No Compensation for Alleged Illegal Detention During GST Inquiry: High Court

Kanhaiya Nilambar Jha claimed to be an office boy with M/s Kabsan Services Pvt. Ltd. On 17.06.2025, GST officers visited a Chartered Accountant’s office in Mumbai in connection with alleged fraudulent ITC claims by the said company.

The petitioner contended that he was taken into custody on 17.06.2025 without a summons or arrest memo and kept at the CGST office, with a formal arrest shown only on 21.06.2025 under Section 69 of the CGST Act. He was thereafter produced before the magistrate and later granted bail. Alleging illegal detention from 17.06.2025 to 20.06.2025, he sought compensation of Rs. 10 lakhs.

Main Issue: Whether attendance before the GST authorities pursuant to a summons under Section 70 of the CGST Act between 17.06.2025 and 20.06.2025 amounted to illegal detention, warranting compensation.

HC’s Decision: The High Court dismissed the writ petition and declined compensation.

The Court held that Section 70 empowers GST officers to summon persons for inquiry in a manner similar to a civil court, and it does not mandate a 7-day prior notice. Reliance on Order XVI of the CPC was found misplaced, as that provision relates to trial proceedings and not investigative summons under tax law.

The Court noted that the petitioner had acknowledged summons on multiple dates and attended the inquiry without protest. The Court held that mere attendance pursuant to a summons does not constitute illegal detention. In the absence of mala fides or violation of statutory or constitutional safeguards, no compensation was warranted.

Thus, the writ petition was dismissed.

To Read Full Judgment, Download PDF Given Below