TaxTMI 
TaxTMI 
2021 (3) TMI 541
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2017 (briefly, "the CGST Act" hereinafter) as unconstitutional; (ii) For a declaration that power under section 69 can be exercised only upon determination of liability and consequent upon failure of the taxable person to meet such liability; (iii) Restraining the respondents from lodging any criminal complaint against the petitioners; and (iv) Enlarging the petitioners on bail on such terms and conditions as may be deemed fit and proper. 4. It may be mentioned that the two petitioners were arrested on 16.02.2021 by the respondents under section 69 of the CGST Act. 5. Facts necessary for adjudication may be set out briefly as under:- 5.1. Mr. Sunil Kumar Jha is the petitioner in writ petition (st) No. 5484 of 2021 whereas Mr. Akshay Chhabra is the petitioner in writ petition (st) No. 5486 of 2021. Mr. Akshay Chhabra is the chairman cum managing director of the company called One Point One Solutions Ltd (briefly "petitioner company" hereinafter) having its registered office at International Infotech Park, Vashi. Mr. Sunil Kumar Jha is the Chief Financial Officer of the petitioner company. Petitioner company is engaged in the business of providing business process outsourci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....company. An allegation has been made that employees of the petitioner company including female staff were not allowed to go home till 04.00 a.m. on 05.02.2021. Also at 03.50 p.m. on 05.02.2021, statement of Ms. Biji Shivprasad, an employee of the petitioner company, was recorded by respondent No. 2. It is stated that petitioners brought to the notice of respondent No. 2 the harassment meted out to the employees of the petitioner company notwithstanding full cooperation rendered by the petitioner company and by the petitioners to the respondents. However, respondent No. 2 again carried out a search and seizure operation on 05.02.2021 in the Pawne office of the petitioner company whereafter various documents were seized. Petitioners have stated that in the course of the search and seizure operation, respondent No. 2 wanted to know the location of the modular furniture supplied by M/s. HNO Furnishings Ltd which was shown by Mr. Akash Chhabra by taking respondent No. 2 and other officials to the various work stations where modular furniture were installed. Though apparently respondent No. 2 was satisfied about the modular furniture supplied by M/s. HNO Furnishings Ltd, nevertheless the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8 crores to the government and that it would pay whatever amount is quantified subject to adjudication and its right of appeal. 5.14. Aggrieved by the arrest and continued detention of the petitioners, the two writ petitions have been filed seeking the reliefs as indicated above. 6. Respondent No. 4 has filed separate but identical affidavits in both the writ petitions stating that petitioners have committed the offence of availing ineligible input tax credit of Rs. 9,04,89,054.00 by using fake invoices without supply of goods and / or services, thus committing offence under section 132(1)(b) and (c) of the CGST Act which is punishable under clause (i) of sub-section (1) of section 132 which is a cognizable and non-bailable offence. While contending that petitioners have the regular remedy of moving bail applications, the affidavits have also given details of various transactions entered into by the petitioner company to highlight the seriousness of the allegation against the petitioners. 7. Mr. Ponda and Mr. Jagtiani, learned senior counsel for the petitioners have contended that when the petitioners had cooperated with the investigation and had responded to the summons issued,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d, the answers to various questions were given in such a manner that the investigating authority could not proceed further. The statements made were evasive and therefore cannot be construed to be cooperative in nature. He has also placed reliance on a decision of the Telangana High Court in P.V. Ramana Reddy Vs. Union of India 2019(25) G.S.T.L. 185 (Telangana) as well as to an order passed by this Court in the case of Ashish Jain Vs. Union of India Order dated 31.07.2019 passed Cri. W.P. NO. 3804 of 2019. He therefore submits that the present is not a fit case for grant of bail to the petitioners. 9. Submissions made by learned counsel for the parties have been duly considered. We have also perused the materials on record. Judgments cited at the bar have been duly carefully examined. 10. There is no dispute to the fact that petitioners were arrested on 16.02.2021 under section 69 of the CGST Act. A perusal of the arrest memo dated 16.02.2021 issued by the Superintendent (Anti Evasion) would go to show that the allegation against the two petitioners is committing an offence under section 132(1)(b) and (c) of the CGST Act punishable under section 132(1)(i) thereof. As per the rema....
X X X X Extracts X X X X
X X X X Extracts X X X X
....prescribed for commission of such offence is laid down in clauses (i) to (iv) of sub-section (1) of section 132. As per clause (i), if the amount of tax evaded or input tax credit wrongly availed of or utilized or the amount of refund wrongly taken exceeds Rs. five crores, then the sentence is imprisonment for a term which may extend to five years and with fine. All the other sentences are below five years. Therefore, the maximum sentence that can be imposed upon conviction for committing an offence under section 132(1)(b) and (c) is five years and with fine. In Arnesh Kumar (supra), Supreme Court had held that in case of an offence where the punishment upon conviction is seven years if a person complies with a notice under section 41-A of the Code of Criminal Procedure, 1973 (briefly "Cr.P.C.") particularly sub-section (3) thereof which says that where such person complies and continues to comply with the notice, he shall not be arrested in respect of the offence referred to in the notice unless for reasons to be recorded the police officer is of the opinion that he ought to be arrested. Relying upon Arnesh Kumar (supra), this Court in Daulat S. Mehta (supra) also held that the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... It also says that a Magistrate may authorize detention of the accused person beyond a period of fifteen days if he is satisfied that adequate grounds exists for doing so but no Magistrate shall authorize detention of the accused person in custody for a total period exceeding 60 days as in the present case. In this backdrop, if we look at the remand application, we find that the prayer made by the arresting authority (page 119 of the paper book in WP (st) No. 5486/2021) is for remand of the petitioners to judicial custody for 60 days though in the penultimate paragraph, this was overwritten to 14 days but without initials. This only indicates the manner in which the respondents have proceeded in the matter whereby the process of detention itself is sought to be converted into a penalty. We say this and no more on this aspect. 16. We have also noticed that as per the remand application, the allegation against the two petitioners is that they had played a crucial role in illegally availing input tax credit of Rs. 9,04,89,054.00. Petitioners have stated that on 18.02.2021, petitioner company made a payment of Rs. 1,36,56,638.00 under protest. Thereafter further payments were made on....