The Delhi High Court has upheld orders directing GST authorities to provide taxpayers with a seven-day prior notice before initiating any coercive action during an investigation.
The Court clarified that this safeguard is intended to uphold the principles of natural justice by giving taxpayers a reasonable opportunity to respond.
It further emphasised that such protection should not be interpreted as granting blanket anticipatory bail or immunity from lawful investigation proceedings.
Justice Neena Bansal Krishna provided the ruling while dismissing three petitions submitted via the Directorate General of GST Intelligence (DGGI) and CGST Delhi South against Girish Sachdeva, Harish Sachdeva, and Abhinav Bardhan.
The petitions contested earlier orders of the Sessions Court that had denied anticipatory bail to the respondents but asked the Department to furnish seven days’ advance notice before taking any action.
The issue has emerged from an investigation into alleged GST evasion by M/s Daak International Pvt. Ltd. It was alleged by the department that the company, whose functioning had been running for nearly 10 months, had claimed and passed on ineligible Input Tax Credit (ITC) via circular trading, which leads to a loss of more than Rs 8 crore to the government exchequer.
The GST authorities claimed that the direction to furnish prior notice was not within the established law and could impede investigations into serious economic offences. They said that the respondents had not cooperated with the investigation even after repeated summonses issued under the CGST Act.
In the High Court, the department considered that no imminent threat of arrest was there because no proposal seeking approval from the commissioner for arrest had been initiated.
The Court said that while offences are serious and investigations should proceed without any obstruction, taxpayers should also be allowed to claim lawful remedies before coercive action is chosen.
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The Court mentioned that the orders did not allow blanket protection to the respondents. Instead, they only needed the department to deliver 7 days’ notice before any action, while asking the respondents to cooperate with the investigation when needed.
Subsequently, the petitions were dismissed by the Delhi High Court, which affirmed the seven-day prior notice requirement, stating that it develops a balance between effective GST investigations and protecting taxpayers’ legal rights.
| Case Title | Directorate General of GST Intelligence vs. Girish Sachdeva |
| Case No. | CRL.M.C. 2300/2021, CRL.M.A. 15297/2021 |
| For the Petitioner | Mr Satish Aggarwala and Mr Gagan Vaswani |
| For the Respondent | Mr Mohit Mathur and Mr Vignesh Ramanathan |
| Delhi High Court | Read Order |
