GST Panacea

Jatinder Manro VS Directorate General Of Goods & Services Tax Intelligence

admin — Mon, 09 Sep 2024 14:23:49 +0000

Case Tittle	Jatinder Manro VS Directorate General Of Goods & Services Tax Intelligence
Court	Punjab And Haryana High Court
Honourable Judges	justice Shekher Dhawan
Citation	2019 (08) GSTPanacea 137 HC Punjab And Haryana CRM-M-36714-2018
Judgement Date	27-August-2019

The present petition has been filed under Section 439 of the Code of Criminal Procedure (Cr.P.C.) by the petitioner, seeking regular bail in relation to an arrest and production application that has been filed against them. The arrest and production application, referenced as Annexure P/1, was submitted by the respondent under the provisions of Section 68 of the Central Goods and Services Tax Act, 2017 (CGST Act), which outlines the procedure for inspection of goods in transit and the power to intercept vehicles for the purpose of ensuring compliance with tax provisions under the Act.

The petitioner, having been arrested pursuant to this application, now seeks relief through bail, arguing that they should not be held in custody while the legal proceedings are ongoing. Section 439 of the Cr.P.C. confers special powers on the Sessions Court and the High Court to grant bail, particularly in cases where the individual is in custody pending investigation, trial, or any other legal proceeding.

The arrest and production application in question had been submitted before the Chief Judicial Magistrate (CJM) of Ludhiana, where the respondent, likely representing the Central Goods and Services Tax authorities, invoked Section 68 of the CGST Act. This section permits authorities to inspect, search, and seize goods, as well as apprehend individuals in cases of suspected tax evasion or non-compliance with GST laws.

The petitioner has approached the court seeking regular bail, which, if granted, would allow them to remain out of custody during the pendency of the case, subject to conditions imposed by the court. The court will consider several factors, including the nature of the allegations, the petitioner’s criminal record, the likelihood of tampering with evidence or influencing witnesses, and the risk of absconding, among other legal considerations, before deciding on the petition for bail.

The legal framework surrounding the CGST Act is aimed at ensuring proper compliance with taxation laws, and authorities are empowered to take strict actions in cases of violations, including arrest and detention. However, the petitioner’s argument for bail would likely rest on the contention that continued detention is unwarranted, particularly in the absence of any immediate risk of further violation or evasion of the law.

The court will have to balance the rights of the individual to personal liberty with the interests of the state in enforcing tax compliance, as well as the specifics of the case before arriving at a decision on the bail application.

In the present case, the petitioner, Jatinder Manro, faces serious allegations involving a fraudulent scheme that revolves around the generation of fake sale invoices amounting to a substantial sum of Rs. 128 Crores. The central accusation against Manro is that he played an active role in this fraudulent activity, which resulted in the issuance of these fake invoices without the actual supply of any goods or materials. Essentially, these documents were created to falsely represent transactions that never took place in reality.

A key aspect of the fraud pertains to the manipulation of the input tax credit (ITC) system. ITC is a mechanism under the Goods and Services Tax (GST) framework that allows businesses to reduce the amount of tax they owe to the government by claiming credits for taxes already paid on inputs. In this case, however, it is alleged that Jatinder Manro fraudulently availed and utilized ITC worth more than Rs. 19.50 Crores, despite no actual goods having been supplied. The input tax credit was claimed on the basis of the fake invoices, creating a significant financial discrepancy and a clear violation of the tax regulations.

The alleged fraud is linked to a company, M/s Pingashk Enterprises, located at the address 583/A, which appears to be involved in these suspicious transactions. This specific company and its address have been highlighted as part of the fraudulent activity, raising questions about the legitimacy of its operations and its role in the broader conspiracy to defraud the tax authorities.

Overall, the allegations against Jatinder Manro suggest a sophisticated scheme designed to deceive the tax system and claim undue financial benefits through false documentation and fraudulent practices. The case presents a serious instance of tax evasion and misuse of the ITC system, with significant financial implications for the state.

The allegations against the petitioner, Jatinder Manro, center around his involvement in a large-scale fraud involving fake sale invoices amounting to Rs. 128 Crores. It is claimed that these invoices were generated without any actual supply of goods, and through this scheme, Manro fraudulently availed and utilized Input Tax Credit (ITC) of over Rs. 19.50 Crores. The invoices were based on non-existent transactions, and no goods were ever exchanged in reality. The address linked to the fraudulent enterprise, M/s Pingashk Enterprises, is a residential flat located at 583/A, Lal Flats, Bawana Industrial Area, Delhi. This property is a small 20 x 20 flat, which, upon investigation, was found to have never been rented out. Interestingly, it was also identified as the business address of another entity, Radha Group of Industries, Delhi, with its proprietor, Sammy Dhiman, being a co-accused in the case.

The investigation further revealed that the total transactions in Pingashk Enterprises’ bank accounts in Axis Bank, Mandi Gobindgarh, amounted to Rs. 13,610 (credit) and Rs. 13,994 (debit), figures that pale in comparison to the vast sums involved in the fraudulent invoices. This discrepancy raised significant red flags regarding the legitimacy of the operations. Manro was summoned under Section 70 of the relevant Act on July 3, 2018, and his statement was recorded on both July 3rd and 4th, 2018. During these proceedings, he confessed to having fraudulently availed and utilized ITC worth Rs. 19.50 Crores on the basis of fake invoices approximating Rs. 128 Crores.

Additionally, Manro was present during a search operation conducted on July 3, 2018, where his statement was recorded on-site. His confession and the evidence gathered during the investigation indicate a deliberate attempt to manipulate financial records and deceive the authorities by falsely claiming tax credits through a complex web of fictitious transactions. The connection between Manro, Pingashk Enterprises, and the co-accused points to a coordinated effort to perpetrate tax fraud on a massive scale. The legal proceedings against him aim to address these serious charges of financial misconduct and tax evasion.

The allegations against Jatinder Manro, the present petitioner, center on his involvement in a large-scale fraud scheme involving the generation of fake sale invoices amounting to Rs. 128 Crores, without the actual supply of any material. This fraudulent activity allowed the petitioner to wrongfully avail and utilize input tax credit (ITC) exceeding Rs. 19.50 Crores. The transactions were conducted based on these fabricated invoices, with no legitimate exchange of goods valued at Rs. 128 Crores.

Further investigations revealed that the address associated with the fraudulent transactions, M/s Pingashk Enterprises, located at 583/A, Lal Flats Bawana Industrial Area, Delhi, was merely a small residential flat measuring 20 x 20. This address was never rented out for business purposes and was linked to another co-accused, Sammy Dhiman, the proprietor of Sh. Radha Group of Industries, Delhi. The inquiry also showed negligible activity in the bank accounts associated with Pingashk Enterprises at Axis Bank, Mandi Gobindgarh, with total transactions of only Rs. 13,610 (credit) and Rs. 13,994 (debit).

Manro was summoned under Section 70 of the Act on July 3, 2018, and gave his statement over two days, July 3 and July 4, 2018. During this period, he reportedly confessed to fraudulently availing and utilizing Rs. 19.50 Crores against the fake invoices of approximately Rs. 128 Crores. He was also present during a search operation on July 3, 2018, where his statement was recorded at the scene.

In the context of seeking bail, the learned senior counsel for the petitioner argued that Manro had been falsely implicated in the case. The counsel emphasized that Manro had been in custody since July 4, 2018, and that there was no need for any recovery from him. Moreover, the trial process was expected to take additional time, which led the defense to request his release from custody on bail.

In the case against the petitioner, Jatinder Manro, the allegations center around his involvement in a large-scale fraud. It is claimed that he participated in the generation of fake sale invoices amounting to Rs. 128 Crores without any actual supply of goods. As part of this scheme, the petitioner allegedly fraudulently availed and utilized Input Tax Credit (ITC) of over Rs. 19.50 Crores. The fraudulent transactions were based on these fake invoices, despite no physical goods being traded.

A significant element of the case is linked to the address of M/s Pingashk Enterprises, which was used in the fraudulent activities. The address, located at 583/A Lal Flats, Bawana Industrial Area, Delhi, is a small residential flat measuring 20×20, and upon investigation, it was revealed that it had never been rented out. Moreover, the same address was used as the business location for Radha Group of Industries, Delhi, whose proprietor, Sammy Dhiman, is named as a co-accused in the case. Investigations into the financial transactions of M/s Pingashk in Axis Bank, Mandi Gobindgarh, revealed insignificant amounts of money in the accounts, with Rs. 13,610/- credited and Rs. 13,994/- debited.

On July 3, 2018, the petitioner was summoned under Section 70 of the relevant act, and over the next two days, he provided a statement in which he admitted to having fraudulently availed ITC of Rs. 19.50 Crores against fake invoices for goods worth approximately Rs. 128 Crores. He was also present during a search operation conducted on July 3, 2018, and his statement was recorded at the scene.

During the bail hearing, the petitioner’s senior counsel argued that he had been falsely implicated in the case and emphasized that he had been in custody since July 4, 2018. Furthermore, the counsel noted that no recovery needed to be made from the petitioner and that the trial was still expected to take considerable time to conclude. On these grounds, the counsel requested that the petitioner be released from custody.

On the other hand, the prosecution, represented by another senior counsel, opposed the bail application, emphasizing the severity of the charges. The petitioner was accused of a serious fraud involving Rs. 19.50 Crores, an economic offense that carries significant weight. The counsel argued that such offenders, especially those involved in large-scale economic crimes, should be dealt with firmly and that the length of time the petitioner has spent in custody is not a sufficient reason to grant bail.

After carefully considering the arguments presented by both sides, as well as reviewing the case file, the court noted that the petitioner has been in custody since July 2018. However, the court recognized the gravity of the accusations leveled against him, including the fraudulent utilization of substantial sums of money based on false documentation.

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NathalalMaganlal Chauhan VS State of Gujarat

admin — Mon, 09 Sep 2024 14:18:01 +0000

Case tittle	NathalalMaganlal Chauhan VS State of Gujarat
Court	Gujarat High Court
Honourable Judge	Justice J.B.Pardiwala Justice Bhargav D. Karia
Citation	2020 (02) GSTPanacea 183 HC Gujarat R/Special Civil Application Nos. 513 And 2741 of 2020
Judgment Date	04-February-2020

The court made the RULE returnable forthwith with Mr. Vinay Vishen and Mr. Chintan Dave, the learned Assistant Government Pleaders (AGP), waiving the service of notice of rule on behalf of the State respondents. Since both writ applications raised the same issues, they were heard together and are being disposed of by a common judgment and order. For convenience, Special Civil Application No. 513 of 2020 is treated as the lead case. The writ applicant, under Article 226 of the Constitution of India, seeks reliefs, including a writ of mandamus or other appropriate orders to quash and set aside the Notification No. EST/1/Jurisdiction/B.2168 dated 05.07.2017 issued by the Commissioner of State Tax, Gujarat State. Additionally, the applicant requests a stay on the implementation and operation of the said notification pending admission, final hearing, and disposal of the petition. Furthermore, the applicant seeks the release of Paresh Nathalal Chauhan, the petitioner’s son, who has been arrested under authorization issued by the Additional Commissioner of State Tax.

(A) The petitioner seeks the issuance of a writ of mandamus, writ of prohibition, or any other suitable writ, order, or direction, requesting that the respondents refrain from taking any actions against them in their capacity as the proprietor of Lancer Enterprise. The petitioner argues that any exercise of powers under Section 69 read with Section 132 of the Central Goods and Services Tax Act, 2017 (CGST Act) and Gujarat Goods and Services Tax Act, 2017 (GGST Act) should not proceed without adhering to the due process of law for the assessment and adjudication of alleged GST evasion. Specifically, the petitioner asserts that the investigation should follow the procedures outlined in Section 61, Section 73, or Section 74 of the CGST Act and GGST Act, including the provisions set forth in Chapter XII of both Acts and Chapter VIII of the corresponding Central Goods and Services Tax Rules, 2017 (CGST Rules) and Gujarat Goods and Services Tax Rules, 2017 (GGST Rules). The petition challenges the initiation of the investigation by the State Tax Unit-22, Ahmedabad, alleging that due process has not been followed.

(B) The petitioner requests the issuance of a writ of mandamus, writ of prohibition, or any other appropriate writ, order, or direction to quash and set aside an order dated June 23, 2017, bearing No.GSL/S.5(1)/B.1. This order was issued by the Commissioner of State Tax, Gujarat, under sub-section (1) of Section 5 read with clause (91) of Section 2 of the GGST Act. The order assigned certain functions to be performed by a higher officer under the GGST Act, and the petitioner seeks to challenge this assignment, arguing that it was made without proper authority or procedural adherence.

(C) Pending the admission, final hearing, and disposal of the petition, the petitioner requests that the respondents be restrained from exercising powers under Section 69 read with Section 132 of the CGST Act or GGST Act. This request aims to prevent any immediate action that might be taken by the respondents before the court has the opportunity to fully consider the merits of the petition.

In this case, Mr. Chetan Pandya, the advocate representing the petitioner, has submitted an affidavit from Nathalal Maganlal Chauhan, the petitioner’s father, which has been accepted into the record. Additionally, the learned Assistant Government Pleader has provided a confidential report detailing the actions taken by the respondents at the petitioner’s premises following an authorization granted to the second respondent under subsection (2) of section 67 of the Central Goods and Services Tax Act, 2017 (CGST Act).

Upon reviewing the report, it is clear that the officers responsible for the search at the petitioner’s residential premises were present from October 11, 2019, to October 18, 2019. The report indicates that on October 11, 2019, at 2:15 PM, the officers had searched the rooms, gathered various documents including bank passbooks and cheque books, and brought these records to the main room for verification. Following this initial search, no further searches were documented. However, the officers continued their presence at the premises and examined phone calls received by family members, recording these communications, as well as taking statements from the petitioner’s family members.

Mr. Chetan Pandya, the advocate representing the petitioner, has submitted an affidavit from Nathalal Maganlal Chauhan, the petitioner’s father, which has been accepted by the court. Additionally, the learned Assistant Government Pleader provided a confidential report detailing the proceedings conducted by the respondents at the petitioner’s premises, based on the authorization given to the second respondent under Section 67(2) of the Central Goods and Services Tax Act, 2017 (CGST Act).

The court has reviewed the report thoroughly, which shows that the authorized officers conducted a search at the petitioner’s residence from October 11, 2019, to October 18, 2019. On October 11, 2019, at 2:15 PM, it was noted that after searching various rooms, the officers gathered the financial records, including bank passbooks and cheque books, into the main room for verification. The subsequent record indicates that although no further searches were conducted, the officers remained at the premises and scrutinized phone calls made by the family members, recording both the calls and their statements. Additionally, a rotation of officers and panchas occurred during the period, continuing until October 18, 2019, when the family members were questioned daily.

