TaxTMI 
TaxTMI 
2024 (12) TMI 1001
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....GSTIN 09AACCW7418B1ZE. It is a registered company under the Central Goods and Services Tax Act, 2017 ("CGST Act") carrying the business of e-waste management. 3. On 28th November 2024, respondent authorities carried out a search under Section 67, CGST Act at the Company's principal place of business at Gautam Buddha Nagar and UPSIDC Industrial Area, Gopalpur, Sikandrabad, District Bulandshahr, Uttar Pradesh. Allegedly, unaccounted stock was seized. 4. As per Senior Counsel for petitioner, pursuant to the search, petitioner was taken taken in his own car from premises of the Company, accompanied by the officers of the respondent, to the respondent's office located at Dwarka at around 1600 hours and was illegally detained there, without reason or information. His mobility was restricted, and he was not allowed to leave the premises of the respondent; his phone was also cloned at respondent's premises without his consent. 5. On the intervening night of 29th and 30th November 2024, petitioner was arrested. Allegations pertained to availing Input Tax Credit ("ITC") amounting to Rs. 10,76,99,292/- by procuring fake invoices without actual supply of goods through the firms operat....
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.... authorization, Arrest Memo shall contain a DIN. Same is extracted below for ease of reference: 2. The Board in exercise of its power under section 168 (1) of the CGST Act, 2017/ Section 37B of the Central Excise Act, 1944 directs that no search authorization, summons, arrest memo, inspection notices and letters issued in the course of any enquiry shall be issued by any officer under the Board to a taxpayer or any other person, on or after the 8th day of November. 2019 without a computer generated Document Identification Number (DIN) being duly quoted prominently in the body of such communication. The digital platform for generation of DIN is hosted on the Directorate of Data Management (DDM)'s online portal "cbicddm.gov.in" 10. Discrepancies in Arrest Memo 10.1 Arrest Memo along with Jamatalashi (also with a DIN) was generated on 30th November 2024 declaring petitioner's arrest at 0100 hours by stating that "grounds of arrest have been informed to the petitioner and the intimation of the arrest has been given to the Father Shri B.P. Suman at his Mobile No. 995844590". The Arrest Memo and Jamatalashi are reproduced as under for ease of reference: 10.2 It was s....
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....eld that grounds of arrest are mandatory and without exception since they serve as the fundamental basis for the arrestee to seek legal remedy and/or challenge the remand. 12. Non-production before a Magistrate within 24 hours 12.1 Petitioner was taken into custody on 28th November 2024 at 1600 hours by the respondent restricting petitioner's mobility. Petitioner was produced before the Magistrate on 30th November 2024 at 1245 hours. Same was in gross violation of Section 58 of the BNSS read with Article 22(2) of the Constitution. 12.2 In this regard, reliance was placed on Bombay High Court's decision in Ashak Hussain Allah Detha v. Assistant Collector of Customs (P) Bombay & Anr. 1990 SCC OnLine Bom wherein it was held that arrest of a person commences from the time restraint is placed on the arrestee's liberty, and not from the time of arrest officially recorded by the police. Thus, it was argued that the consequential custody of the petitioner herein is illegal. 12.3 Reference was also made to the guidelines formulated by the Supreme Court in the landmark judgement of D.K. Basu v. State of West. Bengal 1997 (1) SCC 416. 13. Insufficient compliance of Section 69 (....
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....e respondent, and there is no possibility of tampering. Thus, the arrest ought not to have occurred in the first place. Submissions on behalf of Respondent 15. Senior Standing Counsel ("SSC") for respondent submitted that all actions taken by the respondent agency were in strict compliance of the statutory framework under the CGST Act, and other applicable legal norms. The following points were addressed to refute the contentions raised by Senior Counsel for petitioner and to clarify the procedural correctness of the actions undertaken by respondent: 16. Detention of the Petitioner Beyond 24 Hours Misconceived 16.1 It was submitted that the grounds of arrest were duly provided through the remand application, which was supplied on the 30th November 2024, when the petitioner was produced before the CJM. Remand application explicitly outlined the reasons for arrest, fulfilling the procedural requirements. The grounds of arrest were effectively communicated to petitioner at the time of arrest, though the records of the communication were not preserved. Arrest Memo was duly prepared and signed at 0010 hours, ensuring compliance with procedural mandates. Petitioner was produc....
