TaxTMI 
TaxTMI 
2022 (7) TMI 296
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....Chief Judicial Magistrate, Gurugram on the day of his arrest i.e., 07.05.2022, from where he was remanded to judicial custody for a period of 14 days. It has been further submitted that applicant is under custodial interrogation since 07.05.2022 i.e., the say of his arrest. 2.2 It has been further submitted that the said act of the respondent Authority is nothing but an abuse of power bestowed upon them by the Statute i.e., CGST Act, 2017. The Respondent Authority, without being sure, as to under what sections, the applicant has committed offence, has arrested the applicant by alleging him of multiple offences, which is void of any base. The applicant is a law-abiding citizen, holding goodwill in the society, with no criminal antecedents. 2.3 It has been further submitted that applicant runs a proprietorship under the name and style of "URNEED ONLINE RETAIL" having its Corporate Office at Delhi and a store at Gurugram (HR). The proprietorship of applicant is involved in the business of Wholesale-cum-retail-cum-export of Fast-moving consumer goods and is one of the India's largest branded fast moving consumer goods to various countries across the globe. The proprietorship ....
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....ng the Judicial Remand of the applicant, the Respondent Authority has alleged the applicant for commission of offence U/s 16(2)(b) r/w Section 132(1) of the CGST Act, 2017. It has been alleged by the Respondent Authority that, the applicant has been importing large quantity of goods, however no actual goods have been found at the premises of the applicant. It was further alleged by the Respondent Authority that the applicant has been purchasing goods which involves duty @ 18%, 12% and 5% and has been falsely declaring that it has been exporting goods involving GST @ 28% and 18% with an intention to avail ITC at a higher rate. Additionally, while seeking judicial custody of applicant, it has also been shown by the Respondent Authority that an entity named M/s Mahto Enterprises has passed the fake/bogus Input Tax credit to the proprietorship of the applicant to the tune of Rs. 5,64,79,334/-. 2.7 It has been further submitted that the applicant is a respected person of the society and has established his proprietorship with utmost efforts and transparency. The proprietorship of the applicant is a known brand having global presence since decades, with the top existing brands in the ....
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....imprisonment up to seven years, the magistrate should not allow arrest in a casually and mechanically manner. In the said judgment, the mandatory directions have been issued to the police officers to issue a notice of appearance upon the accused person U/S 41A Cr.P.C. where the offence punishable with imprisonment up to seven years, with or without fine. (d) Because the custodial interrogation is bad in law as the Statue i.e., GST Act does not provide for custodial interrogation as the offences mentioned under the GST Act, is fiscal in nature. Further, no purpose will be served if the applicant is kept in custody as there are various remedies such as seizure and confiscation of the Account of the applicant available to the Respondent Authority. (e) Because the Hon'ble Supreme Court of India in C. Pradeep Vs. Commissioner of GST and Central Excise, Salem and Anr. (2019) SCC Online SC 1942, was pleased to provided interim protection from arrest to the accused assessee upon deposition of the 10% of the disputed liability with the GST Department and the said order of Hon'ble Apex Court in C. Pradeep (Supra) has been followed by Various Courts of this nation wh....
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....he subjective satisfaction should be based on some credible materials or information and also should be supported by supervening factor. It is not any and every material, howsoever vague and indefinite or distant remote or far-fetching, which would warrant the formation of the belief. ii) The power conferred upon the authority under Section 69 of the Act for arrest could be termed as a very drastic and far-reaching power. Such power should be used sparingly and only on substantive weighty grounds and reasons. iii) The power under Section 69 of the Act should neither be used as a tool to harass the assessee nor should it be used in a manner which may have an irreversible detrimental effect on the business of the assessee. iv) The above are merely the incidents of personal liberty guaranteed under the Constitution of India. No arrest can be made because it is lawful for the police officer to do so. The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The Commissioner must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalcula....
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....fair trial of the case in a Court of justice and hence it is essential that due and proper weight should be bestowed on these two factors. While exercising the power Under Section 437 of the Criminal Procedure Code in cases involving non-bailable offences except cases relating to offences punishable with death or imprisonment for life, judicial discretion would always be exercised by the Court in favor of granting bail subject to sub-section 3 of Section 437 with regard to imposition of conditions, if necessary. For the purpose of granting or refusing bail there is no classification of the offences except the ban Under Section 437(1) of the Criminal Procedure Code against grant of bail in the case of offences punishable with death or life imprisonment. Hence there is no statutory support or justification for classifying offences into different categories such as economic offences and for refusing bail on the ground that the offence involved belongs to a particular category. It cannot be said that bail should invariably be refused in cases involving serious economic offences" (m) Because the applicant has no criminal antecedents and belongs to the well-est....