Section 67 of the CGST Act, which governs powers of inspection, search, and seizure, states that if a proper officer, not below the rank of Joint Commissioner, has reasonable grounds to believe that a taxable person has suppressed transactions, claimed excess input tax credit, or engaged in any act of tax evasion or contravention of the Act’s provisions, they may authorize another officer to conduct an inspection. This section also covers cases where goods that have evaded tax are being kept or where accounts are maintained in a way that could cause tax evasion.

In the case at hand, Mr. Chetan Pandya, representing the petitioner, has presented an affidavit from Nathalal Maganlal Chauhan, the petitioner’s father, which has been officially recorded. Additionally, the Assistant Government Pleader has submitted a confidential report detailing the proceedings conducted by the respondents at the petitioner’s residence. This was done under the authorization provided to the second respondent in accordance with sub-section (2) of section 67 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The court has reviewed the report, which indicates that the officers authorized to search the petitioner’s home were present there from October 11, 2019, to October 18, 2019. The report shows that on October 11, 2019, at 2:15 PM, the officers had completed searching the rooms and collected various records, including bank passbooks and cheque books, which were gathered in the main room for ongoing verification. The record reveals that while there were no further searches, the officers continued their stay at the premises and examined phone calls made to family members, recording these calls and statements from them. It appears that the officers, along with the panchas, were periodically replaced until the end of the inspection on October 18, 2019, during which they continued questioning the petitioner’s family members daily.

Section 67 of the CGST Act grants powers of inspection, search, and seizure. Sub-section (1) allows a proper officer, not below the rank of Joint Commissioner, to authorize any other officer to inspect business places if there is reason to believe that a taxable person is involved in tax evasion or has contravened the provisions of the Act. Sub-section (2) provides that if there is reason to believe that goods liable for confiscation or relevant documents are secreted in any place, the proper officer may authorize a search and seizure. If goods cannot be seized immediately, an order may be served to prevent their removal or alteration without prior permission. Documents or items seized can be retained only as long as necessary for examination and inquiry.

Mr. Chetan Pandya, the petitioner’s advocate, has presented an affidavit from Nathalal Maganlal Chauhan, the petitioner’s father, which has been recorded. The Assistant Government Pleader has submitted a confidential report detailing the proceedings conducted by the respondents at the petitioner’s premises, following an authorization issued to the second respondent under section 67(2) of the Central Goods and Services Tax Act, 2017 (CGST Act). Upon reviewing the report, it is evident that the authorized officers searched the petitioner’s residential premises from October 11, 2019, to October 18, 2019. On October 11, 2019, at 2:15 PM, the officers gathered various records, including family bank passbooks and cheque books, in the main room for verification. After this, no further searches were reported; instead, the officers remained at the premises, examining phone calls received by family members and recording their statements. The officers who initially arrived, along with the panchas, were replaced daily by new officers and panchas until October 18, 2019, during which time they continued to question the petitioner’s family members.

Section 67 of the CGST Act grants powers related to inspection, search, and seizure. Sub-section (1) allows a proper officer, not below the rank of Joint Commissioner, to authorize another officer to inspect the premises of a taxable person or businesses involved in transporting goods if there is reason to believe that tax evasion or contravention of the Act is occurring. Sub-section (2) authorizes the same officer to search and seize goods, documents, or books that are believed to be relevant to proceedings under the Act, with provisions for handling documents and goods if they cannot be immediately seized. Sub-section (3) mandates that any documents or books not used for issuing a notice should be returned within thirty days of the notice being issued. Sub-section (4) grants the power to seal or break into premises or containers if access is denied. Sub-section (5) allows the person from whose custody documents are seized to make copies or take extracts, except where it may affect the investigation. Finally, sub-section (6) provides for the provisional release of seized goods upon execution of a bond and provision of security or payment of applicable tax, interest, and penalties.

Mr. Chetan Pandya, the petitioner’s advocate, has submitted an affidavit from Nathalal Maganlal Chauhan, the petitioner’s father, which has been included in the record. The Assistant Government Pleader has also provided a confidential report detailing the proceedings conducted by the respondents at the petitioner’s premises, based on authorization given to the second respondent under subsection (2) of section 67 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The court has reviewed this report thoroughly. It shows that the officers authorized to search the petitioner’s residential premises were present from October 11, 2019, to October 18, 2019. On October 11, 2019, at 2:15 PM, the officers documented that after searching the rooms, they collected various records including bank passbooks and cheque books, and continued their verification. The subsequent records indicate that the officers did not conduct further searches but remained on-site, examining and recording phone calls made by the family members and taking their statements on October 11, 2019. The officers who initially arrived, along with the panchas (witnesses), were replaced by new officers and panchas in a cycle that continued until October 18, 2019. The officers questioned the petitioner’s family daily during this period.

Section 67 of the CGST Act grants powers related to inspection, search, and seizure. According to this section, if a proper officer, at least a Joint Commissioner, believes that a taxable person has concealed transactions or claimed excessive input tax credit, or is otherwise contravening the provisions to evade tax, they can authorize another officer to inspect any place of business. Furthermore, if the proper officer believes that goods or documents useful for proceedings under the Act are concealed, they may authorize a search and seizure of such goods or documents. The Act allows for the sealing or breaking open of premises or containers if access is denied, and the person from whose custody documents are seized can make copies or extracts in the presence of the authorized officer. Seized goods may be released provisionally upon the execution of a bond and security or payment of applicable tax, interest, and penalty. If no notice is issued within six months of seizure, the goods must be returned, with a possible extension of six months if sufficient cause is shown. Additionally, the Government may specify goods that should be disposed of quickly due to their perishable nature or other relevant factors. The procedures for search and seizure are also aligned with the Code of Criminal Procedure, 1973.

Mr. Chetan Pandya, the petitioner’s advocate, has submitted an affidavit from Nathalal Maganlal Chauhan, the petitioner’s father, which is now part of the record. The Assistant Government Pleader has provided a confidential report detailing the proceedings conducted by the respondents at the petitioner’s residence, authorized under section 67(2) of the Central Goods and Services Tax Act, 2017. The report indicates that the officers involved in the search stayed at the petitioner’s premises from October 11, 2019, to October 18, 2019. On October 11, 2019, at 2:15 PM, after searching the rooms, they gathered the financial records, including bank passbooks and cheque books, into the main room and began their verification. Although no further search was documented, the officers examined phone calls and recorded statements from the petitioner’s family members, with new officers and panchas replacing the previous ones daily until October 18, 2019.

Section 67 of the CGST Act grants the power to inspect, search, and seize. Sub-section (1) allows a proper officer, not below the rank of Joint Commissioner, to authorize another officer to inspect places of business if there is reason to believe that a taxable person has evaded tax. Sub-section (2) permits the search and seizure of goods, documents, or books if the officer suspects they are secreted in any place. It also provides for the issuance of orders to prevent the removal of goods if seizure is impractical. Sub-section (3) requires the return of documents not relied upon for issuing notices within 30 days. Sub-section (4) authorizes officers to seal or break open premises if access is denied. Sub-section (5) allows the person from whom documents are seized to make copies in the presence of an authorized officer, except where it might hinder the investigation. Sub-section (6) details the conditions under which seized goods may be released provisionally. Sub-section (7) mandates the return of goods if no notice is given within six months, extendable for another six months if justified. Sub-section (8) enables the government to specify goods for disposal soon after seizure. Sub-section (9) requires an inventory to be prepared for specified goods. Sub-section (10) applies the Code of Criminal Procedure to searches and seizures with modifications. Sub-section (11) allows for the seizure of accounts or documents if there is an attempt to evade tax. Sub-section (12) authorizes the purchase of goods or services to verify tax invoice issuance and mandates a refund for returned goods.

Mr. Chetan Pandya, the advocate for the petitioner, has submitted an affidavit from Nathalal Maganlal Chauhan, the petitioner’s father, which has been accepted by the court. The Assistant Government Pleader has provided a confidential report detailing the proceedings conducted by the respondents at the petitioner’s premises following an authorization under section 67(2) of the Central Goods and Services Tax Act, 2017 (CGST Act).

The court reviewed the report, which indicates that officers authorized to search the petitioner’s residence stayed from October 11, 2019, to October 18, 2019. The records show that on October 11, 2019, the officers collected the family’s bank passbooks and cheque books and were in the process of verifying them. Although no additional searches were recorded, the officers continued to stay at the premises, examining phone calls and recording statements from the petitioner’s family members. The initial team of officers and panchas were replaced by new ones repeatedly until October 18, 2019, and the questioning of the family members persisted daily.

Section 67 of the CGST Act provides powers for inspection, search, and seizure. Sub-section (2) allows an authorized officer to search and seize goods, documents, or books if they believe such items are relevant to proceedings under the Act. Sub-section (4) allows for sealing or breaking open of premises or containers if access is denied. However, the sub-sections do not grant authority to use coercion or force to obtain information or recordings from family members.

It is noted that from October 12 to October 18, 2019, the presence of officers, including a CRPF officer, at the petitioner’s residence, despite the seizure of goods on October 11, 2019, was unwarranted and beyond legal authority. The officers’ actions were deemed a misuse of their powers, as they exceeded the legal scope permitted under the CGST Act, especially regarding the treatment of family members and the use of coercive measures. Consequently, there is a need for a thorough investigation into the conduct of the respondent officers.

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Rakesh Arora VS State of Punjab

admin — Mon, 09 Sep 2024 13:44:57 +0000

Case tittle	Rakesh Arora VS State of Punjab
Court	Punjab and Haryana High Court
Honourable Judge	Justice Avneesh Jhingan
Citation	2021 (01) GSTPanacea 222 HC Punjab and Haryana CRM-M-1511 OF 2021
Judgment Date	28-January-2021

The case at hand was heard via video conference due to the ongoing COVID-19 situation. The petitioner sought bail under Section 439 of the Criminal Procedure Code (Cr.P.C.) after being arrested for offenses under Section 132 of the Central Goods and Services Tax (CGST) Act, 2017.

Initially, the only respondent named in the petition was the State of Punjab. However, during proceedings on January 18, 2021, Mr. Sourabh Goel, an advocate, appeared and argued that the Union of India was also a necessary party to the case. He requested additional time to file a reply to this effect, which was subsequently filed and recorded on January 22, 2021.

The focus of the petition revolves around the petitioner’s request for bail in connection with alleged violations of the CGST Act. The proceedings involved legal deliberations over the appropriate parties to the case, specifically the inclusion of the Union of India as a necessary respondent in light of the charges under the CGST Act, which is central to the matter.

The matter was heard via video conference due to the ongoing COVID-19 situation. The petitioner approached the Court under Section 439 of the Criminal Procedure Code (Cr.P.C.), seeking bail after being arrested under Section 132 of the Central Goods and Services Tax (GST) Act, 2017.

Initially, the petition named only the State of Punjab as the respondent. However, on January 18, 2021, Mr. Sourabh Goel, representing the Union of India, argued that the Union of India was a necessary party. The reply was filed and accepted on January 22, 2021.

The case revolves around data gathered by Business Intelligence and Fraud Analytics (BIFA) from the Goods and Services Tax Identification Number (GSTIN) system. The GST Department had information that three firms—M/s La Mode Fashions, M/s Decent Fashions, and M/s Murari Enterprises—were involved in fraudulent activities related to Input Tax Credits (ITC). The firms allegedly issued fraudulent bills worth ₹158 crores, involving ₹13.39 crores in tax. They availed fake ITC amounting to ₹21.60 crores and claimed a refund of ₹5.02 crores.

The petitioner seeks relief from the ongoing legal proceedings based on these allegations of tax fraud under the GST Act.

The matter under consideration involves a bail application under Section 439 of the Cr.P.C. The petitioner, arrested under Section 132 of the Central Goods and Services Tax Act, 2017, seeks bail. Due to the COVID-19 situation, the case is being heard via video conference.

Initially, only the State of Punjab was named as a respondent in the petition, but on January 18, 2021, it was suggested that the Union of India be added as a necessary party. After submissions by counsel for the Union, a reply was filed on January 22, 2021.

The facts of the case revolve around an investigation by the Goods and Services Tax Department, utilizing Business Intelligence and Fraud Analytics (BIFA) to gather data from GSTIN. The Department discovered that three firms—M/s La Mode Fashions, M/s Decent Fashions, and M/s Murari Enterprises—were involved in availing and passing fraudulent Input Tax Credits (ITC). These firms had issued invoices worth ₹158 crores, involving ₹13.39 crores of tax, and had availed fake ITC amounting to ₹21.60 crores while claiming refunds of ₹5.02 crores.

The petitioner’s premises in Noida were searched, and his mobile phone along with various documents were seized. Initially, the petitioner denied any connection with individuals named Ankur Garg and Vikas Gupta, and the firms in question. However, during the investigation, it was discovered that an email ID linked to the petitioner was used to send a lease deed related to M/s La Mode Fashions. This email was also associated with the firms’ GSTIN portal. Further investigation revealed that a person named Tarun, running a cyber cafe, had confessed to creating fake identities for the firm’s partners, including fake Aadhaar cards, PAN, and bank accounts. Tarun admitted that he and his employees were paid monthly by the petitioner for their involvement in these fraudulent activities. One of Tarun’s employees had their identity altered to act as a partner in the firms.

Statements from other individuals, including a partner named Ms. Shreya Aggarwal and the landlady of the rented premises, were recorded, corroborating that the petitioner, Dharminder Arora (also known as Raja Bhaiya), was involved in the creation and registration of the bogus firms, either directly or through intermediaries.

Counsel for the petitioner argued that the petitioner has been in custody since December 5, 2020, and no formal complaint has been filed against him. The charges fall under a Magistrate’s trial jurisdiction and carry a maximum sentence of five years’ imprisonment. Therefore, the petitioner seeks bail due to the extended pretrial detention and the lack of formal charges.

The petitioner’s case revolves around an arrest that they argue was unwarranted and not supported by any evidence suggesting they attempted to flee before being taken into custody. The petitioner challenges the legal basis for their arrest, particularly in light of the provisions of Section 132(1) of the Central Goods and Services Tax Act, 2017.

