2019 (2) TMI 1150 - HC - GST

High Court denies pre-arrest bail in tax fraud case, stresses custodial interrogation

Meghraj Moolchand Burad Versus Directorate General of GST (Intelligence), Pune, The State of Maharashtra

The High Court of Bombay rejected the applicant's pre-arrest bail application concerning apprehension of arrest under Section 132 of the Central Goods and ... Bail application - grant of pre-arrest/anticipatory bail - wrongful availment of input tax credit - offence under Section 132(1)(b) and (c) of CGST Act - Held that:- It is astonishing to note that, the concerned Advocate on record “Mr.Ritesh Ratnam” has deliberately and with malfide intention not stated in the said letter that there is no interim relief granted in favour of the applicant. The Order dated 24.11.2018 clearly indicates that, the said Advocate Mr. Ritesh Ratnama himself appeared on 24.11.2018 before this Court and in his presence the said Order was passed including the sentence “no interim relief” - It appears that, due to the said deliberate miscommunication by the applicant dated 26.11.2018, the Investigating Agency refrained itself from either arresting or interrogating the applicant. The deplorable practice adopted by the applicant and his Advocate is deprecated. This Court is of the considered view that the applicant does not deserve to be protected by prearrest bail - application dismissed. Issues:Apprehension of arrest under section 132 of Central Goods and Services Tax Act, 2017; Allegation of committing cheating and causing loss to the Government Exchequer; Rejection of pre-arrest bail application; Wrongful availing of input tax benefits; Need for custodial interrogation; Miscommunication leading to refraining from arrest; Deplorable practice by applicant and advocate; Rejection of pre-arrest bail application.1. Apprehension of Arrest under Section 132 of CGST Act:The applicant received summons from the Intelligence Officer, Directorate General of GST Intelligence, Pune, under section 132 of the Central Goods and Services Tax Act, 2017, leading to apprehension of arrest. The prosecution alleged that the applicant, as the owner of a firm, availed wrongful input tax benefits, committing cheating and causing a loss of approximately Rs. 77.00 Crores to the Government Exchequer. The applicant was accused of offenses under Section 132(1)(b) and (c) of the CGST Act.2. Rejection of Pre-arrest Bail Application:The Additional Sessions Judge, Pune, rejected the applicant's pre-arrest bail application, prompting the applicant to approach the High Court. The record indicated that the applicant had caused a wrongful loss of around Rs. 77.00 Crores to the Government Exchequer by unlawfully availing input tax benefits through illegal methods.3. Need for Custodial Interrogation:The Court emphasized the necessity of custodial interrogation to uncover the truth behind the alleged crime and investigate the modus operandi adopted by the applicant and other involved parties. The Court highlighted that custodial interrogation was crucial to understanding the extent of the offense and the involvement of other accused individuals.4. Miscommunication Leading to Refraining from Arrest:A letter from the applicant's advocate to the Investigating Agency led to a misunderstanding, causing the agency to refrain from arresting or interrogating the applicant. The Court criticized the deliberate miscommunication by the advocate, noting that no interim relief had been granted in favor of the applicant.5. Deplorable Practice and Rejection of Pre-arrest Bail:The Court condemned the deplorable practice of deliberate miscommunication by the applicant and his advocate. Considering the gravity of the offense, serious allegations, and the conduct of the applicant, the Court concluded that the applicant did not deserve pre-arrest bail protection, ultimately rejecting the bail application.This judgment by the High Court of Bombay addressed various critical issues, including the apprehension of arrest under the CGST Act, rejection of pre-arrest bail application, the necessity of custodial interrogation, miscommunication leading to refraining from arrest, and the deplorable practice of deliberate miscommunication by the applicant and his advocate. The Court, after thorough consideration of the gravity of the offense and the conduct of the applicant, rejected the pre-arrest bail application, emphasizing the importance of upholding legal integrity and accountability in matters concerning financial fraud and tax evasion.