DGGI Summons to Directors for Fake Input Tax Credit Inquiry Are

DGGI Summons to Directors for Fake Input Tax Credit Inquiry Are Lawfully Valid and Cannot Be Quashed

Issue

Whether summons issued by the DGGI under Section 70 of the CGST Act to a company director for the production of documents and personal attendance during an ongoing fake Input Tax Credit (ITC) inquiry can be judicially quashed through a writ petition.

Facts

Petitioner’s Profile: The Petitioner is a registered company under the Central Goods and Services Tax (CGST) and Bihar Goods and Services Tax (BGST) Acts since February 2019.
Prior Notices: The company had previously received multiple notices and summons from state tax authorities regarding its supplies and input tax credit claims.
State Tax Actions:
- The State tax authority issued an intimation alleging excess ITC based on a mismatch between Form GSTR-3B and Form GSTR-2B for the period from April 2023 to March 2024.
- A subsequent notice computed tax, interest, and penalties for the financial year 2024–25.
- Separate Show Cause Notices (SCNs) were issued covering the periods of April 2023 to March 2024 and April 2024 to July 2024.
DGGI Intervention: Parallelly, the Directorate General of GST Intelligence (DGGI), Meerut Zonal Unit, initiated a distinct inquiry into the alleged utilization of fake ITC by the petitioner.
The Impugned Summons: As part of this fake ITC probe, the DGGI issued summons under Section 70 to the company’s director. The summons demanded personal attendance and the production of purchase ledgers, bills, and bank accounts covering the extensive period from July 1, 2017, to the current date.
Writ Action: The petitioner approached the High Court seeking a writ to quash the DGGI summons, implicitly pointing to the parallel proceedings by state authorities.

Decision

Statutory Authority Upheld: The High Court held that the summons had been issued by a “proper officer” who is legally empowered under Section 70 to compel the attendance of any person and the production of relevant documents during an inquiry.
No Interference in Ongoing Investigations: The Court observed that because the DGGI’s inquiry into the alleged fake input tax credit was active and ongoing, the collection of relevant financial and transactional records was entirely justified.
Petition Dismissed: Finding no illegality or jurisdictional error in the DGGI’s actions, the Court ruled that judicial interference at the summons stage was completely unwarranted and dismissed the writ petition in favor of the Revenue.

Key Takeaways

1. Wide Investigative Powers Under Section 70: The “proper officer” of the DGGI possesses independent, wide-ranging statutory powers to issue summons for evidence, testimonies, and accounting books. High Courts will rarely interfere with or quash these summonses during an active investigation.

2. Parallel Investigations Permissible for Fraud: Routine state tax notices or SCNs regarding standard GSTR-3B vs. 2B mismatches do not block central intelligence agencies like the DGGI from launching deep, independent inquiries into systemic tax fraud or fake ITC syndicates.

3. Duty to Comply: Taxpayers and company directors are legally bound to comply with Section 70 summonses by presenting the requested documentation (such as bank accounts and purchase ledgers) rather than rushing to invoke writ jurisdiction prematurely.

HIGH COURT OF PATNA

Morlatis Engineering and Construction (P.) Ltd.

Union of India^*

Rajeev Ranjan Prasad and Smt. Soni Shrivastava, JJ.

Civil Writ Jurisdiction Case No. 809 of 2026

APRIL 23, 2026

Sadashiv Tiwari, Adv. for the Petitioner. Vikas Kumar, SC-11, Sriram Krishna, Sr. SC, Prabhat Kumar Singh and Amarjeet, Advs. for the Respondent.

ORDER

Rajeev Ranjan Prasad, J.- Learned counsel for the petitioner prays for adjournment. We refused to grant adjournment as prima facie it appears that it will only be a wastage of time of the Court.