In the reply filed by the respondent, it is highlighted that no offense under clauses (a) to (d) of Section 132(1) of the Act has been made out against the petitioner. The respondent contends that only offenses under these clauses are non-bailable. The petitioner is further defended on the grounds that they have not issued any bill or invoice to fraudulently avail Input Tax Credit (ITC), and that the assessment in their case is still incomplete. The petitioner draws support from the Delhi High Court’s decision in *Anil Jain Versus Directorate of Revenue Intelligence* (2007), where bail was granted in similar circumstances.

The petitioner’s grievance also points to the arrest being in violation of legal precedents. Specifically, the petitioner argues that their case does not fall within the categories justifying arrest as laid out by the Division Bench of the Punjab and Haryana High Court in *Akhil Krishan Maggu Versus Deputy Director of GST Intelligence* (2020). The judgment in this case is invoked to assert that the arrest powers under Section 69 of the Act should be used sparingly, with reasons for arrest being properly recorded.

To strengthen their argument, the petitioner relies on several court judgments, including the Gujarat High Court’s ruling in *Vimal Yashwantgiri Goswami Versus State of Gujarat* (2020), which emphasized the need for caution in exercising arrest powers. Additional references are made to orders passed in *Manoj Cables Limited Versus Union of India* (2020) and other relevant cases, asserting that the petitioner’s arrest was not in line with established legal norms.

In essence, the petitioner contends that the arrest was not justified under the applicable legal provisions and that there is no evidence of any attempt to evade the law. The petitioner argues for relief based on legal precedents that restrict the arbitrary use of arrest powers under the GST law.

The petitioner is contending that there is no evidence suggesting an attempt to flee before being taken into custody. The response from the opposing party emphasizes that no offense under clauses (a) to (d) of Section 132(1) of the Central Goods and Services Tax (CGST) Act has been committed by the petitioner. These clauses describe non-bailable offenses, but it is argued that the petitioner neither issued any invoice nor fraudulently availed Input Tax Credit (ITC), and the tax assessment has yet to be finalized.

The petitioner’s counsel references the Delhi High Court ruling in *Anil Jain v. Directorate of Revenue Intelligence* (2007), where bail was granted in similar circumstances, reinforcing the claim that the arrest is unlawful. The petitioner argues that their arrest contravenes the precedent set by the Division Bench of the court in *Akhil Krishan Maggu v. Deputy Director of GST Intelligence* (2020), where specific categories were outlined for arrest, and the petitioner’s case does not fit within these.

Further arguments assert that the powers to arrest under Section 69 of the CGST Act should be exercised sparingly, with reasons properly recorded. The defense relies on the Gujarat High Court ruling in *Vimal Yashwantgiri Goswami v. State of Gujarat* (2020), supporting this view. The counsel also refers to other cases—*Manoj Cables Ltd. v. Union of India* (2020) and *Tarun Bassi v. State of Punjab* (2020)—in which the vires (legal validity) of Sections 132 and 69 are under challenge, and interim bail has been granted by the court in these matters.

Several other bail orders from similar cases under Section 132 of the Act, such as *Rajinder Bassi v. State of Punjab* (2020) and *Ganga Ram v. State of Punjab* (2020), are also cited to reinforce the argument for bail.

On the contrary, the counsel for the Union of India points out that the petitioner is involved in a substantial scam, exceeding ₹150 crores, discovered through BIFA software analysis. The government refutes the claim that the petitioner is unlikely to flee if granted bail, emphasizing that the petitioner had changed his identity, which only came to light after further investigation. There are concerns that, if released, the petitioner could tamper with evidence or influence witnesses. These concerns are supported by statements indicating that the petitioner used force, detained an individual, and conducted suspicious transactions related to the scam. Additionally, there are allegations that the petitioner impersonated someone else and set up fake firms to claim fraudulent ITC, further complicating the defense’s position.

In this case, the petitioner contends that there is no indication that they attempted to flee before being taken into custody. The respondent, in their reply, asserts that no offense has been made out against the petitioner under clauses (a) to (d) of Section 132(1) of the CGST Act, which outline non-bailable offenses. The petitioner has not issued any bill or invoice to claim Input Tax Credit (ITC), and the assessment is not yet complete. Citing the Delhi High Court’s decision in *Anil Jain v. Directorate of Revenue Intelligence* (2007), where bail was granted under similar circumstances, the petitioner argues for bail.

The petitioner further claims that their arrest contradicts the law set by the Division Bench of the Punjab and Haryana High Court in *Akhil Krishan Maggu v. Deputy Director of GST Intelligence* (2020), as their case does not fall under the categories outlined for arrest. The senior counsel for the petitioner argues that the powers under Section 69 of the CGST Act, which authorize arrest, must be exercised sparingly and with proper reasons recorded. They cite several legal precedents, including the Gujarat High Court’s decision in *Vimal Yashwantgiri Goswami v. State of Gujarat* (2020) and other interim bail orders, to support their claim that bail should be granted, especially as the vires of Sections 132 and 69 are under legal challenge.

The counsel for the Union of India counters these claims, highlighting that the petitioner is allegedly involved in a GST scam exceeding ₹150 crores, uncovered through the BIFA software. They argue that the petitioner changed his identity and would likely tamper with evidence or influence witnesses if granted bail. The petitioner is accused of forcibly detaining an individual, Tarun, to ensure the transfer of ₹68 lakhs to a firm’s account. It is further alleged that the petitioner impersonated another individual to establish bogus firms for claiming fraudulent ITC.

The Telangana High Court’s decision in *P.V. Ramana Reddy v. Union of India* (2019) was referenced to clarify that offenses under Section 132(1) of the CGST Act are not dependent on the completion of assessment proceedings. The respondent opposes the bail request, emphasizing that the investigation is ongoing, with new evidence, including bank records, surfacing. It is alleged that the petitioner was involved in a fraudulent transfer of ₹68 lakhs, later returned in a compromise agreement, and signed as a witness.

The respondent defends the petitioner’s arrest, stating that valid reasons were recorded for it, and new leads, including one involving an individual from Dubai, are still under investigation. Hence, the matter remains unresolved, and bail is opposed based on the risk of interference with the ongoing investigation.

The petitioner contends that there is no evidence suggesting he attempted to flee prior to being taken into custody. The respondent’s reply indicates that the petitioner is not charged under clauses (a) to (d) of Section 132(1) of the Central Goods and Services Tax (CGST) Act, which define non-bailable offenses. Therefore, the argument is made that the petitioner’s case does not meet the criteria for a non-bailable offense. Additionally, it is stated that the petitioner has not issued any bills or invoices to claim Input Tax Credit (ITC), and the tax assessment remains incomplete. The petitioner relies on previous court decisions where bail was granted in similar circumstances, particularly citing the Delhi High Court’s ruling in *Anil Jain vs. Directorate of Revenue Intelligence* and the Division Bench judgment in *Akhil Krishan Maggu vs. Deputy Director of GST Intelligence* to argue that his arrest contradicts established legal principles.

The petitioner’s counsel further argues that the power to arrest under Section 69 of the CGST Act should be exercised sparingly, and reasons for the arrest should be clearly documented, referencing judgments from the Gujarat High Court (*Vimal Yashwantgiri Goswami vs. State of Gujarat*) and interim bail orders in other cases challenging the vires of Sections 69 and 132 of the CGST Act. Multiple instances where courts have granted bail under Section 132 are also cited to support the petitioner’s claim for bail.

In contrast, the counsel for the Union of India argues that the petitioner’s arrest was justified due to his involvement in a scam exceeding ₹150 crores, identified through data collected by the BIFA software. The government argues that the petitioner changed his identity to avoid detection and, if released on bail, might tamper with evidence or influence witnesses. The government also highlights specific incidents, including the petitioner’s alleged involvement in forcibly detaining a person to extort money and his role in fraudulently claiming ITC through bogus firms. Evidence such as statements and emails linking the petitioner to these activities is presented.

The government’s opposition to the bail is further supported by ongoing investigations, which have uncovered additional details, such as the involvement of foreign individuals in directing the petitioner’s activities. Despite the petitioner’s contention that his extended custody without interrogation weakens the case for his continued detention, the court finds that the investigation is incomplete, with key evidence still being collected. Moreover, the court is not persuaded by the petitioner’s claim that he would not flee if released on bail, particularly given his use of a false identity and involvement in creating fake firms.

Ultimately, the court stresses the need to consider the overall circumstances and seriousness of the allegations while deciding the bail application. Given the ongoing investigation, the possibility of the petitioner absconding, and the complexity of the case, the court leans toward denying bail, emphasizing that the petitioner’s release poses significant risks to the integrity of the investigation.

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Hanumanthappa Pathrera Lakshmana VS State

admin — Mon, 09 Sep 2024 13:37:11 +0000

Case Tittle	Hanumanthappa Pathrera Lakshmana VS State
Court	Karnataka High Court
Honourable Judges	Justice k. Natarajan
Citation	2020 (06) GSTPanacea 181 HC Karnataka Criminal Petition No.2419 Of 2020
Judgement Date	11-June-2020

This petition, filed by the petitioner under Section 438 of the Code of Criminal Procedure, 1973 (Cr.P.C.), seeks anticipatory bail in anticipation of arrest. Section 438 of the Cr.P.C. allows an individual to apply for anticipatory bail when they fear arrest for a non-bailable offense. In this case, the petitioner is concerned about a potential arrest stemming from an inquiry initiated under the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act).

The facts of the case are as follows: The respondent, who is the tax authority under the CGST Act, had issued a notice or summons to the petitioner under Section 70 of the CGST Act. Section 70 of the CGST Act empowers a tax officer to summon any person whose presence is necessary to give evidence or produce documents relevant to the investigation. In compliance with this provision, the petitioner was summoned to appear before the authorized officer on May 12, 2020. It appears that another summons was issued after the initial filing of this petition, further complicating the petitioner’s legal situation.

The petitioner’s core argument in seeking anticipatory bail revolves around the fact that he is the proprietor of M/s. Sri Om Traders, a registered dealer under both the CGST Act and the State Goods and Services Tax (SGST) Act. His business operates in Shivamogga, Karnataka, where he deals in ferrous and non-ferrous materials. The petitioner’s business activities have likely come under scrutiny as part of an investigation related to potential violations of the CGST or SGST Acts, which may involve allegations of tax evasion, false claims of input tax credit (ITC), or other regulatory breaches.

The summons issued by the tax authorities, as per Section 70, indicates that the petitioner’s presence is required in the investigation. However, the petitioner fears that complying with the summons could lead to his arrest, particularly if the authorities have already gathered evidence or believe that there has been a violation of tax laws. This apprehension of arrest has led the petitioner to seek the protection of the court through an anticipatory bail petition.

In the petition, the petitioner contends that the investigation and the summons are part of a routine inquiry into his business practices, and he asserts that he is fully cooperating with the tax authorities. Despite this, he fears that the authorities may take coercive actions, such as arresting him, during the investigation. The petition, therefore, requests the court to grant him anticipatory bail, ensuring that if an arrest is warranted, the petitioner will have the right to bail and avoid unnecessary detention.

The petitioner’s arguments also imply that the issuance of multiple summonses, both before and after the filing of this petition, has caused uncertainty and concern regarding his legal position. He argues that, as a legitimate business owner, he should be allowed to continue his operations without the threat of arbitrary arrest. Furthermore, the petitioner may claim that any allegations of wrongdoing are either unfounded or based on misunderstandings of his business transactions under the GST framework.

The respondent’s stance, which is not fully detailed in the petition, likely involves an investigation into the petitioner’s business practices to determine whether he has violated any provisions of the CGST Act. The issuance of summonses could be part of a broader tax enforcement action aimed at addressing irregularities in GST compliance, particularly in industries dealing with goods like ferrous and non-ferrous materials, which may be prone to misreporting or underreporting of taxes.

The court, in evaluating the petitioner’s request for anticipatory bail, will consider various factors, including the gravity of the alleged offense, the petitioner’s cooperation with the investigation, the possibility of tampering with evidence or influencing witnesses, and the overall fairness of granting bail in the circumstances of the case.

In sum, this anticipatory bail petition underscores the petitioner’s apprehension regarding arrest in connection with a tax investigation under the CGST Act. It reflects a tension between the need for tax authorities to enforce compliance and the petitioner’s desire for protection against potential coercive measures, such as arrest, which may disrupt his business and personal freedom. The court’s decision on this matter will hinge on balancing these competing interests while ensuring that justice is served both in terms of upholding tax laws and protecting the petitioner’s rights.

This petition has been filed under Section 438 of the Code of Criminal Procedure, 1973 (Cr.P.C.) by the petitioner seeking anticipatory bail. The petitioner’s primary concern arises from an ongoing investigation initiated by the respondent under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner contends that he has been issued multiple notices and summonses under Section 70 of the CGST Act, calling upon him to appear before an Authorized Officer. The petitioner was specifically summoned to appear on May 12, 2020, and additional summons were issued even after the filing of this petition.

The petitioner is the proprietor of M/s. Sri Om Traders, a business entity registered under the provisions of both the CGST and State Goods and Services Tax Act (SGST). M/s. Sri Om Traders is engaged in the business of dealing in ferrous and non-ferrous scrap materials. The petitioner maintains that during the regular course of business, he has purchased goods from a variety of registered and unregistered dealers, and he has duly issued tax invoices in compliance with the law. Additionally, he has collected taxes on these transactions and remitted them to the government in accordance with the statutory provisions of the CGST and SGST Acts.

The petitioner claims that on February 8, 2020, the respondent issued a summon for him to appear before an officer named D. Bhaskar at 3:15 p.m. However, prior to the issuance of this summon, on the same day, the respondent conducted an inspection of the petitioner’s business premises and drew up a mahazar (a legal document recording evidence). Following this, the petitioner was issued another notice to appear before another officer, K. Venumadhava Reddy, on February 10, 2020.

In response to these summonses, the petitioner has expressed his willingness to cooperate fully with the investigation and appear before the authorities as required. However, the petitioner asserts that the respondent has already collected all necessary documents and has completed their investigation. Despite this, the petitioner harbors concerns regarding his potential arrest by the authorities in connection with alleged offenses under Section 132(5) of the CGST Act, which deals with serious tax evasion offenses.

The petitioner is apprehensive that if he is arrested and subsequently remanded to judicial custody, it will cause significant harm to his personal and professional life. He argues that, given his cooperation with the investigation and the completion of document collection by the authorities, his arrest would serve no legitimate purpose and would only result in undue hardship for him. Consequently, he seeks the court’s intervention to grant him anticipatory bail to prevent his potential arrest and detention during the ongoing investigation.

