Chhattisgarh High Court: PIL Not Maintainable to Demand Tax Investigation into Private Parties
Background of the Dispute
The Chhattisgarh High Court, in Santosh Agrawal (Goyal) Vs Union of India, refused to entertain a Public Interest Litigation (PIL) filed under Article 226 of the Constitution of India. The PIL sought wide-ranging directions to GST and Income Tax authorities to investigate alleged large-scale tax evasion by specific private entities and their related concerns.
The Bench examined whether a PIL could legitimately be used:
- to compel statutory authorities to investigate particular assessees in a specified manner, and
- to secure court-monitored supervision of confidential tax enquiries involving private commercial dealings.
Ultimately, the Court held that the petition was not a bona fide public interest proceeding, but an impermissible attempt to use PIL jurisdiction to oversee and influence ongoing statutory tax investigations.
Reliefs Prayed in the PIL
The Petitioner requested multiple directions against the Union of India and tax authorities. In substance, the reliefs sought included:
Mandamus to investigate
Directions to Respondent Nos. 2 to 4 to carry out a “fair, impartial, independent and time-bound investigation” into alleged GST and Income Tax evasion by Respondent Nos. 5 to 7, relying on documents annexed to the petition.Completion of ongoing proceedings
Orders compelling the authorities to conclude proceedings already initiated pursuant to the Petitioner’s complaints, and to take them to their “logical conclusion” in accordance with law.Scrutiny of commercial records
Directions to examine the following in relation to Respondent Nos. 5 to 7 and their connected entities:- business transactions and agreements
- GST returns
- books of accounts
- e-way bills
- invoices
- weighbridge records
- any other relevant documents
Recovery of statutory dues
Mandamus to recover GST, Income Tax, interest, penalty and other statutory dues allegedly payable by Respondent Nos. 5 to 7, as may be revealed upon investigation.Court-monitored or supervised enquiry
Directions to Respondent No. 1 to “ensure proper supervision and monitoring” of the tax investigation so that the process is fair, transparent and free from external interference.Residual reliefs
Any further orders considered appropriate in the interest of justice and protection of public revenue.
Petitioner’s Narrative and Allegations
Business Context and Initial Complaint
The Petitioner, residing at Bhilai (District Durg) and engaged in a small business, claimed that in the course of his business interactions he became aware of alleged systematic evasion of GST and Income Tax by Respondent Nos. 5 to 7. These respondents were said to be involved in large-scale scrap transactions that were allegedly not reported correctly to the relevant tax authorities.
Acting on this information, the Petitioner asserted that:
- In November 2022, he sent a detailed complaint through WhatsApp to officers of the GST Department at Raipur.
- Based on this input, the GST Department allegedly opened an enquiry into:
- M/s R.K. Ispat and its partners/directors (including Manoj Sarogi, Rajesh Sarogi, Rakesh Sarogi and Sunita Sarogi), and
- M/s R.K. Structure Pvt. Ltd.
The petition recorded that summons and notices were issued to several individuals and businesses connected with these transactions, including:
- M/s Indigo Shipping Services (through its Director Mr. Saheb Khan)
- Goyal Industries (summons to its proprietor, Mr. Sunil Goyal)
- Respondent Manoj Sarogi in his capacity as Director/Partner of M/s R.K. Structure Pvt. Ltd. and M/s R.K. Ispat, directing his appearance on 18.07.2023 at Raipur.
The Petitioner contended that the very issuance of these summons showed that the department considered the information serious enough to warrant a deeper probe.
Documents Relied Upon
The Petitioner claimed to have supplied further documentation to the GST authorities to show alleged suppression of turnover and secret sale of scrap. These documents included, inter alia:
- Weighbridge slips (Dharam Kanta Parchis)
- Affidavit of Mohammad Shafiq (stated to be a contractor/labour associated with the business of Manoj Sarogi)
- Affidavit of Mohammad Farhan Khan (concerning purchases from Manoj Sarogi)
- Records relating to dealings with OM Traders and Poddar
On the basis of these materials, the Petitioner alleged that:
- Around 225 MT of scrap valued at approximately Rs.90,00,000/- was sold to Mohammad Farhan Khan and Poddar without due tax compliance.
- The corresponding GST and Income Tax dues on these transactions were allegedly evaded.
Alleged Large-Value Scrap Transactions
The Petitioner further placed reliance on the following alleged transactions:
- Transactions with M/s V.V.S. Enterprises
- Entity involved: M/s R.K. Structure Pvt. Ltd., GST Registration No.