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....ity/party has passed on the fake/bogus Input Tax Credit to the following assesses which are mentioned here in below :- TABLE-B Sr. No. GSTN Trade Name Legal Name Taxable Value in INR Tax in INR 1. 06EATPK9153H1Z4 M/s Rohtash Enterprise Jogendra Kumar 32,48,93,600/- 8,76,99,240/- 2. 06BPTPM0152G1ZV M/s Mahto Enterprise Santosh Mahto 33,18,63,950/- 5,64,79,334/- 3. 06CBKPG3298M1Z4 M/s Gautam Enterprise Narendra Gautam 16,96,97,500/- 3,78,35,800/- TOTAL 82,64,55,050/- 18,20,14,374/- Further the aforementioned partied in Table B have passed the fake/bogus Input Tax Credit to the following assesses which are mentioned here in below : TABLE-C Sr.No. GSTN Trade Name Legal Name Taxable Value in INR Tax in INR 1. 06FHLPS2390A1ZA M/s Guddu Traders Guddu Kumar Singh 16,24,46,800/- 4,38,49,620/- 2. 06CHUPA8724Q1ZJ M/s India Timber Mart Hariom Daya Shankar Agrahari 16,24,46,800/- 4,38,49,620/- 3. 06DHQPP1564J1ZG M/s Pratap Enterprise Ajay Pratap 16,96,97,500/- 3,78,35,800/- 4. 06A....
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....ers that the said shop belonged to the one Naveen Prakash. Soon after the owner of the shop came to the shop and informed the officers that he had given the said premises on rent to one Durga Madhab Panda only for a period of 3 months from August 2021 to October 2021. Furthermore, he informed that he was not in touch with Durga Madhab Panda. The aforementioned search and the information received from the owner of the aforementioned premises were evident enough to conclude that M/s Urneed Online Retails was a fake/non-existent firm. 3.7 That subsequently during investigation of the case, accused was summoned on 06.05.2022 wherein Durga Madhab Panda tendered his voluntary statement wherein he admitted his involvement in the present crime besides other facts. 3.8 Further it was revealed that M/s Urneed Online Retails (Table-C) has falsely and intentionally shown that it has exported goods which involves GST rate @ 28% & 18%. However, on a perusal/scrutinizing the GSTR-2A M/s Urneed Online Retails has been purchasing goods which involved duty @ 18%, 12% and 5% only. Hence M/s Urneed Online Retails through Durga Madhab Panda has been falsely declaring that it has been exporting go....
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....t) in Delhi and in Haryana were visited by the officers of the complainant department but the said firm was found non-existent and non-functional and no capital goods/trading goods were found at both the premises. Further, the M/s Urneed Online Retail was incorporated in the year 2013 as disclosed by the accused/applicant vide his statement u/s 70 of the CGST Act, 2017 dated 19.05.2022. It is pertinent to mention here that the applicant has not supplied the annexures along with the bail application therefore no submission can be made on the profile of proprietorship of the accused/applicant and the prosecution seeks liberty of this Court to respond to the same as and when the annexures are provided to the prosecution. 3.16 That the contents of paragraph III of the bail application have been stated to be wrong and denied. In this regard, it has been submitted that the registration of the petitioner firm under GST has been cancelled w.e.f. 06.05.2022 due to it being non-existent/non-operational at the registered principal place of business. It is pertinent to mention here that the applicant has not supplied the annexures along with the bail application therefore no submission can ....
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....ked-in to the office of CGST, Gurugram on 06.05.2022 at around 3:40 P.M. along with his advocate who submitted a vakalatnama dated 06.05.2022. Further, summon u/s 70 of the CGST Act dated 06.05.2022 was issued to the accused to tender his voluntary statement wherein he inter alia admitted his involvement in the present crime. Since from the investigation, the accused found to have been involved in causing loss to Government Exchequer to the tune of Rs. 5,64,79,334/- and thus has committed offence under section 16(2)(b) of the CGST Act, 2017 read with Section 132(1) of the CGST Act, 2017 which is punishable under Section 132(1)(i) of the CGST Act, 2017, therefore he was arrested in the office of Central Goods and Service Tax Commissionerate, Gurugram. 3.20 The contents of paragraph VIII of the bail application are a matter of record as per the remand application. However, it is submitted that during investigation, it was found after inspection/inquiry that there were three firms M/s Umeed online Retail (Delhi). M/s RGVS Gezellig Pvt. (Delhi) And M/s RGVS GezelligPvt. (Haryana) which were found non-existing and non-operational from which M/s Urneed online Retail (Haryana) has take....