In conclusion, the petitioner argues that his actions have been in compliance with tax laws, and he has made all necessary tax remittances as per the CGST and SGST Acts. He requests that the court grant him anticipatory bail under Section 438 of the Cr.P.C. to avoid arrest, contending that he poses no risk of fleeing from the investigation or obstructing justice. The petitioner asserts that his cooperation with the authorities is evident, and the continuation of his liberty is essential for the smooth operation of his business affairs.

This petition has been filed by the petitioner under Section 438 of the Code of Criminal Procedure, 1973 (Cr.P.C.), seeking anticipatory bail. The petitioner’s concern stems from the issuance of summons by the respondent, in accordance with Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act), which requires the petitioner to appear before an Authorized Officer on multiple occasions, the most recent one being on 12.05.2020, before the petition was filed. The petitioner anticipates potential arrest due to these summons.

The petitioner, the proprietor of M/s. Sri Om Traders, is a registered dealer under the CGST and SGST Acts, operating in Shivamogga, Karnataka, and dealing in ferrous and non-ferrous scrap. The petitioner contends that all transactions have been conducted in accordance with the law, with tax invoices issued, taxes collected, and remitted to the government as per the CGST and SGST requirements. The petitioner asserts that during the normal course of business, goods were purchased from both registered and unregistered dealers.

On 08.02.2020, the respondent issued a summon requiring the petitioner to appear before an Officer named D. Bhaskar at 3:15 p.m. Additionally, on the same day, an inspection of the petitioner’s business premises was conducted, and a mahazar (a formal record of the inspection) was drawn. Following this, the petitioner received another notice to appear before an officer named K. Venumadhava Reddy on 10.02.2020. The petitioner claims to be willing to cooperate fully with the investigation and to appear before the respondent. However, the petitioner is concerned that the investigation has already been completed and that there is an imminent risk of arrest under Section 132(5) of the CGST Act, which deals with offenses related to tax evasion and fraudulent tax claims. If arrested and sent to judicial custody, the petitioner fears significant personal and professional hardship, as he has an elderly mother and a daughter to care for. Additionally, the petitioner cites health concerns due to the ongoing COVID-19 pandemic.

The petitioner argues that he has not committed any offense and is willing to comply with any conditions imposed by the court in exchange for bail. He asserts that the offenses under the CGST Act are non-bailable, but they are not punishable by death or life imprisonment. Furthermore, the petitioner is prepared to offer any surety required by the court and has asked for anticipatory bail to avoid unnecessary hardship and loss.

On the other hand, Sri Jeevan Neeralgi, the learned Special Public Prosecutor, has submitted written objections. The prosecutor contends that the petitioner is an assessee under the CGST Act and that intelligence gathered by officers of the respondent indicates that the petitioner has engaged in fraudulent activities. Specifically, the allegation is that the petitioner has availed of fake input tax credits—credit claimed on invoices for goods that were never actually supplied. Summons were issued to the petitioner under Section 70 of the CGST Act based on this information, with the authorization provided by the competent authority.

The Special Public Prosecutor emphasizes the seriousness of the allegations and the ongoing investigation into the petitioner’s activities, which involve suspected large-scale fraud in tax credits. These offenses under the CGST Act could result in stringent penalties, including imprisonment. Hence, the prosecution is likely to argue that anticipatory bail should not be granted due to the gravity of the offense and the need for the petitioner to remain available for further investigation.

In summary, the petitioner seeks protection from arrest via anticipatory bail, citing personal hardship, cooperation with the investigation, and the non-bailable but non-capital nature of the alleged offense. Meanwhile, the prosecution counters with allegations of tax fraud, stressing the importance of continued investigation and questioning the appropriateness of granting anticipatory bail under such circumstances. The court will have to weigh these competing claims in its decision on whether or not to grant the petitioner anticipatory bail.

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Sushil Kumar VS State of Punjab

admin — Mon, 09 Sep 2024 13:37:10 +0000

Case Title	Sushil Kumar VS State of Punjab
Court	Punjab & Haryana High Court
Honourable Judges	Justice Avneesh Jhingan
Citation	2020 (09) GSTPanacea 182 HC Punjab & Haryana CRM-M-28841-2020
Judgement Date	22-September-2020

Sushil Kumar, an Excise and Taxation Officer currently stationed in Mandi Gobindgarh, has filed a petition challenging an order dated 11th September, 2020, which denied his request for anticipatory bail. The petition relates to an FIR (First Information Report) No. 9, registered on 21st August, 2020, under various sections of the Indian Penal Code (IPC) and the Prevention of Corruption Act, 1988. The charges listed in the FIR include serious offenses under Sections 420 (cheating), 465 (forgery), 467 (forgery of valuable security), 468 (forgery for the purpose of cheating), 471 (using a forged document as genuine), and 120-B (criminal conspiracy) of the IPC. Additionally, the FIR invokes Sections 7, 7(a), and 8 of the Prevention of Corruption Act, which pertain to the receipt of illegal gratification and the misuse of public office for corrupt purposes. Sushil Kumar’s petition is essentially an appeal against the earlier decision to reject his anticipatory bail plea, in light of the ongoing investigation under these serious charges. He seeks protection from arrest, arguing for the grant of anticipatory bail to ensure that his personal liberty is safeguarded while the legal process unfolds.

Sushil Kumar, an Excise and Taxation Officer posted at Mandi Gobindgarh, has filed a petition challenging the order dated September 11, 2020, which rejected his plea for anticipatory bail. The case arises from FIR No. 9, registered on August 21, 2020, under various sections of the Indian Penal Code (Sections 420, 465, 467, 468, 471, and 120-B) and the Prevention of Corruption Act, 1988 (Sections 7, 7(a), and 8) at the Vigilance Bureau Police Station, Phase-1, Mohali. The FIR was lodged following information received by the Vigilance Bureau, alleging that Som Nath, the owner of Sadhu Transport in Phagwara, had been involved in tax evasion with the complicity of officers and officials of the Punjab Excise and Taxation Department. It is claimed that tax evasion occurred by ensuring that no checks or verifications were made on goods being transported to and from Punjab. Large sums of money were reportedly paid monthly as bribes to these officers to facilitate the evasion. Further allegations pointed to Shiv Kumar, a clerk of Som Nath, and Pawan Kumar, a driver allegedly working for some of the Excise and Taxation officers, who were involved in distributing bribe money to officials. The Vigilance Bureau identified mobile numbers associated with these individuals and, after obtaining the necessary permissions, collected technical inputs, including call detail records. These records revealed conversations implicating certain officers and mentioning the bribes being paid or discussed. It was also noted that due to the COVID-19 pandemic, discussions took place regarding paying reduced amounts to the officers. The Vigilance Bureau pursued these call details, leading to the investigation into the accused, including Sushil Kumar.

Sushil Kumar, an Excise and Taxation Officer currently posted at Mandi Gobindgarh, has filed a petition challenging the order dated September 11, 2020, which denied his request for anticipatory bail. This denial relates to FIR No. 9, registered on August 21, 2020, at the Police Station Vigilance Bureau, Phase-1, Mohali. The FIR was filed under several sections of the Indian Penal Code, including Sections 420 (cheating), 465 (forgery), 467 (forgery of valuable security), 468 (forgery for the purpose of cheating), 471 (using a forged document as genuine), and 120-B (criminal conspiracy), as well as Sections 7, 7(a), and 8 of the Prevention of Corruption Act, 1988, dealing with bribery and corruption. The case originated from an investigation by the Vigilance Bureau, which received information that Som Nath, the owner of Sadhu Transport in Phagwara, was evading taxes with the assistance of officials from the Excise and Taxation Department of Punjab. The FIR alleges that officials were receiving heavy bribes to ensure that no checks or verifications were conducted on goods being transported to and from Punjab. Key individuals, including Shiv Kumar, a clerk for Som Nath, and Pawan Kumar, a driver for some officers, were allegedly involved in distributing bribe money. The Vigilance Bureau, after obtaining permission from the competent authority, gathered technical inputs and call detail records. These records revealed conversations about the amounts being paid to officers, including discussions of reduced payments due to the COVID-19 pandemic. The investigation also uncovered the use of bogus bills and altered descriptions and values of goods. Twelve officers, including Sushil Kumar, were named in the FIR. It was noted that Pawan Kumar made at least 40 calls to Sushil Kumar’s mobile phone. The FIR states that further investigations are ongoing, and more names may surface. Sushil Kumar, fearing arrest, filed a petition under Section 438 of the Criminal Procedure Code for anticipatory bail, which was rejected. His counsel argued that his name does not appear in the recorded conversations, and simply receiving calls from Pawan Kumar is not sufficient to establish guilt. Furthermore, the reliance on records maintained by Som Nath, Pawan Kumar, and Shiv Kumar, which allegedly detail payments to officers, was questioned by the defense.

Sushil Kumar, an Excise and Taxation Officer posted at Mandi Gobindgarh, filed a petition challenging the order dated September 11, 2020, which denied his request for anticipatory bail. The case stems from FIR No. 9, registered on August 21, 2020, at Police Station Vigilance Bureau, Mohali, under various sections of the Indian Penal Code (IPC), including 420, 465, 467, 468, 471, and 120-B, as well as sections of the Prevention of Corruption Act, 1988. The FIR was filed after information surfaced that Som Nath, owner of Sadhu Transport, had been evading taxes in collaboration with officers and officials from the Excise and Taxation Department of Punjab. Allegedly, bribes were paid monthly to ensure no checking or verification of the goods being transported. The investigation revealed that Shiv Kumar, a clerk of Som Nath, and Pawan Kumar, a driver for some of the excise officers, played a role in distributing bribe money. Conversations between these individuals, captured through call detail records over a one-year period, implicated various officers, including the petitioner. The FIR also pointed to the use of fraudulent bills to transport goods and suggested that certain officials provided advance warnings to transporters about potential inspections. Sushil Kumar was named in the FIR, along with 11 other officers, and it was found that Pawan Kumar made at least 40 calls to him. The petitioner moved for anticipatory bail, arguing that his name was not mentioned in the recorded conversations, and the calls made to him did not substantiate any criminal offense. Additionally, his counsel argued that the reliance on registers maintained by Som Nath’s associates, which detailed money given to officials, lacked evidentiary value. On behalf of the State, it was contended that Sushil Kumar was directly implicated in the bribery, with the investigation revealing that he received ₹8,25,000 between October 2017 and July 2020. Further investigations found that trucks detained by him were improperly released with minimal fines and without proper documentation or physical verification. In some cases, fines that should have been imposed by higher officials were instead imposed by Sushil Kumar himself, and certain cash penalties were not deposited in the government treasury. The investigation was ongoing, and the State argued that this provided grounds to deny anticipatory bail.

Sushil Kumar, an Excise and Taxation Officer stationed at Mandi Gobindgarh, has filed a petition challenging the denial of anticipatory bail in an order dated September 11, 2020. The bail was sought in connection with FIR No. 9, filed on August 21, 2020, under multiple sections of the Indian Penal Code (IPC) and the Prevention of Corruption Act, 1988. The FIR was lodged by the Vigilance Bureau, Mohali, based on information that Som Nath, owner of Sadhu Transport, was evading taxes with the assistance of officials from the Excise and Taxation Department of Punjab. It was alleged that bribes were regularly paid to officials to avoid document checks during the transportation of goods in and out of Punjab. Key individuals like Shiv Kumar, a clerk of Som Nath, and Pawan Kumar, a driver for some Excise officials, were identified as intermediaries who distributed bribes. Mobile numbers were traced, and call records revealed communication between these individuals and certain officers, including the petitioner, Sushil Kumar, who allegedly received around 40 calls from Pawan Kumar.

The FIR stated that false bills were used for goods transportation, and several officers, including Sushil Kumar, were implicated. A register detailing bribe payments was seized, and it indicated that ₹8.25 lakhs were paid to the petitioner between October 2017 and July 2020. Investigations revealed discrepancies in Sushil Kumar’s handling of detained vehicles, with fines imposed inconsistently, vehicles released without proper orders, and some cash penalties not deposited into the government treasury. These actions suggested a nexus between the petitioner and tax evaders, leading to a significant drop in GST collection.

Sushil Kumar’s counsel argued that his name did not appear in any recorded conversations and that the 40 calls made by Pawan Kumar to him did not constitute sufficient evidence of wrongdoing. They further argued that he was only recently posted to Mandi Gobindgarh and had no active role in the department during parts of the period under investigation. Despite these arguments, the State contended that the evidence pointed to his involvement in corruption, emphasizing the necessity of custodial interrogation to fully investigate the case.

Sushil Kumar, an Excise and Taxation Officer currently posted in Mandi Gobindgarh, filed a petition challenging the order dated September 11, 2020, which denied his request for anticipatory bail. The FIR No. 9, dated August 21, 2020, was registered under Sections 420, 465, 467, 468, 471, and 120-B of the Indian Penal Code, along with Sections 7, 7(a), and 8 of the Prevention of Corruption Act, 1988, at the Police Station Vigilance Bureau, Phase-1, Mohali. The FIR arose after the Vigilance Bureau received information about tax evasion involving Som Nath, the owner of Sadhu Transport from Phagwara, who was allegedly colluding with officers and officials from the Excise and Taxation Department of Punjab. The tax evasion was facilitated by a lack of checking or verification of documents and goods transported in and out of Punjab, with substantial bribes being paid to officials to ensure this. It was reported that Pawan Kumar, a driver linked with certain Excise and Taxation officers, and Shiv Kumar, a clerk, were actively involved in distributing the bribe money. The Vigilance Bureau, after obtaining permission from the competent authority, collected technical inputs and call detail records, uncovering conversations between various officials and discussions about bribes, especially during the COVID-19 situation. Names of officers involved, including Sushil Kumar, emerged through these investigations, with Kumar reportedly receiving over 40 calls from Pawan Kumar. Furthermore, a register was seized which allegedly recorded the bribes paid to these officers, including ₹8,25,000 paid to Sushil Kumar from October 2017 to July 2020.

The petitioner sought anticipatory bail under Section 438 of the CrPC, arguing that his name did not figure in the recorded conversations and that mere phone calls from Pawan Kumar were not sufficient to establish an offense. His counsel further contended that the register maintained by Som Nath and others detailing the bribes had no evidentiary value, and there was no direct accusation of forgery against him. On the contrary, the State argued that Sushil Kumar had been named in the FIR, and during the investigation, irregularities in the handling of detained vehicles by the petitioner were discovered. Trucks were released without physical verification or with minor fines, and in some cases, fines were imposed without proper penalty orders. Additionally, some cash penalties were allegedly not deposited in the government treasury. It was argued that tax evasion under the GST regime had led to a significant drop in state-level tax collection, and this evasion was facilitated by the connivance of transporters, officers, and intermediaries (“passers”). The State further contended that custodial interrogation of Sushil Kumar was necessary to thoroughly investigate the matter and uncover the extent of the tax evasion scheme.

