TaxTMI 
TaxTMI 
2021 (2) TMI 386
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....bai, who remanded the petitioner to magisterial custody. Respondent No. 2 proceeded against the petitioner on the basis that he had committed offence under section 132 (1) (b) (c) of the CGST Act and that since the input tax credit wrongly availed by the petitioner exceeded Rs. 500 lakh (Rs. 5 crores) and the offence was punishable with imprisonment for a term, which could extend to five years and with fine under section 132 (1) (i) of the CGST Act, it was a cognizable and non-bailable offence under sub-section (5) thereof. The power to arrest the petitioner was exercised by respondent No.2 under Section 69 of the CGST Act. 4. According to respondent No.2, the petitioner was effectively operating four business establishments which had indulged in fake purchase invoices and sale invoices whereby bogus input tax credit was claimed to the tune of at least Rs. 11.54 crores and the amount of wrongful input tax credit passed on through fake sale invoices was not less than Rs. 9.29 crores. On the basis of such figures arrived at during the investigation initiated against the petitioner, he was put under arrest on 30.12.2020. 5. In the writ petition, it was contended that the ....
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....Act, thereby showing that even if each of the said establishments could be alleged to have committed offences under section 132 (1) (b) (c) of the CGST Act, the amount of such input tax credit allegedly wrongly availed would not exceed Rs. 5 crores. Thus, the offences, if at all, were non-cognizable and bailable. 7. The learned senior counsel appearing for the petitioner, invited attention of this court to section 69 of the CGST Act to contend that the power to arrest in the present case was exercised in a wholly illegal manner because when the offence could, at best, be a non-cognizable and bailable offence, as per section 69 (3) of the CGST Act, the petitioner ought to have been admitted to bail immediately. There was no propriety in arresting the petitioner and then seeking his remand before the Magistrate. It was submitted that even the Magistrate failed to appreciate the provisions of the CGST Act while passing the impugned order dated 30.12.2020, thereby remanding the petitioner to magisterial custody. According to the learned counsel appearing for the petitioner, respondent No.2 in the present case had violated the right of the petitioner under Article 21 of the Constitut....
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....rought to the notice of this court that the KYC details of bank accounts of all the four firms were that of the petitioner. It was his email ID and mobile number that were linked to all the accounts of the firms and the e-Way Bill Registration data also demonstrated that the it was the email of the petitioner that was used for registration in respect of all the four firms. Reference was made to the statement of the petitioner recorded under section 70 of the CGST Act, as also the statement of his father and that of the Tax Consultant. 10. On this basis, it was submitted that it was the petitioner alone, who had committed the offences under Section 132 (1) (b) (c) of the CGST Act and he could not claim that the offences were non-cognizable and bailable because the input tax credit wrongly availed by the four firms could not be clubbed together. It was also brought to the notice of this court that the material available through investigation clearly demonstrated that the addresses against which the four firms were shown to be carrying out business were stated to be leased premises, but the owners of such premises had stated on affidavits that they had never met the petitioner or h....
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.... Procedure, 1973 (2 of 1974),- (a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate; (b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station." 14. Section 132 reads as under : "132. Punishment for certain offences (1) Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences, namely :- (a) ------- (b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax; (c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credi....
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....132 pertains to punishment for certain offences and sub-section (5) thereof provides that offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) and punishable under clause (i) of that sub-section shall be cognizable and non-bailable. 18. Section 132 (1) (i) of the CGST Act specifies that in cases where the input tax credit wrongly availed exceeds Rs. 5 crores, such an offence would be punishable with imprisonment which may extend to five years and with fine, the offence being cognizable and non-bailable. Thus, the central requirement for application of the said provision is that the input tax credit wrongly availed must exceed Rs. 5 crores. The whole endeavour of the petitioner in the present petition is to demonstrate that the figure of Rs. 5 crores is not exceeded, even if the facts as claimed to have been discovered by respondent No.2 during investigation are to be accepted. It is for this reason that much emphasis has been placed on the definition of "person" under Section 2 (84) of the CGST Act and it is emphasized that since each of the said firms or business establishments has a different registration number, the alleged wrongdoing ....
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....allegation of offences being committed for wrongly availing input tax credit. 21. The question, therefore, that arises for consideration is, as to whether in the peculiar facts of the present case it could be said that under Section 69 of the CGST Act, the Commissioner had reasons to believe that a person had committed the offences specified in section 132 thereof, thereby justifying authorization of an officer to arrest such a person. The material presently available on record prima facie indicates that not only was the petitioner alone responsible for the activities of the aforesaid four firms and that the entire KYC details and other information for registration of the said four firms pertained only to the petitioner, but the petitioner had indulged in prima facie fake claims regarding addresses of the said four firms. This is evident from the fact that respondent No. 2 has affidavits in its possession during the course of investigation from landlords and owners of premises from where the said four firms were purportedly conducting business, stating that no lease deeds were ever signed by such landlords and owners, thereby indicating that such wrongful and illegal activities ....
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....ourt in the aforesaid judgment, it cannot be said that the petitioner has been able to make out a case for issuing a direction for his release from custody on the basis that his arrest is wholly illegal and unauthorized. 24. Taking any other view at this stage would amount to accepting the claim of the petitioner and preventing the Commissioner from exercising power under Section 69 (1) of the CGST Act, despite sufficient material and reasons to believe that offences had been committed warranting arrest, only because multiple entities are created and run by a single individual for carrying out activities, which prima facie indicate wrong availing of input tax credit exceeding Rs. 5 crores. It is in this context that the learned Special Public Prosecutor is justified in relying upon judgment of the Telangana High Court in P.V.Ramana Reddy (supra), as also judgments of this court in the case of Ashish Jain (supra) and Tejas Pravin Dugad (supra). 25. Insofar as judgments of the High Courts relied upon by the learned counsel for the petitioner are concerned, in the case of Makemytrip (India) Pvt. Ltd. Vs. Union of India 233 (2016) DLT 484, the Delhi Court found on facts that even....