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....ia 2021 (2) SCC 782 wherein the aforementioned judgment of the Hon'ble Telangana High Court was challenged and the same was dismissed. 3.24 It has been further submitted that no custodial interrogation of accused ever took place and the accused tendered his voluntary statement u/s 70 of the CGST Act on 06.05.2022. It is reiterated that presently the investigation is at nascent stage if concession Bail granted the accused herein there reasonable that he try hamper the investigation/destroy evidence which seriously prejudice the case of the prosecution also belief that the accused flight risk. 3.25 It has been further submitted that in judgment C. Pradeep Vs. Commissioner of GST and Central Excise, Salem & Anr. 2019 SCC OnLine SC 1942, is not applicable in the facts and circumstances of present case as the accused already been arrested in the present matter and currently judicial custody. Further reliance is placed upon the judgment the Hon'ble Court of India in the matter of Sandeep Goyal Union of India SLP (Crl.) No. 1803/2020 order dated 17.04.2020 where inter alia has been held that the accused under GST Act shall only be released once the investigation compl....
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...., the accused fraudulently availed Input Tax Credit amounting to Rs.11,29,58,668/ on the basis of fake invoices issued by a non-existent/fake firm i.e. M/s Mahto Enterprises. 4.1 Further that the accused in his voluntary statement dated 06.05.2022 u/s 70 of CGST Act has himself admitted that he has availed Input Tax Credit on the basis of goods-less invoices issued by M/s Mahto Enterprises. Thus, the Input Tax Credit of Rs. 11,29,58,668/- availed by the applicant/accused is inadmissible to him. The accused utilized the fraudulently availed Input Tax Credit to the tune of Rs.3,68,19,876/- to set-off his GST liability on his outward supplies made in the month of March & April, 2022 and filed for the refund of Input Tax Credit of Rs.3,46,10,000/- & Rs.3,80,69,396/- for the month of March & April, 2022 respectively. 4.2 The accused availed Input Tax Credit of Rs.5,18,80,988/- on the basis of the invoices issued by M/s Urneed Online Retail having GSTIN 07AXZPP6264B1ZY and M/s RGVS Gezellig Pvt. Ltd. having GSTIN 06AAHCR1597B1ZG & 07AAHCR1597B1ZE, which were also found non-existent at their registered principal place of business during the investigation. Thus, the accused fraudulen....
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....bsconding once any suspect that the fake ITC chain is exposed. Thus allowing the person to be released on bail will allow the other perpetrators to evade and abscond and commit similar offences. 4.8 Finally, it has been prayed that the bail application of the accused Durga Madhab Panda may be dismissed, in the interest of justice. (Arguments) 5. Both the parties have argued in the line of their written submissions. (Findings) 6. After hearing both the parties and gone through the case file very carefully, this court would like to observe that the allegations against the applicant is under Section 132(1)(c)&(e) r/w 16(2)(b) of the CGST Act, 2017. In order to proceed further, it would be relevant to see what Section 132 of CGST Act, 2017 postulates : "132. Punishment for certain offences. (1) Whoever commits any of the following offences, namely : (a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax; (b) issues any invoice or bill without supply of goods or services or both in violation of the provisions....
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....sonment for a term which may extend to three years and with fine; (iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine: (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j). he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. (2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine. (3) The imprisonment referred to in clauses (i), (ii) and (iii) of subsection (1) and subsection (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months. (4) Notwiths....
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....it to be taken by a Magistrate. The High Court rejected the prayer on the ground that it did not consider it "expedient in the interests of justice to open a new vista of evidence" in view of the fact that the offence had taken place six years back. The mere fact that six years had elapsed, for which timelag the prosecution was in no way responsible, was no good ground for refusing to act in order to promote the interests of justice in an age when delays in the Court have become a part of life and the order of the day. Apart from the fact that the alleged lacuna was a technical lacuna in the sense that while the opinion of the Mint Master had admittedly been placed on record it had not been formally proved the report completely supported the case of the prosecution that the gold was of the specified purity. To deny the opportunity to remove the formal defect was to abort a case against an alleged economic offender. Ends of justice are not satisfied only when the accused in a criminal case is acquitted. The Community acting through the State and the Public Prosecutor is also entitled to justice. The cause of the Community deserves equal treatment at the hands of the court in the dis....
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....equence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye, unmindful of the damage; done to the National Economy and National Interest, as was aptly stated in State of Gujarat v. Mohanlal Jitamalji Porwal and Anr., AIR (1987) 1321) Unfortunately in the last few years, the country has seen an alarming rise in whitecollar crimes which has affected the fibre of the country's economic structure. These cases are nothing but private gain at the cost of public, and lead to economic disaster." 9. Further, in case of "Prahlad Singh Bhati Vs. NCT of Delhi" 2001 AIR SCW 1266, the Apex Court has observed as under : "The jurisdiction to grant bail has to be exercised on the basis of well settled principles having regard to the circumstances of each case and not in an arbitrary manner. While granting the bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of th....