Sushil Kumar’s counsel refuted these allegations, noting that he had not held an active post as Excise and Taxation Officer between January and March 2020 and had only been stationed in Mandi Gobindgarh for two months. Furthermore, the defense claimed that Pawan Kumar was merely a driver occasionally used by the department, and the number of phone calls made to the petitioner was not in itself incriminating.

The case brought to light the challenges posed by the Goods and Services Tax (GST) regime, which was designed to facilitate free movement of goods by removing barriers and placing responsibility on Excise and Taxation Officers. The evasion of GST, as alleged in this case, had broad implications, potentially allowing input tax credit to be claimed on taxes not paid to the government, thereby affecting the entire supply chain. This case highlighted the need for a deeper probe into tax evasion activities involving intermediaries, transporters, and officials, and its potential impact on the functioning of the GST system.

Sushil Kumar, an Excise and Taxation Officer posted at Mandi Gobindgarh, has filed a petition challenging the order dated September 11, 2020, which rejected his plea for anticipatory bail. The case stems from FIR No. 9, filed on August 21, 2020, under several sections of the Indian Penal Code (IPC), including 420 (cheating), 465 (forgery), 467 (forgery of valuable security), 468 (forgery for purpose of cheating), 471 (using forged documents), and 120-B (criminal conspiracy), as well as Sections 7, 7(a), and 8 of the Prevention of Corruption Act, 1988. The FIR, registered at the Vigilance Bureau, Phase-1, Mohali, accuses Kumar of involvement in a tax evasion scheme orchestrated by Som Nath, owner of Sadhu Transport, in collaboration with officials from the Excise and Taxation Department of Punjab. The alleged scheme involved evading taxes by bypassing document checks on transported goods in exchange for monthly bribes paid to the department’s officials. It is claimed that Shiv Kumar, a clerk working for Som Nath, and Pawan Kumar, a driver linked to the Excise Department, were responsible for distributing bribes. Technical surveillance, including call detail records, revealed conversations about bribe payments to certain officers, including discussions about reduced bribes during the COVID-19 pandemic.

The FIR names 12 officers, including Sushil Kumar, and claims that Pawan Kumar made 40 calls to him. Further investigation revealed a register maintained by Som Nath’s employees, detailing bribe payments to officers, including an alleged sum of ₹8,25,000 paid to Sushil Kumar between October 2017 and July 2020. The state argues that Sushil Kumar failed to enforce tax checks properly, allowing trucks to pass with minor fines and, in some cases, without following statutory procedures. The investigation has uncovered instances of forgery in goods transportation bills, discrepancies in penalty collections, and missing records of detained vehicles. The state’s counsel contends that custodial interrogation is necessary to uncover the full scope of the tax evasion network, which threatens the integrity of the Goods and Services Tax (GST) system.

Sushil Kumar’s counsel refutes these claims, arguing that his name does not appear in the recorded conversations and that the mere fact of receiving phone calls from Pawan Kumar does not constitute evidence of wrongdoing. It is also argued that the register detailing the bribes lacks evidentiary value and that no specific forgeries are directly attributed to the petitioner. Moreover, the defense asserts that Sushil Kumar was not in an active role as Excise and Taxation Officer during certain periods and had only recently been posted to Mandi Gobindgarh. Despite these arguments, the state emphasizes the seriousness of the allegations, the ongoing nature of the investigation, and the broader implications of the tax evasion scheme for the GST system. The court must weigh these factors in deciding whether to grant anticipatory bail to the petitioner.

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Yogesh Jagdish Kanodia VS State of Maharashtra

admin — Sat, 07 Sep 2024 14:27:03 +0000

Case tittle	Yogesh Jagdish Kanodia VS State of Maharashtra
Court	Bombay High Court
Honourable Judge	Justice S.S.Shinde Justice Manish Pitale
Citation	2021 (02) GSTPanacea 221 HC Bombay Criminal writ petition No. 93 Of 2021
Judgment Date	08-February-2021

In this case, the petitioner has approached the Court seeking his immediate release, claiming that his arrest under the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) is illegal. The petitioner argues that the offence he has been arrested for is bailable, and yet he continues to be held in custody, which he asserts is unlawful.

The petitioner was arrested on December 30, 2020, and was subsequently presented before the Additional Chief Metropolitan Magistrate in Mumbai, where he was remanded to magisterial custody. The arrest was made by Respondent No. 2, who accused the petitioner of committing offences under sections 132(1)(b) and 132(1)(c) of the CGST Act. These sections relate to the wrongful availing of input tax credit (ITC), and the amount in question exceeded ₹5 crore (₹500 lakh). Under section 132(1)(i) of the CGST Act, such an offence is punishable by imprisonment for a term that may extend up to five years, along with a fine. Additionally, as per sub-section (5) of section 132, it is classified as a cognizable and non-bailable offence. The arrest was carried out under section 69 of the CGST Act, which grants the power to arrest in such situations.

Respondent No. 2 alleges that the petitioner was operating four business entities that were involved in issuing fake purchase and sale invoices. This fraudulent activity enabled the petitioner to wrongfully claim an input tax credit amounting to ₹11.54 crore. Additionally, it was alleged that the fake sale invoices issued by the petitioner passed on wrongful input tax credit worth at least ₹9.29 crore. Based on these findings from the investigation, the petitioner was arrested on December 30, 2020.

The petitioner has approached the court contesting the legality of his arrest under the Central Goods and Services Tax Act, 2017 (CGST Act). He argues that his detention relates to a bailable offense and requests his immediate release.

The petitioner was arrested on December 30, 2020, and produced before the Additional Chief Metropolitan Magistrate, Mumbai, who remanded him to judicial custody. The arrest was made by Respondent No. 2 under Section 69 of the CGST Act. It was based on allegations that the petitioner had violated Section 132(1)(b) and (c) of the CGST Act by availing of fraudulent input tax credits (ITC) exceeding Rs. 500 lakh (Rs. 5 crores), which constitutes a cognizable and non-bailable offense punishable by imprisonment up to five years and a fine under Section 132(1)(i) of the CGST Act.

According to Respondent No. 2, the petitioner operated four business establishments that engaged in issuing fake purchase and sales invoices to fraudulently claim ITC amounting to Rs. 11.54 crores, while wrongful ITC passed through bogus sales invoices totaled Rs. 9.29 crores. Based on these findings from the ongoing investigation, the petitioner was arrested.

In his writ petition, the petitioner contends that his arrest and subsequent judicial custody were illegal. He argues that the four distinct business entities involved were improperly consolidated as one by Respondent No. 2, leading to an inflated figure of over Rs. 5 crores in wrongly availed ITC. The petitioner asserts that, had these entities been treated individually, none would have exceeded Rs. 5 crores in wrongful ITC, making the alleged offenses non-cognizable and bailable under the CGST Act.

The petitioner’s counsel, Mr. Ponda, reiterated this argument, focusing on the definition of “person” under Section 2(84) of the CGST Act. He emphasized that the CGST Act treats individuals, companies, firms, and Hindu undivided families (HUFs) as distinct legal entities. Thus, Respondent No. 2 erroneously considered the four establishments as being under the petitioner’s control without properly distinguishing between them. Mr. Ponda argued that a review of the documents used by Respondent No. 2 in its investigation would show that the petitioner only held specific roles, such as being the proprietor of ‘M/s Shree Ganesh Textiles’ and Karta of an HUF, rather than controlling all four entities.

Therefore, the petitioner claims that his arrest and continued detention are unlawful and without merit.

The petitioner filed a writ petition before the court, challenging the legality of his arrest under the Central Goods and Services Tax Act, 2017 (CGST Act). He argued that his arrest for a bailable offense was unlawful, and thus sought an order for immediate release.

The petitioner was arrested on December 30, 2020, and produced before the Additional Chief Metropolitan Magistrate, Mumbai, who ordered his remand to judicial custody. The arrest was based on allegations that the petitioner violated Sections 132(1)(b) and (c) of the CGST Act by fraudulently availing input tax credits exceeding ₹5 crores, which made the offense cognizable and non-bailable under Section 132(1)(i) and Section 69 of the CGST Act.

The respondent authorities claimed the petitioner managed four business establishments that engaged in issuing fake purchase and sale invoices, which resulted in wrongful input tax credit claims amounting to ₹11.54 crores and fake sale invoices passing on wrongful credits worth ₹9.29 crores. Based on this, the petitioner was arrested.

In his petition, the petitioner contended that the arrest and remand were illegal as the four business entities were distinct legal entities and should not have been treated as a single unit. He argued that when considered separately, none of the entities had availed input tax credit exceeding ₹5 crores, which would make the offenses under Section 132 non-cognizable and bailable.

The petitioner’s counsel highlighted the definition of “person” under Section 2(84) of the CGST Act, which treats distinct legal entities, such as individuals, companies, or Hindu Undivided Families (HUFs), separately. The petitioner’s involvement was limited to being the proprietor of ‘M/s. Shree Ganesh Textiles’ and ‘M/s. Yash Fabrics,’ while his father and other family members ran separate businesses. Therefore, the input tax credit allegedly availed by each business should be calculated individually, not cumulatively, and none exceeded ₹5 crores. As a result, the offenses should be classified as non-cognizable and bailable.

Furthermore, the counsel argued that the power to arrest under Section 69 of the CGST Act was misused, as the petitioner’s offenses were bailable and non-cognizable. The Magistrate’s order remanding the petitioner to custody was improper since the offenses, under Section 69(3) of the CGST Act, warranted immediate bail instead of arrest and detention. The counsel criticized the authorities and the Magistrate for failing to properly apply the provisions of the CGST Act.

Thus, the petitioner sought relief from continued illegal custody and requested immediate release.

In this case, the petitioner has approached the Court claiming that his arrest under the Central Goods and Services Tax (CGST) Act, 2017, was illegal. The petitioner argues that he has been detained for a bailable offense and seeks his immediate release. The petitioner was arrested on December 30, 2020, and produced before the Additional Chief Metropolitan Magistrate, Mumbai, who remanded him to magisterial custody. Respondent No. 2, acting under Section 69 of the CGST Act, arrested the petitioner, alleging that he committed offenses under Section 132(1)(b) and (c) of the Act, as the input tax credit (ITC) wrongly availed exceeded Rs. 5 crores. The offense is punishable with imprisonment up to five years, making it cognizable and non-bailable under Section 132(1)(i) of the CGST Act.

Respondent No. 2 contended that the petitioner operated four business establishments involved in issuing fake purchase and sale invoices, falsely claiming ITC worth Rs. 11.54 crores, while passing on fake ITC worth Rs. 9.29 crores. Based on this, the petitioner was arrested.

The petitioner argued that his arrest and custody were illegal, claiming that the four distinct legal entities were wrongfully treated as one, inflating the ITC claim beyond Rs. 5 crores. The petitioner emphasized that each entity’s wrongful ITC claim was less than Rs. 5 crores, meaning that any offense under Section 132 of the CGST Act would be non-cognizable and bailable. The petitioner cited Section 2(84) of the CGST Act, which defines “person” to include various entities, such as individuals, companies, and firms, asserting that each of his four establishments should be treated as separate persons. Therefore, the ITC claims must be assessed individually, and none of the entities surpassed the Rs. 5 crore threshold.

The petitioner’s counsel argued that arresting and remanding the petitioner violated Section 69(3) of the CGST Act, which requires that the accused be granted bail if the offense is bailable. The counsel further contended that the Magistrate failed to appreciate these provisions when remanding the petitioner to custody. As a result, the petitioner’s rights under Article 21 of the Constitution of India were violated, making the arrest and continued detention illegal.

Additionally, the petitioner’s counsel emphasized that the CGST Act contains no provision for clubbing the alleged tax violations of separate entities, unlike Section 64 of the Income Tax Act. Thus, the petitioner argued that the tax liabilities of the four distinct entities could not be combined to exceed Rs. 5 crores and classify the offenses as cognizable and non-bailable. The petitioner relied on the Supreme Court’s ruling in *Arnab Manoranjan Goswami v. State of Maharashtra* and other High Court judgments to support the argument that the arrest and continued detention were illegal.

Ultimately, the petitioner seeks the Court’s intervention under Article 226 of the Constitution of India, asking for immediate release on the grounds that his arrest and custody were unlawful.

In this case, the petitioner has challenged his arrest under the Central Goods and Services Tax Act, 2017 (CGST Act), arguing that it was illegal because he was detained for a bailable offense. He was arrested on December 30, 2020, and subsequently remanded to magisterial custody. The authorities alleged that the petitioner had committed offenses under Section 132(1)(b) and (c) of the CGST Act, claiming that he had wrongfully availed input tax credit (ITC) exceeding Rs. 500 lakh (Rs. 5 crores), which made the offense cognizable and non-bailable under Section 132(5).

According to the respondents, the petitioner controlled four business establishments involved in fake purchase and sale invoices, leading to wrongful claims of ITC amounting to Rs. 11.54 crores, and the fraudulent ITC passed on through fake invoices was valued at Rs. 9.29 crores. Based on this, the petitioner was arrested.

The petitioner contended that his arrest and custody were illegal because the four distinct business entities involved were wrongly treated as one. He argued that the ITC wrongly availed by each entity did not exceed Rs. 5 crores individually, meaning that the offenses were non-cognizable and bailable. He also pointed to the definition of “person” under Section 2(84) of the CGST Act, which treats different legal entities, such as individuals, Hindu Undivided Families (HUFs), and companies, as distinct persons. The petitioner claimed that he was the proprietor of Shree Ganesh Textiles, Karta of Yash Fabrics (an HUF), while his father was the proprietor of J.K. Fabrics and Karta of Krishnansh Enterprises (another HUF). Therefore, the ITC for each firm should be treated separately.

The petitioner’s counsel argued that, as per Section 69(3) of the CGST Act, he should have been granted bail since the offenses were non-cognizable and bailable. The counsel further emphasized that the CGST Act does not have a provision for clubbing tax violations of distinct legal entities, unlike the Income Tax Act. Therefore, the ITC of the four firms could not be combined to cross the Rs. 5 crore threshold under Section 132(1)(i), making the arrest and custody improper.

On the other hand, the respondent, represented by a Special Public Prosecutor, argued that the petitioner effectively controlled all four firms. They pointed out that the petitioner’s KYC details were linked to all firms, and his email and phone number were used for their operations, indicating that he controlled the entities. The respondents also referred to statements made by the petitioner, his father, and their tax consultant under Section 70 of the CGST Act, claiming these demonstrated that the petitioner had committed the alleged offenses, making them cognizable and non-bailable.

