TaxTMI 
TaxTMI 
2022 (7) TMI 296
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....s 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 of applicant is in existence for last 20 odd years and h....
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....ity 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 world. There has been no fraudulent activities and misrepresenta....
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....d 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 while granting bail to the accused assessee. Pawan Kumar Bansal Vs. Union of India (12.04.2021), Calc....
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.... 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 incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. I....
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.... 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-established and reputed class in the society. (n) That the allegation of the Respondent Authority with respect to the export of large quantity of goods by the applicant being fake and dubious is false and frivolous. It is pertinent to mentio....
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....ahto 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. 06AXZPP6264B1Z0 M/s Urneed Online Retail Durga Madhab Panda 33,18,63,950/- 5,64,79,334/- TOTAL 82,64,55,050/- 18,20,14,374/- 3.1 The chain mentioned hereinabove stands established on the verifying the same from the GST Portal. Furthermore, it was revealed from the investigation that all the aforementioned assesses were engaged in different kind of work as per the HSN [Harmonized System of Nomenclature] m....
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....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 goods involves GST rate @ 28% & 18% with an intention to avail ITC at a higher rate. 3.9 Further it has been further submitted that during the course of investigation all the firms mentioned in the tables here in above were found to be bogus/non existence. 3.10 Since from the investigation, it appeared that accused had been involved in causing a loss to Government Exchequer to the tune of Rs. 5,64,79,334/- and hence committed offence under section Section 132(1)(b)(c)....
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....l 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 be made in this regard and the prosecution seeks liberty of this Court to respond to the same as and when the annexures are provided to the prosecution. 3.17 The contents of paragraph IV of the bail application are wrong and denied. In this regard, it is submitted that M/s Urneed Online Retail has made purchase only on paper as all the firms run by the accused/applicant Durga Madhab Panda i.e. M/s Urneed online Retail having GSTIN 06AXZPP6264B1Z0 & 07AXZPP6264B1ZY and M/s RGVS Gezellig ....
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....nce 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 taken fraudulent Input Tax Credit amounting to Rs. 5,18,80,988/-. It is further submitted that the applicant has himself admitted in his voluntary statement u/s 70 of CGST Act that he also availed fake Input Tax Credit on the basis of bogus invoices issued by M/s Mahto Enterprises. 3.21 That the contents of paragraph IX of the bail application are wrong and denied. In this regard, it is submitted that as per the voluntary statement of the accused u/s 70 of the CGST Act, 2017 dated 06.05.2022, he ad....
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....idence 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 complete. 3.26 It has been further submitted that the offences under Section 132(1)(b)(c) are cognizable and non-bailable under Section 132(5), Various High Courts in their judgements denied the bail for offences committed under these Sections. Reliance has been placed upon the following case laws : (i) Rakesh Arora v. State of Punjab 2021 SCC OnLine P&H 200 (ii) Mohit Bathla v. CGST Division Panipat 2021 SCC OnLine P&H 4038 (iii) State of Gujarat Versus Mohanlal Jitamalji Porwal (1987) 2 SCC 364 (iv) ....
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....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 fraudulently availed Input Tax Credit of Rs. 5,18,80,988/- on the invoices issued by these firms, which was also inadmissible to him. 4.2 It has been further specifically submitted that M/s Urneed Online Retail having GSTIN 07AXZPP6264B1ZY and M/s RGVS Gezellig Pvt. Ltd. having GSTIN 06AAHCR1597B1ZG & 07AAHCR1597B1ZE are directly connected to the accused as he is proprietor of M/s Urneed Online Retail and is a Director in M/s RGVS Gezellig Pvt. Ltd. 4.3 The accused was involved in receiving goods less invoices to fraudulently avail Input Tax Credit and claim....
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....tions 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 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 such invoice or bill referred to in clause (b); (d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due: (e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or docume....
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....ain 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) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), all offences under this Act, except the offences referred to in sub section (5) shall be non-cognizable and bailable. (5) The 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 subsection shall be cognizable and nonbailable. (6) A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner. 7. It is settled preposition of law that economic offences in itself are considered to be gravest offence against the society at large and hence are required to be treated differently in the matter of bail. I....
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.... 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 discharge of its judicial functions. The Community or the State is not a personnongrata whose cause may be treated with disdain. The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence 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....
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....ther, 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 the punishment which conviction will entail, the character, behaviour, means and standing of the applicant, circumstances which are peculiar to the applicant, reasonable possibility of securing the presence of the applicant at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public or State and similar other considerations. It has also to be kept in mind that for the purposes of granting the bail the Legislature has used the words "reasonable grounds for believing" instead of "the evidence" which means the court dealing with the grant of bail can only satisfy it as to whether there is a genuine case against the applicant and that the prosecution will be able to produce prima facie evidence in support of the ch....