The court cautioned the authorities to exercise extreme care in future arrests, ensuring compliance with legal procedures.
In a significant ruling, the Bombay High Court accepted the unconditional apology submitted by Goods and Services Tax (GST) Department officials for arresting a petitioner before allowing him to record his scheduled statement. The Court emphasized the need for strict adherence to legal procedures to prevent misuse of authority.
Mishal J. Shah Hindu Undivided Family (HUF) had filed a writ petition challenging the validity and legality of GST notices served upon them. The petitioner also sought directives to lift the provisional attachment and defreeze their bank account, which had been immobilized due to allegations of involvement in fraudulent GST Input Tax Credit (ITC) claims.
Arrest Before Scheduled Statement
The petitioner’s legal team, comprising Advocates Prasannan Namboodiri, Pratibha Namboodiri, Tejal Darekar, Rishabh Sinha, Pallavi Dabak, and P.S. Patkar, argued that the arrest on December 19, 2024, was premature. The petitioner had been given the opportunity to record his statement on December 30, 2024, yet GST authorities proceeded with the arrest before this date.
Show Cause Notice for GST Officials
In response to the apparent procedural violation, the High Court issued a show cause notice to Chandar Kamble, Assistant Commissioner of State Tax, and Prerna Deshbhratar, Joint Commissioner of State Tax, signaling potential contempt proceedings. The Court highlighted the importance of observing due process and legal principles.
GST Authorities’ Explanation
Represented by Additional Government Pleader Jyoti Chavan, the GST authorities contended that the arrest was made due to the petitioner’s directorship in JMC Metals Private Limited, a company accused of fraudulently availing ITC worth Rs. 9.54 crores. The officials clarified that the arrest was related to his role as Director, not in his capacity as Karta of the HUF.
Also Read: GST officers to furnish written grounds of arrest to avoid harassment
High Court’s Decision
The Division Bench, comprising Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla, acknowledged the apologies submitted by the GST officials. The Bench cautioned the authorities to exercise extreme care in future arrests, ensuring compliance with legal procedures. The show cause notice was subsequently discharged.
Key Takeaways
This case underscores the judiciary’s stance on upholding the rule of law and protecting individual rights against administrative overreach. It serves as a reminder for enforcement agencies to follow procedural fairness and avoid arbitrary actions.
Also Read: West Bengal AAR: Catering Services for In-Patients Not Eligible for GST Exemption
Case Details
- Title: Mishal J. Shah HUF vs. State of Maharashtra
- Citation: Writ Petition (L) No. 38480 of 2024
- Date: January 7, 2025
This landmark judgment reinforces the importance of procedural safeguards in safeguarding citizens’ rights within the GST framework.
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