and/or concerned party is directly concerned, departmental communication between two or more authorities in connection with audit, investigation, assessment, appeal, revision, and any other proceedings against that person and/or concerned party. The order sheet is a very vital part of any and every proceeding(s) and also prime evidence concerning the correctness of that proceeding. An order sheet can be used as evidence by both the authorities and concerned parties and seeking certified copies of the entire order sheet in any proceeding is the right of that particular person / concerned parties and denying to provide him/them the certified copies not only violates the fundamental rights of those concerned persons but also violates the principles of natural justice.
(l) In the instant case the search and seizure proceeding was initiated against the Petitioner under the provisions of GST Act and Service Tax Act, and the Petitioner under Annexure - 5 requested the Opp. Party No. 1 to provide him the certified copy of the order sheets maintained in connection with that particular search and seizure proceeding and in response to which the Opp. Party No. 1 said in his rejection letter under Annexure-7 that the order sheet is an internal official document which is not disclosed/provided publicly which sounds irrational, irresponsible, and absurd, and needs kind interference of this Court.
(m) From the above-quoted provisions of the Evidence Act, it is abundantly clear that an order sheet is not an internal official document and there is nothing called an "internal official document", a document can be a public document or a private document and the Petitioner has every right to obtain the certified copy of the order sheet. Therefore, the Opp. Party No.1's claim that "order sheets are internal official documents related to the investigation, which are not disclosed/provided publicly" is fictitious and imaginary and as such the impugned rejection letter of the Opp. Party No. 1 under Annexure- 7 is liable to be set aside.
III. SUBMISSIONS OF
OPPOSITE PARTIES:
11. Per contra, learned Senior Standing Counsel for the Opp. Parties
intently made the following submissions:
(a) The Officers of Directorate General of Goods and Services Tax Intelligence (DGGI), Bhubaneswar Zonal Unit, is empower under the act and rule to investigate and inquiry into the matter. After specific intelligence input in case of M/s Jagannathdham Superstructures Pvt. Ltd., N1/17, IRC Village, Nayapalli, Bhubaneswar, Odisha -751012 having 21AAACJ8178K2ZC GSTIN: and Service Tax Registration No. AAACJ8178KSD001, the investigation unit inquiry into the matter. The petitioner is engaged in providing works contract services such as construction of Government Buildings, roads, parks etc. and had not paid GST correctly.
(b) Based on the above intelligence, a search was conducted at their registered premises located at N1/17, IRC Village, Nayapalli, Bhubaneswar, Odisha-751012 by dint of search warrant no. 21/2019-20 dated 14.06.2019 issued by the Additional Director, DGGI, Bhubaneswar. During the course of search, relevant documents of the company were recovered from said premises and all the documents seized in FORM GSTINS-02 along with Panchanama as per due process of law. It is revealed during the investigation that the aforesaid assessee had provided the taxable services but did not paid GST in accordance with GST Law.
(c) After the search and seizure, summons was issued from time to time to the petitioner, and in response to which the petitioner appeared before the intelligence officer of DGGI. After the investigation was completed, the assistant director of DGGI issued two show cause notices on 30.09.2021 and 18.10.2021 under the GST Act, 2017 and Chapter V of the finance act, 1994 respectively to the Petitioner and called upon the petitioner to show cause to the Assistant Commissioner, Central Tax &Central Excise, Bhubaneswar-II Division, Bhubaneswar before whom the cases are pending for adjudication.
(d) The Deputy Director, Directorate General of GST Intelligence, Bhubaneswar vide letter F. No. DGGI/BbZU/INV/37/GST/2019- 20/3587 dated 19.08.2022 replied to the applicant denying the information sought for, on the ground that the case has not attained its finality and disclosing the information regarding internal official documents/ information's would impede the process of investigation.
(e) The search warrant had been shown to the assessee/officials of M/s Jagannathdham Superstructures Pvt. Ltd., and it had been duly acknowledged with his signature on the date of search. During the search, a Panchanama had been drawn and it had also been acknowledged by the persons concerned. There is no strict rule or regulation that the copies of the search warrant ought to be given to the persons occupying the premises during the search. It would be sufficient if the search warrant had been shown to such persons before the search of the premises is undertaken. For better appreciation of the facts of the case, the provisions of the Clause 55(m) of the Central Excise Intelligence and Investigation Manual.
IV. COURT’S REASONING
AND ANALYSIS:
12. Learned Counsel for the petitioner has contended that the Petitioner has to
be provided a copy of the search warrant in order to enable the investigation
team to search the premises. The Intelligence Officers used the search warrant
against the Petitioner to conduct a search and seizure operation because it is a
statutory requirement that empowers them to perform a certain action.
13. However, in this regard, the Opposite Party has clarified that the search
warrant was shown to the assessee/officials of M/s Jagannathdham Superstructures
Pvt. Ltd., and was duly acknowledged with his signature on the date of search.
During the search, a Panchanama had been drawn and it was acknowledged by the
persons concerned. There is no strict rule or regulation that the copies of the
search warrant ought to be given to the persons occupying the premises during
the search. It would be sufficient if the search warrant had been shown to such
persons before the search of the premises is undertaken.
14. The process of investigation in tax evasion cases cannot be construed to be
over in the event of issuance of Show Cause Notice by the competent authority
and the investigative process can be said to be over only when the quantum of
evasion has been quantified or it has been determined that there was in fact no
evasion of taxes or contravention of law by the process of adjudication/appeal.
15. Further, the question of launching of prosecution, which is in many cases is
a natural extension of an investigation, still remains to be decided and if it
were to be assumed that an investigation is deemed to be concluded on issuance
of Show Cause Notice and that the order sheet/note sheet recorded in the case
file were to be disclosed, the person against whom prosecution is proposed to be
launched by the department would gain an unfair advantage.
16. Mere issuance of SCN does not mean that the process of investigation has
been concluded and a final decision has been arrived at, rather, it is only one
of the steps to arrive at a final decision: As such any disclosure of
information at this stage, as sought for by the petitioner, would impede the
process of investigation which can be deemed to be complete only after the final
decision/adjudication about the liability of the person under investigation has
been made after the matter has gone through all the stages of appeals and
revisions and a final decision about prosecuting or not prosecuting such person
has been taken by the competent authority.
17. Further, it has to be borne in mind that the order sheet/ note sheet in a
particular case file invariably contain the source of information upon which the
investigation is initiated. Disclosure of such information would reveal the
identity of the source of information/informant and the nature of information
which may affect prejudicially to the informant and on future investigations.
Moreover, the order sheet/note sheet sought from an investigation file may
contain information pertaining to a third party against whom an investigation
may be ongoing or actively under consideration and any disclosure of such
information would jeopardize the investigation against such third entity.
18. With respect to the aforesaid discussion, this Court is not inclined to
entertain the prayers of the Petitioners. Accordingly, this Court hereby allows
the rejection letters issued by the Deputy Director, DGGI (Opposite Party No.1),
refusing to grant certified copies of the order sheet/note sheet and search
warrant. Moreover, this Court is of the opinion that the show-cause notices
issued by the Deputy Director, DGGI for non-payment of GST on “Works Contract
Services” have been issued in accordance with law.
19. The W.P.(C) No.25400 of 2022 is, accordingly, dismissed.
20. Interim order dated 11.01.2023 passed in W.P.(C) No.25400 of 2022 stands
vacated.
21. Consequently, all the connected Writ Petitions are dismissed.
(Dr. S.K. Panigrahi)
Judge
G. Satapathy, J.I agree.
(G. Satapathy)
Judge
Orissa High Court, Cuttack,
Dated the 29th Nov. 2023/