Writ petition dismissed, arrest upheld under Central Goods and Services Tax Act. No violation of petitioner's rights.

The court dismissed the writ petition, upholding the legality of the petitioner's arrest under the Central Goods and Services Tax Act. It was determined that the input tax credit wrongly availed exceeded the threshold of Rs. 5 crores when considering the combined amount across the four distinct legal entities controlled by the petitioner. The court found no violation of the petitioner's rights under Article 21 of the Constitution of India and affirmed the Commissioner's decision to arrest the petitioner. The petitioner was not precluded from seeking bail before the competent court despite the dismissal of the writ petition.

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Issues Involved:
1. Legality of the petitioner’s arrest under the Central Goods and Services Tax Act, 2017 (CGST Act).
2. Whether the alleged input tax credit wrongly availed exceeded Rs. 5 crores.
3. Whether the offences committed were cognizable and non-bailable.
4. Whether the petitioner’s rights under Article 21 of the Constitution of India were violated.
5. Applicability of clubbing the tax violations of distinct legal entities under the CGST Act.

Detailed Analysis:

1. Legality of the petitioner’s arrest under the CGST Act:
The petitioner argued that his arrest was illegal as he was kept in custody for a bailable offence. He contended that the arrest and subsequent remand to judicial custody were improper because the alleged input tax credit wrongly availed did not exceed Rs. 5 crores when considering each legal entity separately. The petitioner claimed that the four business establishments involved were distinct legal entities and should not have been treated as one.

2. Whether the alleged input tax credit wrongly availed exceeded Rs. 5 crores:
The petitioner contended that the input tax credit wrongly availed by each of the four entities did not exceed Rs. 5 crores individually. Therefore, even if offences under Section 132 of the CGST Act were committed, they were non-cognizable and bailable. Respondent No. 2 argued that all four firms were effectively controlled by the petitioner and that the total input tax credit wrongly availed exceeded Rs. 5 crores when combined.

3. Whether the offences committed were cognizable and non-bailable:
The court examined Section 132 (1) (i) of the CGST Act, which specifies that offences involving input tax credit wrongly availed exceeding Rs. 5 crores are cognizable and non-bailable. It was noted that the material on record indicated that the petitioner controlled all four firms, and the combined input tax credit wrongly availed exceeded Rs. 5 crores. Therefore, the petitioner’s offences were cognizable and non-bailable under Section 132 (5) of the CGST Act.

4. Whether the petitioner’s rights under Article 21 of the Constitution of India were violated:
The petitioner claimed that his arrest and continued custody violated his rights under Article 21 of the Constitution, as they were not in accordance with the procedure established by law. The court found that the Commissioner had sufficient reasons to believe that the petitioner committed the offences, justifying the arrest under Section 69 of the CGST Act. Therefore, the petitioner’s rights under Article 21 were not violated.

5. Applicability of clubbing the tax violations of distinct legal entities under the CGST Act:
The petitioner argued that there was no provision under the CGST Act for clubbing the tax violations of distinct legal entities. The court noted that the petitioner effectively controlled all four firms, and the input tax credit wrongly availed by these firms could be combined to exceed Rs. 5 crores. The court rejected the petitioner’s contention, stating that the material on record justified the Commissioner’s decision to arrest the petitioner.

Conclusion:
The court dismissed the writ petition, concluding that the petitioner’s arrest was justified under the CGST Act. The petitioner’s contention that the input tax credit wrongly availed did not exceed Rs. 5 crores was rejected, as the material on record indicated that the petitioner controlled all four firms and the combined amount exceeded Rs. 5 crores. The court found no violation of the petitioner’s rights under Article 21 and upheld the Commissioner’s decision to arrest the petitioner. The dismissal of the writ petition does not preclude the petitioner from applying for bail before the competent court.

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