TaxTMI 
TaxTMI 
2025 (3) TMI 1022
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....ds and Services Tax Act, 2017 (Annexure A). 1.1. Furthermore, the petitioner seeks the consequential relief of quashing the order of remand dated 31.01.2025 (Annexure B, pp. 67-69) passed by the Special Court in Crime No. 03/2025, as well as quashing the application for remand of the arrestee-petitioner dated 31.01.2025 (Annexure A). 1.2. The petitioner, as of the date of this order, has been in judicial custody for over 40 days pursuant to the impugned remand order of the Learned Special Court. 2. The petitioner challenges his arrest on the grounds that there was non-compliance with the statutory requirement for the issuance of a notice under Section 35 (3) of BNSS, 2023 (i.e., the Section 41-A notice under CrPC, 1973). 3. The factual matrix of the case is as follows: The petitioner, a proprietor of two entities-M/s. JMG Enterprises/Heena Enterprises (bearing GSTIN No. 27AQMPG1606J1ZV) and M/s. Heena International-is alleged by the respondent to have raised fake invoices for purported supplies of goods and services in order to avail inadmissible input tax credit (ITC) without actually supplying the Fast Moving Consumer Goods (FMCG). This scheme purportedly resulted in ....
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....ught the relief of quashing the remand order under this Court's inherent powers. 5.2. In addition, the learned Senior Counsel contended that the petitioner's arrest by the respondent also violates Section 74 (1) of the CGST Act, 2017, which mandates that a notice be issued by the proper officer at least six months before the expiry of five years from the date of wrongful availment of ITC, directing such assessee to show cause as to why the specified amount should not be paid. In support, reliance is placed on: 1. Arnesh Kumar v. State of Bihar, (2014) 8 SCC 273; 2. Sandeep Goyal v. Union of India, DHC; 3. Satender Kumar v. CBI, (2022) 10 SCC 51; 4. Sanjay Chandra v. CBI, (2012) 1 SCC 40; 5. P. Chidambram v. ED, (2020) 13 SCC 791; and 6. Sourabh Agarwal v. Union of India, High Court of Chhattisgarh, MCRC No. 2729, 2023. 6. Per contra, Sri Madhu N. Rao, learned counsel for the respondent - DG GST Intelligence, argued that the instant petition is not maintainable under Section 528 of BNSS, 2023 (i.e., Section 482 of CrPC, 1973), and further contended that a review of the memorandum of the petition fails to reveal any groun....
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....atorily communicated to the arrestee to enable him to contest the arrest effectively. Consequently, since the petitioner had 'sufficient knowledge' regarding the investigation into the wrongful availment of ITC (as evidenced by the prior issuance of a summons under Section 70 of the CGST Act), the requirement for a separate notice of appearance under BNSS need not be strictly enforced. Furthermore, the learned counsel argued that the petitioner cannot contend that his arrest was vitiated on account of non-issuance of a notice of appearance under Section 35 (5) of BNSS, given that the Sanhita does not apply to criminal proceedings arising from self-contained statutes such as the CGST Act, 2017. 6.3. Additionally, the learned counsel for the respondent produced the arrest memo dated 05.03.2025 and reiterated the gravity of the alleged offences committed by the petitioner, arguing that continued incarceration is necessary to conclude the investigation. In support, reliance was placed on: 1. Guidelines for Arrest and Bail in Relation to Offences Punishable under the GST Act, 2027 - Instruction No. 2 of 2023; 2. Instruction No. 01/2025-GST; 3. Radhika Ag....
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....sistently endorsed by the Apex Court in recent cases (including in the cases of Association of Democratic Reforms and Anr. v. Union of India and Ors., 2024 INSC 113; Arvind Kejriwal v. Directorate of Enforcement, 2024 INSC 512; and Radhika Agarwal v. Union of India, 2025 INSC 272), requires that the justifiability of any state action curtailing liberty be examined against the following parameters: (i) Whether the impugned state action serves a legitimate aim or purpose; (ii) Whether the restrictions imposed have a rational nexus with the stated aim and objective; (iii) Whether less restrictive, yet equally effective, alternatives were available to minimize the impairment of liberty; and (iv) Whether an appropriate balance is struck between the individual's liberty and the pursuit of the public purpose. 9.1. It is needless to state that any determination based on the above factors must be made after a careful consideration of the unique facts and circumstances of the case, with due regard to the need for a judicious exercise of discretion. 9.2. As regards the grant of bail, it is pertinent to advert to the following judicial pronouncements:....
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....nied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the court, whether before or after conviction, to assure that he will submit to the jurisdiction of the court and be in attendance thereon whenever his presence is required. (emphasis supplied) 9.2.3. In the case of Satender Kumar Antil v. CBI (2022 Live Law (SC) 577), the Apex Court observed in respect of grant of bail to persons accused of offences punishable with less than seven years of imprisonment that "one would expect a better exercise of discretion on the part of the court in favour of the accused". 10. In addressing the maintainability of the instant petition under Section 528 of BNSS (or Section 482 of the CrPC, 1973), it is necessary to determine whether the provisions of BNSS, 2023 (or the CrPC, 1973) apply to criminal proceedings arising under the CGST Act, 2017. A perusal of Sections 4 and 5 of the BNSS, 2017-which deals with the trial of offen....