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....ons. 17. Assertion Regarding Non-Furnishing of Grounds of Arrest to the Petitioner Without Merit 17.1 SSC for respondent stated that the essential ingredients of the offence under Section 132, CGST Act were fulfilled. The omission of specific phrases does not nullify the substance of the grounds of arrest. Compliance with Section 69 (2), CGST Act was ensured, as the Arrest Memo bore the petitioner's signature, and the endorsement was done before the remand hearing. The statutory requirement to "inform" was effectively fulfilled. The remand order reflected the CJM's satisfaction regarding the necessity of the remand, after hearing both sides. The procedural requirements for judicial endorsement were duly met, as recognized in Vijay Madanlal Choudhary and Ors v. Union of India and Ors. 2022 SCC OnLine SC 929. The arrest was effected within a reasonable time frame, adhering to the 24-hour timeline mandated under law, as interpreted in Ram Kishor Arora v. Enforcement Directorate, (2024) 7 SCC 599. The procedural standards under GST laws were met, and any typographical errors in documentation were incidental and did not undermine the validity of the arrest or remand proceedings. ....
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....Act does not require reasons to be recorded in the arrest order itself, as long as they are documented in the case file. This judgment, subsequently affirmed by the Supreme Court, holds that procedural compliance under Section 69 does not mirror the requirements of the CrPC or PMLA. 17.4 Counsel also emphasized that the respondent strictly adhered to procedural safeguards outlined by the CBIC in its Instruction No. 2/2022-23 dated 17th August 2022, which was followed during the petitioner's arrest. In any event, it was argued by counsel for respondent that, as per clauses 4 and 5 of the CBIC circular dated 5th November 2019, which are extracted as under, any omission in generating DIN could be regularised subsequently. 4. The Board also directs that any specified communication which does not bear the electronically generated DIN and is not covered by the exceptions mentioned in para 3 above, shall be treated as invalid and shall be deemed to have never been issued. 5. Any communication issued without an electronically generated DIN in the exigencies mentioned in para 3 above shall be regularized within 15 working days of its issuance, by: (i) obtaining....
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....ime of arrest. Section 69 (1), CGST Act requires the Commissioner or the authorized officer to form reasons based on material available on record, but it does not obligate the provision of such reasons to the arrestee. The assertion that the application lacks specific references to 'reasons to believe' is devoid of merit, as the application comprehensively reflects the evidence substantiating a prima facie case against the petitioner. 18.3 It was argued that the petitioner's reliance on cases such as Arvind Kejriwal v. Directorate of Enforcement, 2024 INSC 512 and V. Senthil Balaji v. State, 2023 SCC OnLine SC 934 is misplaced. While these decisions underscore the necessity of 'reasons to believe' being based on material evidence, they do not stipulate that such reasons must be disclosed to the arrestee. The statutory framework of the CGST Act is distinct from other fiscal statutes and does not necessitate disclosure to the accused. Judicial review is permissible to ascertain the existence of reasons, and due procedural compliance has been demonstrated in the present case. 18.4 Counsel contended that the authorization for arrest under Section 69 (1), CGST Act was not mechanic....