2. Heard learned counsel for the petitioner and learned counsel for the CGST.

3. The petitioner in the present writ application is seeking the following reliefs:-

“(i) For issue of a writ in the nature of certiorari or any other appropriate writ(s) or order(s) to quash multiple summons (as contained in Annexure-18, 20 series, 21, 22, 24 series and 26) issued by the respondent no. 2 to 6 in the same subject matter being in contravention to the statutory provisions as contained in section 6(2) of the Central/Bihar Goods and Services Tax Act, 2017 (hereinafter called the Act) and also the circular issued by the Central Board of Indirect Taxes, New Delhi.

(ii) For issue of a writ of mandamus or any other appropriate writ(s) or orders to direct the respondents to stay off their hands for recovery of disputed demand whether as voluntary payment through GST DRC-03 or any other mode until culmination of proceeding or determination of tax payable by an appropriate authority having jurisdiction over the case.

(iii) For granting any other relief (s) to which the petitioner is otherwise found entitled to.”

4. It is the case of the petitioner that the petitioner is a registered private limited company and has got registration under the Central/Bihar Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘Act of 2017’). The registration certificated dated 07.02.2019 (Annexure-P1 series) has been brought on record to satisfy this Court with regard to the registration of the petitioner in Form GST REG-06.

5. Learned counsel for the petitioner submits that the petitioner has been subjected to several notices and summons by the respondent herein directing the presence of the petitioner and compliance to various queries as regards supply of goods and claim of input tax credit etc. The petitioner has been subjected to assessment by the State respondent.

6. Learned counsel for the petitioner submits that since several such notices and summons have been issued in a long span of time, the petitioner has challenged the propriety of issuance of multiple notices and summons.

7. Learned counsel submits that State-respondent (Respondent No. 7) had issued an intimation of tax ascertained as payable under Section 74 (5) of the Act. The notice mentions claim of excess input tax credit as per comparison between GSTR 3B and GSTR 2B. The sum total of the availment of input tax credit in between the period April, 2023 to March, 2024 under the CGST/SGST/IGST is to the tune of Rs. 34,77,301.90. The interest and penalty thereon takes the total amount to Rs. 71,21,250.87. The notice advises the petitioner to pay the tax as ascertained payable along with applicable interest and penalty failing which show cause notice under Section 74 (1) of the Act would be issued.

8. It is submitted that respondent no. 7 has also issued a notice for the period 2024-25. A tax amount of Rs. 87,08,413/-had been worked out and the interest as well as penalty thereof would take the total amount to Rs. 1,75,45,662.80.

9. Respondent No. 7 has issued another show cause notice for both the Tax periods April, 2023- March, 2024 and April, 2024 – July, 2024. It is the case of the petitioner that the respondent no. 7 has acted in furtherance of the notice issued by him and passed an order under Section 74 of the Act. The explanations furnished in course of assessment proceedings have not been considered and the findings in the show cause notices have been confirmed.

10. On perusal of the impugned summons, to this Court it appears that those have been issued under Section 70 of the Act of 2017. The Senior Intelligence Officer, Directorate General of GST Intelligence, Zonal Unit, Meerut is making an enquiry in connection with availment of fake ITC by the petitioner’s firm under the Act of 2017. The Inquiring Officer is seeking attendance of the Director of the petitioner’s firm to give evidence and/or to produce documents or things of the description which are in the possession and under control of the petitioner. The petitioner has been called upon to tender statement and to produce purchase ledger/ bills/ bank account for a period 01.07.2017 to till date.

11. It is evident on perusal of all the summons that those have been issued by the proper officer under the Act who have got power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any enquiry in the same manner as provided in the case of a Civil Court under the provisions of the Code of Civil Procedure. The power of the proper officer is duly provided under Section 70 of the Act of 2017.

12. We find no reason to interfere with the summons. Any interference at this stage would only amount to scuttling the ongoing inquiry.

13. This writ application has no merit. It is dismissed with a cost of Rs. 25,000/-, which would be payable to the Patna High Court Legal Services Committee within one month from today and receipt thereof shall be filed.