Delhi HC asks BYJU’s CFO to appear before GST investigators

The Delhi High Court has ruled that apprehension of contracting Covid-19 cannot be accepted as a basis for stalling tax evasion investigation. It has asked the PV Rao, Chief Financial Officer of Think and Learn Private Limited which conducts online classes through the brand name BYJU’S, to present himself before the tax department here.

The High Court took note of the investigation and said the evidence being recorded at this stage would impact the entire investigation.

‘Mere apprehension’

Questioning during investigation has to be on the basis of evaluation and examination of documents. During the process of interrogation, the investigating agency may come across certain relevant facts and discoveries which are germane and crucial for concluding the investigation. Judicial interference at this threshold stage, in such matters relating to investigation, has to be exercised with circumspection.

“The concept of balance of convenience, therefore, cannot be tilted in favour of the petitioner to be allowed to appear through video conferencing, merely because travelling from Bengaluru to New Delhi would be a risk factor for the Petitioner of contracting Covid-19. This mere apprehension of contracting Covid-19 does not persuade us to grant the relief sought for by the present petitioner,” the Court said.

It also recorded the statement given to the lawyer representing the tax department, where it was stated that while recording Rao’s statement, as and when he appears, all safety measures and protocols would be in place. His statement would be recorded and concluded on day-to-day basis so that he would have to travel to Delhi only once, the Court said while dismissing the petition.

Charge of non-cooperation

The Directorate-General of GST intelligence is carrying out an investigation for tax evasion on books/printed material being supplied by Think and Learn, by misdeclaring such supplies under an exempted category. Tax officials visited the premises of the company for inspection. Rao could not record his statement due to ill health and morbidities.

Tax department had asked the 57-year-old CFO to tender the statement and present the evidence before November 5 in New Delhi. Rao wanted to do it through video conferencing as he did not want to travel to Delhi on account of Covid. However, his request was denied, following which he moved the Delhi HC.

The tax department alleged that Rao was not co-operating with the investigation. Detailed clarifications are required to be sought from him, which will only be feasible in case he physically joins the investigation and records his statement. While video conferencing, Rao may have a support system helping him and clarifications/answers can be motivated and influenced, which may adversely affect the ongoing investigation, the lawyer for the tax department argued.

Commenting on the ruling, Harpreet Singh, Partner at KPMG, said though the HC refused to interfere or allow tendering of statement through video conferencing, this should not be construed as a precedent for future requests. The HC in this case has stated that there were instances of past non-cooperative conduct of the Petitioner. Thus, “the industry may still expect empathy from the Courts on humanitarian grounds if the request is genuine,” he said.

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