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....rt's jurisdiction is wider. 18.8 Counsel for respondents concluded that GST law does not impose 'twin conditions' as under UAPA or PMLA; instead, it necessitates the officer's subjective and objective satisfaction with the reasons for arrest. The distinction between 'reasons' and 'grounds' is well-recognised in tax jurisprudence, and the procedural compliance in this case aligns with the statutory framework under the CGST Act. The submissions categorically establish the petitioner's culpability and the fulfilment of statutory requirements under Section 132 (1), CGST Act. The allegations challenging the legality of the proceedings are, therefore, devoid of merit. Analysis 19. The petitioner essentially challenges petitioner's detention through 28th and 29th November 2024 and arrest at 0100 hours on 30th November 2024 by the respondent agency, who is responsible for prosecuting offences under the CGST Act. 20. The offences alleged to have been committed by the petitioner under Section 132 (1) (c), CGST Act are punishable under Section 132(2)(i) or (ii), CGST Act. The arrest was made under Section 69, CGST Act. 21. For ease of reference, the relevant provisions are extr....
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....ments or furnishes any false information with an intention to evade payment of tax due under this Act; (g) obstructs or prevents any officer in the discharge of his duties under this Act; (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (j) tampers with or destroys any material evidence or documents; (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or (l) attempts to commit, or abets the commission of any of the offences mentioned....
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....mo. Further, they contend that the grounds of arrest form part of the remand application even though they were not captioned as "Grounds of Arrest". Essentially, they claim that the remand application had enough narration, as part of reasons to believe, that would effectively subsume the grounds for arrest. Not providing a specific caption would not be fatal to the arrest itself. On a query by the Court as to when the remand application was supplied to the accused, the response from the Agency was that it was handed over just before the remand hearing which was scheduled on 30th November 2024 before the Magistrate. 25. What can, therefore, be gleaned from the above is that firstly, petitioner was orally informed about the grounds of arrest at the time of serving him the Arrest Memo; secondly, the nature, scope, and expanse of that information is not documented in any form or manner; thirdly, no written grounds of arrest were given at the stage of the arrest nor prior to the remand; and fourthly, the remand application was handed over just prior to the Court hearing, which did not have specifically stated 'grounds of arrest'. 26. These facts and circumstances, therefore, have ....
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....or release, that there are reasonable grounds to believe that the arrested person is not guilty of the offence and, secondly, that he is not likely to commit any offence while on bail. To meet this requirement, it would be essential for the arrested person to be aware of the grounds on which the authorised officer arrested him/her under Section 19 and the basis for the officer's "reason to believe" that he/she is guilty of an offence punishable under the 2002 Act. It is only if the arrested person has knowledge of these facts that he/she would be in a position to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. Therefore, communication of the grounds of arrest, as mandated by Article 22 (1) of the Constitution and Section 19 PMLA, is meant to serve this higher purpose and must be given due importance. ... 42. That being so, there is no valid reason as to why a copy of such written grounds of arrest should not be furnished to the arrested person as a matter of course and without exception. There are two primary reasons as to why this would be the advisable co....
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....l remedies. More so, as a person who has just been arrested would not be in a calm and collected frame of mind and may be utterly incapable of remembering the contents of the grounds of arrest read by or read out to him/her. The very purpose of this constitutional and statutory protection would be rendered nugatory by permitting the authorities concerned to merely read out or permit reading of the grounds of arrest, irrespective of their length and detail, and claim due compliance with the constitutional requirement under Article 22 (1) and the statutory mandate under Section 19 (1) PMLA. 45. On the above analysis, to give true meaning and purpose to the constitutional and the statutory mandate of Section 19 (1) PMLA of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception. The decisions of the Delhi High Court in Moin Akhtar Qureshi [Moin Akhtar Qureshi v. Union of India, 2017 SCC OnLine Del 12108] and the Bombay High Court in Chhagan Chandrakant Bhujbal [Chhagan Chandrakant Bhujbal v. Union of Indi....