In conclusion, the petitioner claimed that his arrest was unlawful and his continued custody violated his rights under Article 21 of the Constitution of India, as the procedures of the CGST Act were not followed. The petitioner sought his immediate release from custody. The court was asked to consider whether the CGST Act allowed for clubbing the tax liabilities of distinct legal entities, whether the offenses were cognizable and non-bailable, and whether the petitioner’s arrest and custody were lawful.

In this case, the petitioner approached the court challenging the legality of his arrest under the Central Goods and Services Tax Act, 2017 (CGST Act). He argued that his detention pertained to a bailable offense, thus seeking an order for his immediate release.

The petitioner was arrested on December 30, 2020, and produced before the Additional Chief Metropolitan Magistrate in Mumbai, who remanded him to custody. The arrest was based on allegations under sections 132(1)(b) and 132(1)(c) of the CGST Act. Respondent No. 2 claimed that the petitioner had illegally availed input tax credit exceeding ₹5 crores, making the offense cognizable and non-bailable under section 132(1)(i) and sub-section (5). Consequently, the petitioner was arrested under the powers granted by section 69 of the CGST Act.

The case against the petitioner involved four business entities allegedly controlled by him, which were accused of claiming bogus input tax credit worth ₹11.54 crores and issuing fake sale invoices involving a further ₹9.29 crores. Based on this, the petitioner was arrested.

The petitioner argued that these four businesses were distinct legal entities under section 2(84) of the CGST Act, and the input tax credit for each should be treated separately. None of the individual entities exceeded the ₹5 crore threshold for a non-bailable offense. The petitioner claimed that the arrest was illegal, as the clubbing of credits from different entities to surpass the ₹5 crore threshold was improper. Therefore, the offenses were non-cognizable and bailable.

The petitioner’s counsel argued that section 69 of the CGST Act was misapplied, as the offenses should have been treated as bailable. He contended that the petitioner’s fundamental rights under Article 21 of the Constitution were violated due to his unlawful arrest and detention.

Moreover, the counsel argued that there was no provision in the CGST Act allowing the clubbing of separate entities’ tax credits, unlike the Income Tax Act, and cited judgments, including Arnab Goswami’s case, to argue for the petitioner’s release.

In response, the learned Special Public Prosecutor for respondent No. 2 countered that the petitioner effectively controlled all four businesses. It was asserted that the petitioner had committed the offenses under section 132(1)(b)(c) of the CGST Act, as he operated and controlled all four firms and used the same bank and registration details across them. Evidence, such as KYC details, email addresses, and e-Way Bill registrations, supported this claim. It was also alleged that the businesses’ premises were falsely claimed as leased, as the property owners had denied knowledge of the petitioner or his father.

Respondent No. 2 concluded that the petitioner’s arrest was lawful, as he had clearly committed cognizable and non-bailable offenses under section 132(5) of the CGST Act. Additionally, prior judgments from the Telangana High Court and other cases were cited to support their position.

The court, after hearing both sides, examined the relevant provisions of the CGST Act to assess the legality of the petitioner’s arrest and detention.

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Subhash Kumar Singh VS State Of Assam

admin — Sat, 07 Sep 2024 13:31:49 +0000

Case Tittle	Subhash Kumar Singh VS State Of Assam
Court	Gauhati High Court
Honourable Judges	Justice Hitesh Kumar Sarma
Citation	2022 (07) GSTPanacea 783 HC Gauhati Bail Appln./1631/2021
Judgement Date	01-July-2022

This is a bail application filed under Section 439 of the Code of Criminal Procedure (Cr.PC) by the petitioner, Subhash Kumar Singh, in connection with BI(E.O.) Assam Tax P.E. No. 03(03)/2021. The case was registered under Section 132(1)(i) of the Assam GST Act, 2017, which pertains to serious offenses involving tax evasion. The petitioner, having been arrested on 12th July 2021, is seeking bail, claiming he has been in detention for a considerable period in connection with the ongoing investigation.

The hearing of the bail application took place with the petitioner being represented by Dr. A.K. Saraf, a senior counsel, who was assisted by Advocate Amit Goyal. The prosecution, representing the state of Assam, was led by Mr. M. Phukan, the Public Prosecutor. During the hearing, the court reviewed the investigation report along with the other materials that were presented on record. These records and reports formed the basis of the charges against the petitioner.

The case itself revolves around allegations that the petitioner was involved in serious violations under the Assam GST Act, 2017. Specifically, the petitioner had been served with a notice under Section 50 of the Cr.PC by the Superintendent of State Tax, Assam. This notice was connected to the investigation under BI(E.O.) Assam Tax P.E. No. 03(03)/2021, which accused the petitioner of engaging in tax evasion exceeding Rs. 5 crores. This offense is deemed cognizable under Section 132(1)(i) of the Assam GST Act, which relates to willful evasion of tax, where the evaded amount is more than Rs. 5 crores.

The prosecution’s case is that the petitioner was involved in deliberate tax evasion by supplying goods without issuing invoices, thereby violating the GST laws. This conduct resulted in a massive loss of revenue to the government, which led to his arrest and continued detention during the investigation.

Section 132(1)(i) of the Assam GST Act, 2017, under which the petitioner has been charged, prescribes severe penalties, including imprisonment, for those found guilty of tax evasion exceeding Rs. 5 crores. The prosecution further argued that the petitioner’s alleged conduct amounted to a deliberate and calculated scheme to evade taxes and that releasing him on bail might hinder the ongoing investigation or allow him to interfere with the evidence.

The court, in its deliberation, weighed the gravity of the allegations against the petitioner, the progress of the investigation, and the legal framework within which the case was registered. The court is tasked with determining whether the petitioner’s prolonged detention is justified under the circumstances or whether he can be released on bail, subject to any conditions imposed by the court to ensure his availability for further proceedings and investigations.

Thus, the core issue before the court is whether the petitioner, Subhash Kumar Singh, should be granted bail in light of the serious allegations of tax evasion and the continued investigation by the tax authorities. The decision will likely take into account the risk of the petitioner fleeing, tampering with evidence, or otherwise hindering the investigation, balanced against his right to personal liberty and the time he has already spent in detention.

This is an application under Section 439 of the Criminal Procedure Code (CrPC) seeking bail for the accused-petitioner, Sri Subhash Kumar Singh, in connection with BI(E.O.) Assam Tax P.E. No. 03(03)/2021, registered under Section 132(1)(i) of the Assam GST Act, 2017. The court heard the submissions of Dr. A.K. Saraf, senior counsel for the petitioner, assisted by Advocate Amit Goyal. Mr. M. Phukan, Public Prosecutor for Assam, represented the respondents (1 and 2).

The petitioner, Subhash Kumar Singh, was arrested on 12th July 2021 and has since been in detention in connection with the aforementioned case. The case originated when Singh was served with a notice under Section 50 of the CrPC by the Superintendent of State Tax Assam, BIEO, Srimantapur, Guwahati, in relation to alleged violations under Section 132(1)(i) of the Assam GST Act (AGST Act). According to the authorities, Singh was involved in evading taxes and cess amounting to more than ₹5 crores by supplying goods without issuing invoices, in violation of the AGST Act, during the period of 2019 to 2021.

The investigation alleges that Singh deliberately avoided invoicing goods to evade taxes. The total evasion detected by the authorities, inclusive of applicable tax, cess, penalty, and interest, amounts to ₹22,77,13,211.04 (approximately ₹22.77 crores). This figure includes the evasion of tax and cess amounting to ₹10,22,31,514.18 (approximately ₹10.22 crores). As a result, Singh has been accused of committing an offense under Section 132(1)(i) of the AGST Act, which makes this offense cognizable.

Arguments
During the hearing, Dr. Saraf submitted that on the day of Singh’s production before the court (12th July 2021), a bail petition was filed, but it was withdrawn on 16th July 2021. He further argued that the procedures outlined by the Supreme Court in Arnesh Kumar v. State of Bihar (2014) 8 SCC 273, particularly in light of the ongoing pandemic, have not been followed. He cited the direction in the In Re: Contagion of Covid 19 virus In Prisons* case, reported in 2021 SCC Online SC 376, emphasizing that such guidelines were meant to be adhered to during the pandemic.

The court examined the investigation report and case records and noted the serious nature of the allegations, particularly in light of the substantial amount of tax evasion involved. However, the court also considered the argument made by the petitioner’s counsel regarding the need to follow the principles laid down by the Supreme Court for arrests and detention during the pandemic. Dr. Saraf stressed that Singh’s continued detention amid the pandemic posed risks and that he should be released on bail pending the conclusion of the investigation or trial.

The petitioner argued for bail on the grounds that the alleged tax evasion, although serious, did not warrant indefinite detention, especially when the offense is punishable under a law that allows for discretion in granting bail. Furthermore, it was argued that there is no chance of the petitioner tampering with evidence or fleeing, as his cooperation with the investigation has been established. In summary, the petition seeks bail for Subhash Kumar Singh in a case involving serious allegations of tax evasion amounting to more than ₹22 crores. The petitioner has been in custody since July 2021, and the bail application argues that the procedural guidelines established by the Supreme Court, particularly during the pandemic, should be followed. The case hinges on the court’s assessment of the gravity of the tax evasion offense and the application of legal principles surrounding arrest and detention during a public health crisis.

This is a bail application filed under Section 439 of the Criminal Procedure Code (CrPC) on behalf of Subhash Kumar Singh, seeking his release in connection with the case BI(E.O.) Assam Tax P.E. No. 03(03)/2021. The case involves charges under Section 132(1)(i) of the Assam Goods and Services Tax Act (AGST Act), 2017, where the petitioner is accused of evading taxes amounting to more than ₹22 crores. Singh has been in judicial custody since his arrest on July 12, 2021. The following are the detailed arguments, circumstances, and legal principles surrounding the application.

Background of the Case:
Subhash Kumar Singh is accused of engaging in large-scale tax evasion between 2019 and 2021, during which he allegedly supplied goods without issuing proper invoices. This violation of the AGST Act resulted in an estimated tax and cess evasion of over ₹10 crores. The total liability, including penalties and interest, was calculated at ₹22.77 crores. Singh was arrested following a notice under Section 50 of the CrPC by the Superintendent of State Tax, Assam, and has been in custody since July 12, 2021.

Legal Submissions by Petitioner:
Dr. A.K. Saraf, senior counsel for the petitioner, contended that Singh’s continued detention during the ongoing COVID-19 pandemic is unwarranted and poses unnecessary health risks. Dr. Saraf highlighted that proper procedures laid down by the Supreme Court in *Arnesh Kumar v. State of Bihar* (2014) 8 SCC 273, regarding arrests and detentions, were not adhered to either by the arresting authorities or by the lower court when remanding Singh to judicial custody. The counsel emphasized that during the pandemic, these procedures should be strictly followed, especially considering the Supreme Court’s directions in *In re: Contagion of Covid-19 virus in prisons* (Suo Motu Writ Petition (C) No.1/2020), where the Court called for decongesting prisons to prevent the spread of the virus.

Reference to Supreme Court Guidelines:
In support of the bail application, Dr. Saraf referenced the Supreme Court’s ruling in the *Arnesh Kumar* case, which restricted the arrest of individuals in cases where the alleged offense is punishable by imprisonment of up to seven years. Section 132(1)(i) of the AGST Act, under which Singh is charged, carries a maximum punishment of seven years. The guidelines established in *Arnesh Kumar* require police officers to avoid unnecessary arrests and mandate that magistrates not authorize detention without proper scrutiny and satisfaction based on the forwarding report provided by the police.

Dr. Saraf argued that the authorities did not comply with these guidelines when arresting Singh and that his prolonged detention is excessive, particularly in light of the ongoing pandemic and the principles laid down by the Supreme Court to control the spread of COVID-19 in prisons.

Pandemic Considerations:
The bail plea also relied heavily on the ongoing public health crisis caused by COVID-19. The petitioner’s counsel submitted that Singh’s detention should be re-evaluated in light of the Supreme Court’s order dated May 7, 2021, in the *Suo Motu Writ Petition* concerning the COVID-19 contagion in prisons. In this order, the Apex Court urged authorities to limit arrests in order to prevent overcrowding in jails. The Court also directed State Governments and Union Territories to establish High Powered Committees (HPCs) to review cases and consider releasing prisoners, especially those detained for offenses carrying punishments of less than seven years, similar to the petitioner’s case.

Dr. Saraf underscored that Singh, being held for a non-violent offense under a tax law, falls within the category of individuals who could be released on bail to reduce prison congestion and limit the risk of COVID-19 transmission. Furthermore, Singh has cooperated with the authorities and there is no likelihood of him tampering with evidence or fleeing.

Public Prosecutor’s Submissions:
Mr. M. Phukan, Public Prosecutor for Assam, concurred with the petitioner’s argument regarding the Supreme Court’s guidelines in the *Arnesh Kumar* case and the need to adhere to the directions of the Court during the pandemic. He also referred to the Supreme Court’s May 7, 2021, order in the *Suo Motu* writ petition on COVID-19, which advocated for prison decongestion and controlled arrests. However, he emphasized that the seriousness of the offense and the large amount of tax evasion should not be overlooked.

Court’s Consideration:
The court examined the investigation report and case records, considering both the allegations of significant tax evasion and the pandemic-related guidelines issued by the Supreme Court. The court took into account the procedural lapses alleged by the petitioner’s counsel regarding Singh’s arrest and the magistrate’s decision to remand him to judicial custody without fully adhering to the *Arnesh Kumar* guidelines.

In determining whether to grant bail, the court must balance the seriousness of the financial offense against the health risks posed by the ongoing pandemic and the potential overreach in Singh’s continued detention. The arguments made by the petitioner’s counsel advocate for a more lenient approach, particularly in light of the pandemic, while the prosecution underscores the gravity of the charges.

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Gurbax Lax @ Happy Nagpal VS State of Punjab

admin — Sat, 07 Sep 2024 13:25:49 +0000

Case Title	Gurbax Lax @ Happy Nagpal VS State of Punjab
Court	Punjab And Haryana High Court
Honourable Judges	Justice Arvind Singh Sangwan
Citation	2021 (07) GSTPamacea 220 HC Punjab And Haryana CRM-M17671 And 17673 of 2021
Judgement Date	06-July-2021

In these petitions, anticipatory bail is sought for the petitioner, Gurbax Lal @ Happy Nagpal, in two cases filed by the Inspector (Prevention) of the CGST Commissionerate, Ludhiana. The cases involve Sandeep Kumar Puri and Rajinder Singh, accused under Clauses (b), (c), and (1) of Subsection 1 of Section 132 of the CGST Act, 2017, related to GST fraud.

