2020 (6) TMI 379 - HC - GST

Anticipatory bail granted for CGST Act offences; conditions imposed to prevent evidence tampering

Sri Hanumanthappa Pathrera Lakshmana Versus State By Senior Intelligence Officer, Directorate General Of Goods And Service Tax Intelligence, Bengaluru Zonal Unit, Bengaluru

The court held that anticipatory bail under Section 438 of the Cr.P.C. is maintainable for offences under the CGST Act, despite arguments to the contrary. ... Grant of Anticipatory Bail - respondent had issued notice/summons to the petitioner as per Section 70 of the Central Goods and Service Tax Act, 2017 summoning him to appear before the Authorized Officer finally on 12.05.2020 - HELD THAT:- On bare reading of Section 69 (1) of the CGST Act, where the Commissioner has reasons to believe if a person committed the offence under Section 132 of the CGST Act, he may, by order, authorize any officer of central tax to arrest such person. Therefore, the petitioner has reasons to believe that he may be arrested on accusation for having committed non-bailable offence under sub-section 5 of Section 132 of the CGST Act. Therefore, the petition under Section 438 of the Cr.P.C. is maintainable for the offences committed under the CGST Act and there is no statutory bar for invoking or exercising power under section 438 of the Cr.P.C. for the offence committed under the provisions of the CGST Act. Therefore, the contention of the learned Special Public Prosecutor cannot be accepted. Summons have been issued by the authorized officer under Section 70 of the CGST Act which clearly goes to show that the petitioner is reasoned to believe that he is apprehending his arrest in the hands of the respondent in case after his appearance before the authorizing officer as per Section 69 of the CGST Act. Therefore, in case the petitioner is arrested, he is likely to remand to the judicial custody, after his production before the Magistrate and by looking to the present COVID-19 situation, if he is remanded to the judicial custody, he will be put to hardship and definitely, his health would likely to affect - The offences are not punishable with death or imprisonment for life. There is no statutory bar in the CGST Act for granting anticipatory bail by exercising power under Section 438 of the Cr.P.C. Merely, there were number of notices/summons issued by the respondent during the lockdown for COVID-19 that itself is not a ground to reject the bail petition. Considering the fact and circumstances of the case, if an anticipatory bail is granted, no prejudice would be caused to the respondent. The petitioner is ordered to be enlarged on bail in the event of his arrest under Section 69 of the CGST Act by the respondent-Authorised Officer, after enquiry under Section 70 of the CGST Act - Petition allowed. Issues Involved:1. Maintainability of anticipatory bail under Section 438 of the Cr.P.C. for offences under the CGST Act.2. Merits of the case regarding the petitioner’s involvement in fraudulent input tax credit claims.3. Conditions for granting anticipatory bail.Detailed Analysis:1. Maintainability of Anticipatory Bail under Section 438 of the Cr.P.C. for Offences under the CGST Act:The petitioner sought anticipatory bail under Section 438 of the Cr.P.C., fearing arrest under Section 69 of the CGST Act for alleged offences under Section 132(5) of the CGST Act. The respondent argued that anticipatory bail is not maintainable and cited judgments from the Telangana High Court and the Supreme Court, emphasizing that writ petitions should be filed for relief under the CGST Act. The court examined the judgments, particularly P.V. Ramana Reddy vs. Union of India, where the Telangana High Court held that writ petitions are maintainable for pre-arrest relief but dismissed them on merits due to the significant tax evasion involved. The Supreme Court had upheld this view without a detailed speaking order.The court also considered other cases, such as Meghraj Moolchand Burad (Jain) vs. Directorate General of GST Intelligence, where anticipatory bail was granted by the Supreme Court. The court noted that there is no statutory bar in the CGST Act against granting anticipatory bail under Section 438 of the Cr.P.C., unlike specific prohibitions in other statutes. Therefore, the petition under Section 438 of the Cr.P.C. is maintainable for offences under the CGST Act.2. Merits of the Case Regarding the Petitioner’s Involvement in Fraudulent Input Tax Credit Claims:The respondent alleged that the petitioner was involved in fraudulent input tax credit claims based on fake invoices without actual supply of goods, causing a loss of approximately Rs. 9.05 crore to the exchequer. The petitioner contended that he had cooperated with the investigation and that his arrest would cause undue hardship, especially considering the COVID-19 situation. The court acknowledged the preliminary findings of the respondent but also noted the petitioner’s willingness to cooperate and the absence of statutory bars to anticipatory bail.3. Conditions for Granting Anticipatory Bail:Considering the merits and the maintainability of the anticipatory bail petition, the court granted anticipatory bail to the petitioner with specific conditions to ensure his cooperation and prevent tampering with evidence. The conditions included:- Execution of a personal bond for Rs. 10,00,000 with two sureties.- Appearance before the Authorized Officer within one week for the inquiry under Section 70 of the CGST Act.- Non-tampering with prosecution evidence or documents.- Cooperation during the inquiry and not leaving the country without permission.- Surrendering of the passport to the Authorized Officer.- Appearance as and when called for further investigation.- Non-indulgence in similar offences.The court concluded that no prejudice would be caused to the respondent by granting anticipatory bail under these conditions, and thus, allowed the petition. The court also disposed of the interim application in view of the main petition's disposal.