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....would tantamount to diluting the sanctity of the fundamental right guaranteed under Article 22 (1) of the Constitution of India. ... 22. The right to be informed about the grounds of arrest flows from Article 22 (1) of the Constitution of India and any infringement of this fundamental right would vitiate the process of arrest and remand. Mere fact that a charge sheet has been filed in the matter, would not validate the illegality and the unconstitutionality committed at the time of arresting the accused and the grant of initial police custody remand to the accused. ... 29. The language used in Article 22 (1) and Article 22(5) of the Constitution of India regarding the communication of the grounds is exactly the identical. Neither of the constitutional provisions require that the 'grounds' of "arrest" or "detention", as the case may be, must be communicated in writing. Thus, interpretation to this important facet of the fundamental right as made by the Constitution Bench while examining the scope of Article 22(5) of the Constitution of India would ipso facto apply to Article 22 (1) of the Constitution of India insofar the requirement to communicat....
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....uthorised to arrest the said person 'shall' inform such a person of the grounds of arrest and produce him before a Magistrate within 24 hours. Information, as held by the Supreme Court in Pankaj Bansal (supra) and subsequently affirmed in Prabir Purkayastha (supra) and Arvind Kejriwal (supra), must be meaningful and in writing. 35. Applying these to the facts of the case, it is quite clear, as noted above, that grounds of arrest were not available in writing, were not furnished at the time of arrest to the arrestee, nor at the stage of furnishing the remand application. 36. The argument offered by respondent agency, that remand application itself subsumed the grounds of arrest, is only a post-facto interpretation/explanation, and in the opinion of the Court, is unmerited. 37. The communication to the arrestee, as per the Supreme Court, must be clear, categorical, and meaningful, and there is no reason as to why written grounds of arrest could not be given, particularly since, as per the prosecution, petitioner had been interrogated for two days prior to the arrest on the intervening night of 29th November 2024 and 30th November 2024. 38. Despite such categorical enuncia....
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....me back again for further interrogation on 29th November 2024. 44. Aside from the respective contentions regarding detention for the two days, what is very significant, and disturbing is the charade that seems to have been carried out in issuance of summons to petitioner. The first summons issued under Section 70 of the CGST Act, which this Court has perused, is signed by the Superintendent/Appraiser/Senior Intelligence Officer on 27th November, 2024. It demands the appearance of the petitioner on 28th October 2024 at 1730 hours at DGGI, DZU, Dwarka Office. However, the DIN generation time, as per the online system, shows the generation at 21:55:20 hours on 28th November 2024, i.e. about 5 hours after the petitioner was expected to have appeared before the agency. CBIC circular dated 05th November 2019 directed that no search authorization, summons or Arrest Memo shall be communicated/issued to a taxpayer or any other person without a computer-generated DIN, which would be quoted prominently in the body of communication, hosted on an online portal cbicddm.gov.in. Having used the DIN on the first summons to elicit the generation time, petitioner contends that the summons never ex....
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....t to the concerned Jail Superintendent for information and necessary compliance. 53. Needless to state, this Court has undertaken a judicial review of the arrest and not a merits review. Nothing stated above is an opinion on the merits of the respondent agency's case against the petitioner. 54. Judgement be uploaded on the website of this Court. ============= Document 1 AADHAAR-661893001919 File No-DGGI/INV/GST/2974-2024-Gr.F CBIC-DIN-202411DNN0000000D036 ARREST MEMO (To be prepared in duplicate) [under Section 69 of the Central Goods and Services Tax Act, 2017] Whereas, the principal Commissioner/Commissioner, Dinesh Kumar Gupta has reasons to believe that you, Kshitij Ghildiyal, Director of M/s Weee Pro Resource Recovery Solutions Pvt. Ltd., age about 35 years, son/ daughter of Shri B. P. Suman and address Flat No. 702, Tower 6, Unitech Horizon, Plot No. 6, Sector pi-2, Greater Noida, Kasana, Gautam Buddha Nagar, UP - 201310 have commited an offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub section (1) of section 132 of the Central Goods and Service Tax, 2017 which is punishab....