The petitioner’s counsel argues that on February 4, 2021, the Superintendent (Preventive) of the Central Goods and Services Tax (CGST) Commissionerate, Ludhiana, conducted a search of the petitioner’s house. This search was authorized by the Joint Commissioner of the CGST Commissionerate, Ludhiana. However, the petitioner was not present during the search, and only his wife and son were at home. The counsel contends that conducting the search in the absence of the petitioner was unlawful.

Furthermore, the counsel states that a Panchnama (a formal document prepared during the search) was created following the completion of the investigation, but neither the petitioner’s wife nor his son received a copy of this document. The investigation that led to the search was based on allegations against Rajinder Singh and Sandeep Kumar Puri, who are involved in a GST fraud case under the same provisions of the CGST Act.

The petitioner’s counsel seeks anticipatory bail, arguing that the search and subsequent actions were not legally proper, especially considering the absence of the petitioner and the failure to provide essential documents to his family members.

In this case, petitions have been filed for the grant of anticipatory bail to Gurbax Lal @ Happy Nagpal in two complaints related to GST fraud, titled as Inspector (Prevention) of CGST Commissionerate, Ludhiana vs. Sandeep Kumar Puri and Inspector (Prevention) of CGST Commissionerate, Ludhiana vs. Rajinder Singh Both cases have been filed under Clauses (b), (c), and (1) of Sub-Section 1 of Section 132 of the Central Goods and Services Tax (CGST) Act, 2017.

The learned counsel for the petitioner argues that a search was conducted on 04.02.2021 by the Superintendent (Preventive) of CGST, Ludhiana, at the petitioner’s house based on an authorization from the Joint Commissioner. The search took place in the absence of the petitioner, with only his wife and son present. The counsel contends that this raid was not legally valid due to the petitioner’s absence. Furthermore, a Panchnama was prepared post-investigation, but no copy of it was provided to the petitioner’s family.

The petitioner’s counsel explains that the investigation was linked to Rajinder Singh and Sandeep Kumar Puri, who are accused of GST fraud under the aforementioned clauses of the CGST Act. During the investigation, the petitioner’s name surfaced as an alleged participant in the fraud, though he claims no connection with the firms involved. It is further asserted that the petitioner neither owns nor operates any of these firms and is being wrongfully implicated due to the influence of one Yashpal Mehta.

The counsel explains that Yashpal Mehta is involved in export-import business and conducts a substantial portion of business with Rajinder Singh and Sandeep Kumar Puri. A personal enmity is claimed to have arisen between Mehta and the petitioner after an engagement between Mehta’s son and the petitioner’s daughter was called off in 2018. According to the counsel, Mehta is now attempting to damage the petitioner’s reputation by shifting blame for the GST fraud onto him.

The petitioner’s legal representative emphasizes that a custodial investigation is unnecessary, as the petitioner is willing to cooperate fully and provide all necessary documents to the investigating authorities.

The reply from the respondent, Inspector (Prevention) of CGST Commissionerate, Ludhiana, highlights that credible information was received by the CGST Headquarters about the involvement of certain individuals in fraudulent GST activities, but details of these claims remain unclear in the document.

In this case, Gurbax Lal @ Happy Nagpal filed petitions seeking anticipatory bail in connection with two complaints under the CGST Act, 2017. These complaints relate to GST fraud accusations in cases involving two individuals, Rajinder Singh and Sandeep Kumar Puri, who are alleged to have committed offenses under Section 132(1)(b), (c), and (l) of the CGST Act. The fraud primarily revolves around issuing fake invoices and availing or passing on fraudulent Input Tax Credit (ITC) without any actual movement of goods.

The petitioner’s counsel argued that a search was conducted at his house on February 4, 2021, by the Superintendent of Central Goods and Service Tax, Ludhiana, without his presence. His wife and son were present, but they were not given a copy of the panchnama prepared after the search. The counsel maintained that the petitioner was unfairly implicated in the GST fraud cases of Rajinder Singh and Sandeep Kumar Puri, with whom he had no business association. It was also alleged that one Yashpal Mehta, due to a personal grudge stemming from a broken engagement between their families, had manipulated the case to implicate the petitioner.

The petitioner contended that he is neither the proprietor nor the owner of any of the firms involved in the fraudulent activities and has been wrongly framed. He expressed willingness to cooperate with the investigation and argued that custodial interrogation was unnecessary.

On the other hand, the respondent’s counsel presented a detailed case against the petitioner. The authorities received credible information that Gurbax Lal was operating bogus firms and availing fraudulent ITC on fake invoices. Investigations revealed that the petitioner had been withdrawing large sums of money, which were the proceeds of the fake billing transactions. Additionally, 14 firms linked to him were discovered, along with a number of blank cheques and credit/debit cards associated with various banks. One entity, M/s Nagpal Enterprises, was also found to have been operated under his name.

The respondents highlighted that another accused, Sandeep Kumar Puri, had already been arrested and that the petitioner’s involvement in fraudulent activities was established through various documents and transactions. Based on these findings, the respondents opposed the grant of anticipatory bail to the petitioner.

The investigation revealed that three entities—M/s Sai Enterprises, M/s Sai Traders, and M/s Balaji International—were registered under the mobile number of Sandeep Kumar Puri. These entities were linked to the petitioner, who allegedly controlled and operated multiple firms involved in fraudulent GST activities. According to information provided by the Khanna Police, 31 firms were identified from blank cheques, and the same number of firms were found to have declared significant outward supply amounts. These firms had utilized Input Tax Credit (ITC) for tax payments as per their GSTR-3B filings. Among these firms, 13 had already had their registrations canceled by the Business Intelligence & Fraud Analytics (BIFA) system due to the absence of inward supplies, and their suppliers’ registrations had also been terminated.

Specific details of some firms illustrate the scale of fraud. M/s Balaji Enterprises received Rs. 257.84 lakh in ITC despite the cancellation of its eight suppliers’ licenses in 2018-19. Similarly, M/s Sai Enterprises received Rs. 79.10 lakh in ITC from five suppliers whose licenses had been canceled earlier. M/s Balak Enterprises received ITC of Rs. 117.05 lakh from six suppliers who were deregistered, and M/s Nath Enterprises fraudulently claimed Rs. 188.73 lakh in ITC from seven suppliers whose licenses had been revoked. M/s Yuvraj Enterprises, too, availed ITC from suppliers with invalid licenses, showcasing a pattern of false invoicing and fraudulent ITC claims across multiple entities.

The case details reveal a large-scale GST fraud allegedly involving the petitioner, Gurbax Lal @ Happy Nagpal, linked to multiple fictitious entities. Investigation by the CGST Commissionerate in Ludhiana identified three companies—M/s Sai Enterprises, M/s Sai Traders, and M/s Balaji International—registered under the mobile number of one of the co-accused, Sandeep Kumar Puri. Further inquiry exposed that the petitioner operated numerous fraudulent firms, with 31 entities being flagged for irregularities based on blank cheques recovered during the investigation. Out of these, 13 firms had already had their registrations canceled due to the absence of any actual inward supply of goods, while others were registered under closed or non-traceable firms.

Detailed financial transactions were uncovered showing large sums of Input Tax Credit (ITC) fraudulently availed. For example, M/s Balaji Enterprises received ITC worth ₹257.84 lakh despite its suppliers’ licenses being canceled in 2018-19. Similarly, M/s Sai Enterprises received ₹79.10 lakh, and other firms like M/s Balak Enterprises and M/s Nath Enterprises were also found to have availed crores of ITC despite being linked to defunct suppliers. This fraudulent activity led to fake bills amounting to ₹425 crore, with ITC passed on to the tune of ₹478 crore.

The prosecution emphasized that the petitioner and his associates had defrauded the government of approximately ₹127 crore using these fake entities and invoices. The magnitude of the fraud, being over ₹5 crore, granted the authorities the legal grounds to arrest the petitioner under Section 69 read with Section 132 of the GST Act, 2017. The court, after hearing both parties, indicated the seriousness of the allegations and considered the need for the petitioner’s custodial interrogation.

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Mrs.B.Banu Bee VS State Of Karnataka

admin — Fri, 06 Sep 2024 14:39:19 +0000

Case Tittle	Mrs.B.Banu Bee VS State Of Karnataka
Court	Karnataka High Court
Honourable Judges	Justice B.A.Patil
Citation	2019 (04) GSTPanacea 136 HC Karnataka Criminal Petition No.1293/2019
Judgement Date	16-April-2019

The petitioner, identified as Accused No. 2, has filed the present petition under Section 438 of the Code of Criminal Procedure (Cr.P.C.), seeking anticipatory bail in anticipation of her arrest in connection with a criminal case. This petition arises from an ongoing investigation under O.R. No. 32/2018-19, which has been registered by the Commissioner of Central Tax, Bengaluru South Commissionerate, Bengaluru.

The essence of anticipatory bail under Section 438 of the Cr.P.C. is to protect individuals from arrest in cases where they have reason to believe that they might be arrested on an accusation of having committed a non-bailable offense. The petitioner has approached the court pre-emptively to secure her release in case of an arrest, suggesting that she has a legitimate fear of detention.

The legal basis for this petition hinges on various factors such as the nature of the accusations against her, the potential evidence that may or may not implicate her in the case, her conduct throughout the investigation, and whether her detention would serve any larger purpose in the investigation. In this context, the court will assess whether the petitioner is cooperating with the investigation and whether she poses any threat of tampering with evidence, influencing witnesses, or fleeing from the jurisdiction of the court.

Typically, in cases involving tax-related offenses, such as the one registered by the Central Tax Commissionerate, allegations can range from fraudulent activity in tax filings, evasion of taxes, non-compliance with statutory tax obligations, or other regulatory offenses. The court will take into account the gravity of the accusations and the extent of the petitioner’s alleged involvement in the matter.

In such petitions, the accused often seeks protection against arrest, arguing that their detention is not essential to the investigation. Instead, they might commit to cooperating with the authorities, appearing for interrogation when summoned, and complying with any conditions imposed by the court. The court, before granting anticipatory bail, would weigh these considerations carefully. If granted, the anticipatory bail would allow the petitioner to remain free, provided she meets the conditions set forth by the court, such as regular attendance in court, non-interference with the investigation, or submitting her passport to prevent travel abroad.

If anticipatory bail is not granted, the petitioner may face immediate arrest upon the discretion of the investigating authorities. Hence, the primary argument often put forth by the petitioner in such cases is that her arrest is unnecessary and would serve only to humiliate or unduly harass her, especially if she is otherwise willing to comply with the investigation process.

The present petition has been filed by the petitioner, who is Accused No. 2, under Section 438 of the Criminal Procedure Code (Cr.P.C.) seeking anticipatory bail in the event of her arrest in connection with O.R.No.32/2018-19. This case was registered by the Commissioner of Central Tax, Bengaluru South Commissionerate, Bengaluru. The petitioner is facing legal action and is apprehensive about her arrest, which led her to file the anticipatory bail petition.

The case was taken up out of its usual order, based on a request made by the petitioner’s counsel. The petitioner’s counsel argued that there is an urgent need to resolve this matter because the petitioner’s daughter is scheduled to appear for the National Eligibility Entrance Test (NEET), a critical medical entrance exam, and requires regular attendance at tuition classes. Since the petitioner is responsible for transporting her daughter to these classes, she is concerned that stepping out of her house may lead to her immediate arrest by the authorities. This creates a practical difficulty, and the petitioner fears the police may detain her before the matter is resolved. Hence, her need for anticipatory bail is based not just on legal grounds but also on family responsibilities and the education of her daughter.

Upon hearing the petition, the learned counsel representing the petitioner argued for the need for anticipatory bail, emphasizing the petitioner’s responsibility as a mother and the potential disruption to her daughter’s education if she were to be arrested. The learned High Court Government Pleader, representing the respondent-State, was also present to contest the petitioner’s application for bail.

In brief, the facts of the case indicate that Accused No.1 is the proprietor of several shell companies, which are presumably involved in fraudulent or illegal activities, and Accused No.2, the petitioner in this case, is associated with these shell companies. Although the specific role of the petitioner in these companies is yet to be clarified in this summary, it is clear that she is entangled in a larger investigation concerning the shell firms, which is why the authorities are seeking to arrest her.

The petitioner’s request for anticipatory bail is built around the potential threat of arrest under this ongoing investigation, and her legal team has raised these concerns to seek relief from the court in anticipation of any legal actions that may disrupt her daily responsibilities. The High Court is expected to consider not just the legal standing of her case but also the humanitarian aspects concerning her daughter’s education.

In conclusion, the case presents both legal and personal dimensions. Legally, the petitioner is being sought for arrest in connection with alleged fraudulent activities tied to shell companies, but personally, she seeks the court’s intervention to avoid an arrest that would prevent her from caring for her daughter’s educational needs. The final decision of the court will depend on the balance between these two considerations.

The present petition is filed by the petitioner, who is also Accused No. 2, seeking anticipatory bail under Section 438 of the Criminal Procedure Code (Cr.P.C.) in case she is arrested in connection with O.R.No.32/2018-19. This case was registered by the Commissioner of Central Tax, Bengaluru South Commissionerate. The petitioner fears arrest due to ongoing proceedings and investigation related to the case.

The matter has been heard out of turn at the petitioner’s request because of personal circumstances. The petitioner’s daughter is preparing to appear for the National Eligibility Entrance Test (NEET) and needs to attend tuition classes, for which the petitioner must accompany her. The petitioner is concerned that leaving her home might lead to her immediate arrest by the police.

Upon hearing the submissions, the Court noted the basic facts of the case. The main allegation is that Accused No. 1 is the proprietor of several shell firms, and the petitioner (Accused No. 2) is a partner in one such firm. The prosecution alleges that these shell companies have been involved in issuing fake tax invoices without the actual supply of goods. The firm with which the petitioner is associated, M/S. Basha Enterprises, and several other companies allegedly colluded to carry out fraudulent activities. The investigation has revealed that the accused firms have evaded Goods and Services Tax (GST) totaling ₹57.60 crores, resulting in significant financial loss to the government.

The petitioner’s defense, presented by her counsel, argues that she is not involved in the fraudulent transactions. The counsel emphasized that, even if an offense under the GST Act is made out, the maximum punishment is five years of imprisonment. Additionally, the alleged offense is compoundable under Section 138 of the GST Act upon payment of dues to the Commissioner. The counsel also argued that there was no irregularity or loss of revenue caused to the State or Central Government by the petitioner’s actions.

