TaxTMI 
TaxTMI 
2024 (2) TMI 129
X X X X Extracts X X X X
X X X X Extracts X X X X
....ible ITC of Rs. 17.73 crores. It is further alleged that the applicant also used to operate and look after few other trade firms namely Aditya Trading Company, Prashant Traders in the same premises. Thus, allegation in a nut shell is that the applicant has obtained GST Registration on fictitious documents and has never conducted any business activity from the registered premises and illegally claimed refund of accumulated ITC on account of trade/supply of goods and contravened provisions of the CGST Act, 2017. 5. The Directorate General of GST Intelligence (DGGI) Nagpur, Zonal Unit, Nagpur has conducted a search on 22.11.2023 at the resident of the applicant in respect of the aforementioned trade firms pertaining to its transactions of sales and supply etc. During the course of the said search, three mobile phones of the applicant are seized. Based upon this search, it was found that trade firm viz. Arihant Traders belonging to the applicant is not in existence and no document of any kind of business activity of the said trade firm was found. It further alleged that another trade firms viz. Mehal Construction and Supplier had not declared any supplies in GST Returns. Thus, the app....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....10.2022); 3. Daulat Samirmal Mehta vs. Union of India, thr. the Secretary and ors, reported in 2021 SCC OnLine Bom 200; 4. Rini Johar and anr vs. State of Madhya Pradesh and ors, reported in (2016)11 SCC 703; 5. Md. Asfak Alam vs. State of Jharkhand, reported in 2023 SCC OnLine 892; 6. Satender Kumar Antil vs. CBI, reported in (2022)10 SCC 51, and 7. Chanda Kochar vs. CBI 2023 SCC OnLine Bom 72. 8. Per contra, learned counsel Shri S.N. Bhattad for the non-applicant submitted that Section 69 of the CGST Act, 2017 empowers the Commissioner to arrest a person when he has reasons to believe that a person has committed any offence specified in clauses (a) or (b) or (c) or (d) of sub-section (1) of Section 132, which is punishable under clauses (i) and (ii) of subsection (1) or sub-section (2) of the said Section. He may by order authorizes any officer of the Central Tax to arrest such person. In view of sub-section (2) of Section 69, where a person is arrested under sub-section (1) of an offence specified under sub-section (5) of Section 132, the officer authorized to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(2) imprisonment of 5 years. Thus, punishment provided is less than seven years. But, without complying the guidelines issued by the Honourable Apex Court, the applicant is arrested which amounts to illegal custody. Whereas, as per submission of learned counsel for the non-applicant, Section 69 of the CGST Act, 2017 empowers the Commissioner to arrest a person and by virtue of Section 4(2) of the Code of Criminal Procedure, the application of Section 41 is restricted in respect of arrest made under the CGST Act, 2017. As per Section 4(2) of the Code of Criminal Procedure, if there is separate provision in respect of any subject in a special statute, the same will prevail over general provisions of the Code of Criminal Procedure. 11. In the light of the above submissions, if Scheme contemplated under Section 132 of the CGST Act, 2017 is considered, it provides punishment for certain offences and it is urged that it is only when a person supplies any goods or services or both without issue of any invoice, in violation of the provisions of the Act and with an intention to evade taxes or issues any invoice or bill without supply of goods or services or both in violation of the provisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the fact that Section 69(1) of the CGST Act, 2017 authorizes the arrest only of persons who are believed to have committed cognizable and non-bailable offences, but Section 69(3) of the CGST Act, 2017 deals with the grant of bail and the procedure for grant of bail even to persons who are arrested in connection with non-cognizable and bailable offences and (2) in the light of the fact that the Commissioner of GST is conferred with the powers of search and seizure under Section 67(10) of the CGST Act, 2017, in the same manner as provided in Section 165 of the Cr.P.C., 1973, the contention of the Additional Solicitor General that the petitioners cannot take umbrage under Section 41 and 41A of Cr.P.C. may not be correct. It is further held by the Honourable Apex Court that it may be remembered that Section 41(3) of Code of Criminal Procedure, does not provide an absolute irrevocable guarantee against arrest. Despite the compliance with the notices of appearance, a Police Officer himself is entitled under Section 41A(3) Code of Criminal Procedure, for reasons to be recorded, arrest a person. At this stage, we may notice the difference in language between Section 41A(3) of the Code of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es specified in clause (a) or (b) or (c) or (d) of sub-section (1) and punishable under clause (i) of that sub-section are cognizable and non-bailable. 16. Reverting back to the facts of the present case, it is alleged that the applicant by using a single PAN and without conducting any business and supplying any goods from the registered premises illegally claimed refund of the accumulated ITC on account of trade/supply of goods and contravened the provisions of the GST. The officer of the non-applicant has recorded the statement of the applicant wherein the applicant during his statement accepted that he has obtained GST Registration of Mehal Construction and Suppliers, M/s. Mehal Associates, M/s. Arihant Traders on the same PAN. It further reveals from his statement that he has accepted that he has issued invoices without actual supply of goods and availed fraudulent ITC without actual receipts of goods and issued the bogus invoices. The non-applicant has relied upon the statement of the applicant and contended that there is a clear admission on the part of the applicant towards his act of wrong doing and thus committed offence under Section 132(1)(b) and (c) of the CGST Act, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on account of trade/supply of goods. 19. In the case of Arnesh Kumar vs. State of Bihar, reported in (2014)8 SCC 273, the Honourable Apex Court while laying down some guidelines clarified that directions issued would not only be applicable to cases under 498-A of the Indian Penal Code or Section 4 of the Dowry Prohibition Act but also would cover cases where offence is punishable with imprisonment for a terms which may be less than seven years or which may extend to seven years whether with or without fine. 20. The Honourable Apex Court in the case of Satender Kumar Antil vs. CBI supra has reiterated the above principle in paragraph Nos. 26 & 27 which is reproduced as under: "26. We only reiterate that the directions aforesaid ought to be complied with in letter and spirit by the investigating and prosecuting agencies, while the view expressed by us on the non-compliance of Section 41 and the consequences that flow from it has to be kept in mind by the Court, which is expected to be reflected in the orders. 27. Despite the dictum of this Court in Arnesh Kumar (supra), no concrete step has been taken to comply with the mandate of Section 41A of the Code. This Court has clearl....