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....ed in matters covered by the specific provisions of the Sanhita. (See, LV Jadhav v. Shankarrao AIR 1983 SC 1219; Arun Shankar Shukla v. State of UP AIR 1999 SC 2554; and Madhu Limaye v. State of Maharashtra AIR 1978 SC 47.) 13.2. The inherent powers may be invoked in three circumstances: (a) to give effect to any order under this Code; (b) to prevent the abuse of the process of any court; and (c) to otherwise secure the ends of justice. The power under Section 528 of BNSS is meant to achieve real and substantial justice-particularly where the court is of the opinion that non-interference would result in a failure of justice, where grave injustice has occurred and must be remedied, or where the required statutory provision has not been complied with. (See, Sanapareddy Maheedhar Seshagiri v. State of Andhra Pradesh AIR 2008 SC 787; Mast Ram v. Smt Shanti Devi 2002 CrLJ 1616 (1617) HP.) 13.3. The inherent powers of a High Court are not negated by any overlap with the judicial review powers conferred under Articles 226 and 227. Writs are extraordinary constitutional remedies and operate independently of the statutory right under Section 528 to addres....
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....hat Section 35 (3) of BNSS, 2023 mandates that in all cases where an arrest is not required under Section 35 (1) of BNSS (Section 41 of CrPC), the notice of appearance must be issued to any person against whom a complaint has been made or against whom there is a reasonable suspicion of having committed a cognizable offence. The learned Senior Counsel further argued that non-compliance with this requirement, as in the case at hand, vitiates the arrest of the petitioner. Section 35 of BNSS, 2023 which deals with the arrest of persons without a warrant, is reproduced below: 35. (1) Any police officer may, without an order from a Magistrate and without a warrant, arrest any person: (a) who commits, in the presence of a police officer, a cognizable offence; (b) against whom a reasonable complaint has been made, or credible information has been received, or there exists reasonable suspicion that he has committed a cognizable offence punishable with imprisonment for a term that may be less than seven years or up to seven years (with or without fine), if the following conditions are satisfied: (i) the police officer has reason to believe on the basis of ....
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.... otherwise; or (i) who, being a released convict, commits a breach of any rule made under sub-section (5) of Section 394; or (j) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made, and it appears from the requisition that the person might lawfully be arrested without a warrant by the officer who issued the requisition. (2) Subject to the provisions of Section 39, no person involved in a non-cognizable offence, or against whom a complaint has been made, or credible information has been received, or where there exists reasonable suspicion of such involvement, shall be arrested except under a warrant or an order of a Magistrate. (3) The police officer shall, in all cases where the arrest of a person is not required under sub-section (1), issue a notice directing the person-against whom a reasonable complaint has been made, or credible information has been received, or where there exists reasonable suspicion that he has committed a cognizable offence-to appear before....
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....fences under the CGST Act, the Apex Court observed at paragraphs no. (3) and (5) as follows: "2. As different High Courts of the country have taken divergent views on this matter, we are of the view that the position in law should be clarified by this Court. Hence, the notice... 3. As the respondent-accused have been granted the privilege of pre-arrest bail by the High Court in the impugned orders [Sapna Jain v. Union of India, 2019 SCC OnLine Bom 13064; Chandraprakash Labhchand Sanklecha v. Union of India, 2018 SCC OnLine Bom 21184], at this stage, we are not inclined to interfere with the same. However, we make it clear that High Courts, when entertaining such requests in the future, will bear in mind that this Court, by its order dated 27-5-2019 in P.V. Ramana Reddy v. Union of India [P.V. Ramana Reddy v. Union of India, (2021) 2 SCC 784], had dismissed the special leave petition filed against the judgment and order [P.V. Ramana Reddy v. Union of India, 2019 SCC OnLine TS 3332] of the Telangana High Court in a similar matter, wherein the Telangana High Court took a view contrary to that expressed in the present case. Having heard the learned counsel for the pe....
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....earlier on 02.01.2025 to tender evidence in the judicial proceeding of inquiry opened by the respondent in respect of the same allegations of wrongful availment of ITC. 20.3. The said submission, however, cannot be countenanced in light of the fact that summons under Section 70 of the CGST Act can be issued to any person whose attendance is necessary in the conduct of the inquiry, and all persons so appearing are statutorily bound to "state the truth during examination or ... as may be required". Furthermore, sub-section (2) of the Section 70 of the said Act deems every such inquiry conducted under sub-section (1) of Section 70 of the Act to be a judicial proceeding, within the meaning of Section 193 of IPC, 1860 (which deals with punishment for false evidence) and Section 228 of IPC, 1860 (which deals with intentional insult or interruption to public servant sitting in Judicial Proceeding). 20.4. Furthermore, the the three-Judge Bench of the Apex Court in the case of Vijay Madanlal Choudhary v Union of India and Ors, 2022 INSC 757, has elucidated the distinction between the stages of inquiry deemed to be judicial proceeding, and an investigation under the PML Act, 2002, wher....
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....nce of the notice of appearance under Section 35 (3) of BNSS, 2023 (or section 41-A(1) of CrPC, 1973). 21. However, this Court on numerous occasions has opined that arrest of persons for offence of economic nature, and punishable with imprisonment of not more than seven years, must be preceded with an notice of appearance under Section 35 (3) BNSS, 2023 (Section 41-A of CrPC, 1973), and that an arrest must be made only upon failure of the person to comply with the terms of the notice, as stipulated under sub-section (6) of section 35 of BNSS, 2023 (Section 41-A(4) of CrPC, 1973). 22. A further perusal of the decision of the High Court of Telangana in PV Ramana Reddy (supra), reveals affirmation of the principle of mandatory issue of notice against accusations of commission of offences under CGST Act. Paragraph no. (61) of the judgment and order reads thus - "In view of the above, despite our finding that the writ petitions are maintainable and despite out finding that the protection under Sections 41 and 41-A of Cr.P.C., may be available to persons said to have committed cognizable and non-bailable offences under this Act and despite our finding that there are incong....