In light of these arguments, the Court must consider the anticipatory bail plea. The petitioner seeks protection from arrest, arguing that her role in the firm does not warrant such drastic action, particularly given the personal circumstances involving her daughter’s educational needs. The case remains under investigation, but the Court must determine whether the anticipatory bail should be granted to allow the petitioner to continue her responsibilities without fear of immediate arrest.

The petition under Section 438 of the Code of Criminal Procedure (Cr.P.C.) has been filed by the petitioner, who is Accused No. 2, seeking anticipatory bail due to concerns over a potential arrest related to a case registered as O.R.No.32/2018-19 by the Commissioner of Central Tax, Bengaluru South Commissionerate.

The request for an expedited hearing was made by the petitioner’s counsel on the grounds that the petitioner’s daughter is preparing for the NEET exam and requires transportation to tuition classes. The counsel argued that if the petitioner leaves her house, she risks arrest by the police, which would disrupt her ability to support her daughter.

The court has heard arguments from both the petitioner’s counsel and the learned High Court Government Pleader representing the State. The essence of the case involves allegations against Accused No. 1, the proprietor of numerous shell firms, and Accused No. 2, the partner in these ventures. The accusation is that these firms were involved in diverting and issuing tax invoices without the actual supply of goods. This was allegedly done in collusion with M/S Basha Enterprises and other shell companies, resulting in a significant GST evasion amounting to Rs. 57.60 Crores, causing a loss to the government.

The petitioner’s counsel contends that the petitioner is not involved in the alleged illegal transactions and asserts that under the GST Act, the maximum penalty for such offenses is imprisonment for up to five years. Additionally, the counsel noted that Section 138 of the GST Act allows for the offense to be compounded before the Commissioner upon payment. The counsel further argued that no irregularities or revenue losses have occurred as they have made GST payments through invoices, and there has been no involvement in obtaining loans or raising funds from banks. Emphasizing that the offenses are neither punishable by death nor life imprisonment, the counsel offered to comply with any bail conditions and provide sureties. On these grounds, the petitioner’s counsel requested that the court grant anticipatory bail to the petitioner.

The Standing Counsel representing the respondent argued against the petitioner’s claims by presenting detailed objections. He emphasized that upon reviewing the entire situation, it is evident that fake invoices were issued despite there being no actual movement of goods. This fraudulent activity has resulted in a substantial financial loss to the State, amounting to Rs. 57.60 Crores. The Counsel further noted that the investigation into this matter is still ongoing. There is a concern that the petitioner or accused might not fully cooperate with the ongoing investigation, potentially jeopardizing the integrity of the prosecution’s evidence. In light of these serious issues, the Standing Counsel requested the court to reject the petition.

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Agarwal Foundries VS Union Of India

admin — Fri, 06 Sep 2024 14:09:54 +0000

Case Tittle	Agarwal Foundries VS Union Of India
Court	Telangana High Court
Honourable Judges	Justice Ujjal Bhuyan Justice A.venkateshwara Reddy
Citation	2022 (07) GSTPanacea 782 HC Telangana Writ Petition No.11492 of 2022
Judgement Date	01-July-2022

In this case, the court heard from multiple legal representatives, including Mr. D. Prakash Reddy, Senior Counsel, supported by Mr. N. Naveen Kumar, for the petitioners, and Mr. B. Mukherjee, representing the Assistant Solicitor General of India for respondent No.1, along with Mr. Anurag Ojha, counsel for respondent Nos. 2 to 4. The petitioners have filed under Article 226 of the Indian Constitution, seeking relief from certain penal actions taken by the respondents under the CGST Act of 2017. Specifically, the petitioners challenge the invocation of penal provisions, including Section 69 of the CGST Act, against directors, employees, or agents of Petitioner No.1, such as Petitioners No. 2 to 4. These actions relate to a search conducted on Petitioner No.1’s premises on December 11, 2019, and the subsequent summons issued on February 24, 2022, under CBIC–DIN-202202CC00000000F565/21709 and CBIC-DIN-202202CC0000000F565/21710 to Petitioners No.2 and 3. The petitioners contend that these actions are illegal, arbitrary, and unconstitutional. Therefore, they are requesting the court to declare these actions unlawful and prevent the arrest of any directors, employees, or agents of Petitioner No.1, including Petitioners No.2 to 4. Additionally, the petitioners request any further orders deemed appropriate by the court in light of the circumstances of the case.

In this case, the petitioners, represented by learned Senior Counsel Mr. D. Prakash Reddy and counsel Mr. N. Naveen Kumar, have filed a petition under Article 226 of the Constitution of India, seeking specific reliefs against actions taken by the respondents, which include the Directorate General of GST Intelligence (DGGI). They have named several respondents, including the Union of India, represented by learned counsel Mr. B. Mukherjee and Mr. N. Rajeshwar Rao, as well as officials from the DGGI, represented by Mr. Anurag Ojha.

The petitioners challenge the legality of actions taken by the respondents following a search conducted on December 11, 2019, at the premises of Petitioner No.1, a private limited company engaged in the steel manufacturing industry and recognized as one of the highest GST payers in the State of Telangana. The petitioners include Petitioner No.1, the company, and Petitioners No.2 to 4, who are individuals connected to the company in various capacities. Petitioner No.2 is the Director of Petitioner No.1, Petitioner No.3 is a relative and proprietor of M/s. Gautam Trading Company, which trades with Petitioner No.1, and Petitioner No.4 is the brother of Petitioner No.2, with his own unrelated business.

The petition seeks to declare the respondents’ actions, including invoking penal provisions under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017, as illegal, arbitrary, and unconstitutional. The petitioners particularly contest the issuance of summons to Petitioner No.2 and Petitioner No.3 on February 24, 2022, following the raids, arguing that these actions were improper given the circumstances. Furthermore, they request the court to issue an order preventing the arrest of any directors, employees, or agents of Petitioner No.1, including Petitioners No.2 to 4, in connection with the case. In essence, the petitioners seek relief from what they consider to be coercive actions by the GST authorities, which they argue are unwarranted based on their compliance history and unrelated personal circumstances of the individuals involved.

The facts of the case indicate that during the search on December 11, 2019, the DGGI personnel raided both the business premises of Petitioner No.1 and the residential premises of Petitioner No.2. The nature of the allegations and the manner in which the raids were conducted have not been detailed yet in this portion of the document, but the petitioners contend that the raids and subsequent actions by the authorities were excessive and unjustified. Thus, they seek judicial intervention to halt further actions that may result in arrest or other penal measures against them.

In the case, Mr. D. Prakash Reddy, Senior Counsel, and Mr. N. Naveen Kumar represented the petitioners, while Mr. B. Mukherjee, on behalf of the Assistant Solicitor General of India, and Mr. Anurag Ojha represented the respondents. The petition, filed under Article 226 of the Indian Constitution, sought relief from the actions of the respondents, specifically regarding the invocation of penal provisions under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017. These provisions pertain to the directors, employees, and agents of Petitioner No. 1, including Petitioners 2 to 4, in connection with a search conducted on December 11, 2019, and subsequent summonses issued on February 24, 2022. The petitioners argued that these actions were illegal, arbitrary, and unconstitutional. They requested the court to prevent any arrests of the directors, employees, or agents of Petitioner No. 1 and sought further appropriate orders from the court.

Petitioner No. 1 is a private limited company engaged in steel manufacturing for the past 28 years, recognized as a significant GST payer in the State of Telangana. Petitioner No. 2 is the company’s director, while Petitioner No. 3, a relative of Petitioner No. 2, runs a separate business but trades with Petitioner No. 1. Petitioner No. 4, the brother of Petitioner No. 2, has an independent business unrelated to Petitioner No. 1.

On December 11, 2019, officials from the Directorate General of GST Intelligence conducted simultaneous raids on the business and residential premises of Petitioners 1 and 2. The petitioners claimed that during these raids, officials physically assaulted Petitioners 2 and 3. As a result, the petitioners filed W.P. No. 28268 of 2019 to protect themselves from further harm. The respondents, in their counter-affidavit, denied these allegations. After hearing both sides, the court ruled in favor of the petitioners on November 6, 2020, and issued specific directions.

The petitioners contended that they had cooperated with the ongoing investigation and paid over Rs. 290 crores in taxes between April 2021 and December 2021. The respondents did not challenge the court’s 2020 order, allowing it to attain finality. However, despite this, Respondent No. 4 issued summons under Section 70 of the CGST Act, demanding the petitioners’ appearance.

In this case, the petitioners were represented by Mr. D. Prakash Reddy, a Senior Counsel, along with Mr. N. Naveen Kumar, while the respondents were represented by Mr. B. Mukherjee, appearing on behalf of the Assistant Solicitor General of India, and Mr. Anurag Ojha for respondent Nos. 2 to 4. The petition was filed under Article 226 of the Indian Constitution, wherein the petitioners sought several reliefs. They asked the Court to declare as illegal and unconstitutional the actions of the respondents, including invoking penal provisions under Section 69 of the CGST Act, 2017, against directors, employees, and agents of the first petitioner company, following a search conducted on December 11, 2019, and subsequent summons issued in February 2022. Additionally, they requested that the Court restrain the respondents from arresting any of the involved individuals, and they sought any further relief deemed appropriate by the Court.

Petitioner No. 1 is a private company engaged in steel manufacturing for over 28 years and is registered with the GST authorities in Telangana, where it has been recognized as a top GST payer. Petitioner No. 2 is its Director, while Petitioner No. 3 is the proprietor of Gautam Trading Company and a relative of Petitioner No. 2, though not involved in the business affairs of Petitioner No. 1. Petitioner No. 4 is the brother of Petitioner No. 2 and has a separate business unrelated to Petitioner No. 1.

On December 11, 2019, the Directorate General of GST Intelligence conducted raids on the business and residential premises of Petitioner Nos. 1 and 2. During these raids, it was alleged that Petitioner Nos. 2 and 3 were physically assaulted by officials, prompting them to file a writ petition in 2019 to protect themselves from further violence. This earlier writ petition was decided in favor of the petitioners by this Court on November 6, 2020, directing the respondents to follow certain measures. The petitioners claimed to have complied with the investigation, paying over Rs. 290 crores in taxes from April to December 2021. The respondents accepted the Court’s order without appealing to a higher forum, thereby giving the decision finality.

In early 2022, summons were issued to the petitioners under Section 70 of the CGST Act, requiring them to appear in person before the authorities. However, due to the death of a close family member from COVID-19, the petitioners challenged the summons and obtained a Court order allowing them to appear at a later date. Fearing arrest upon their appearance, the petitioners filed the current writ petition. On March 4, 2022, the Court instructed the petitioners to appear physically before the authorities on March 8, 2022, while directing further procedural steps.

The case revolves around a petition filed under Article 226 of the Constitution of India by a group of petitioners, represented by Mr. D. Prakash Reddy and Mr. N. Naveen Kumar, who sought various legal remedies against actions taken by the respondents, including officials from the Directorate General of GST Intelligence. The petitioners, involved in the steel manufacturing business, claim that the respondents initiated punitive actions under Section 69 of the CGST Act, 2017, following a raid on their premises on 11th December 2019. The raid, which included alleged physical assaults on some of the petitioners, led to the issuance of summons against them. In response, the petitioners argue that these actions were illegal, arbitrary, and unconstitutional, and have sought relief from the court to prevent their potential arrest. The petitioners, who assert that they have been cooperating with the investigation and have paid over Rs. 290 crores in taxes, challenge the legality of the summons issued in February 2022. They claim that, during this period, a family member passed away due to COVID-19, which complicated their ability to comply with the summons. Despite an earlier court order directing the petitioners to respond to the summons, they now fear arrest and have filed a writ petition seeking protection. The respondents, on the other hand, have submitted a counter-affidavit, stating that their investigation revealed significant GST evasion, amounting to approximately Rs. 9 crores, by the petitioners and associated entities. However, they also clarified that there is no immediate proposal for the arrest of the petitioners, making the petitioners’ request for protection against arrest premature. The court had previously directed the petitioners to appear before the investigating authorities and granted interim protection from any coercive actions, a directive that has been extended multiple times as the case progresses.

In this case, senior counsel Mr. D. Prakash Reddy, along with Mr. N. Naveen Kumar, represented the petitioners, while Mr. B. Mukherjee, counsel for respondent No. 1, and Mr. Anurag Ojha, counsel for respondents Nos. 2 to 4, were heard. The petitioners filed under Article 226 of the Constitution, seeking several key reliefs: firstly, to declare the actions of the respondents regarding invoking penal provisions under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017, against the directors and employees of Petitioner No. 1 as illegal, arbitrary, and unconstitutional. This arose from a search conducted on December 11, 2019, followed by summons issued in 2022. The petitioners, representing a company involved in steel manufacturing and recognized as a major GST payer, contended that such actions were excessive and unwarranted.

The petitioners highlighted their compliance with tax obligations, stating that they had paid significant amounts in taxes. However, they also recounted how the search involved physical assault on some individuals, which led them to seek the court’s intervention previously. That earlier writ petition was resolved in the petitioners’ favor, and the order had attained finality. Nonetheless, when further summons were issued in early 2022, coinciding with the death of a family member, the petitioners again approached the court to challenge these summons.

The petitioners expressed their apprehension about potential arrest upon complying with the summons, which led them to file the current writ petition seeking protection against arrest. Responding to the petition, the court initially directed the petitioners to appear physically while ensuring no coercive steps would be taken against them. The respondents, in their counter affidavit, emphasized that the writ petition was premature and inadmissible, arguing that the petitioners were using it as a means to secure anticipatory bail. They asserted that the investigation had uncovered tax evasion amounting to approximately Rs. 9 crores, with potential for the figure to increase. While they acknowledged the power to arrest under the CGST Act, they clarified that it is exercised only under specific conditions and with necessary approval. The respondents contested the petitioners’ claim of cooperation with the investigation, stating that the petitioners had not fully complied with the ongoing inquiry.

Despite these allegations, the petitioners maintained their position, filing a reply affidavit and expressing their willingness to deposit substantial sums to demonstrate their good faith. They had already deposited Rs. 1.1 crore and were prepared to deposit an additional Rs. 3 crore to further show their bona fides, as noted in court proceedings. This ongoing legal tussle reflects a complex situation involving accusations of significant GST evasion, procedural disputes, and efforts by the petitioners to avoid coercive actions while continuing their business operations.

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