TaxTMI 
TaxTMI 
2025 (7) TMI 1386
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.... ROAD, SIKANDRABAD, Bulandshahr, Uttar Pradesh, 203205 engaged in availing and passing on of fraudulent ITC on the strength of bogus invoices issued without supply of concomitant goods. Based on the above information, Search was conducted at the address given by Shri Azharuddin in his records on 12.04.2022, searches were also conducted at the declared Principal Place of Business of his major suppliers i.e. M/s Allied Decorators (GSTIN 09APIPA9191F1ZQ), M/s Golden Corporation (GSTIN 09NKCPS1782Q1ZZ), M/s S Rose Trading Company (GSTIN 09BGYPH6111C1ZD, M/s Victory Sales Corporation (GSTIN 09AIHPU8131F1ZZ) and M/s Shine Enterprises (GSTIN 090TFPS0023D1ZO) on 12.06.2025 and all were found non-existent. Search was conducted at declared Principal Place of Business of M/s Star Enterprises (09NUFPS7770R1Z2) on 07.07.2023 and was found non-existent. Search was also conducted at the declared Principal Place of Business of M/s Asian Traders (GSTIN 09EHEPA1345B1ZZ) on 12.04.2022 and it was found that it was a closed shop on which a small banner bearing name and GSTIN of the firm was found but no body was found there. Search was also conducted at the declared Principal Place of Business of M/s S....
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....icant is a law abiding citizen and has no prior criminal record. The applicant has been operating his business under the supervision of the department and has acquired the GST registration after due compliance of the all the regulatory requirements. A copy of the GST registration certificate has been annexed herewith as Annexure-A2. The applicant is a young entrepreneur who has not violated any provision of the GST law. That the present application is being made by the applicant who has been illegally arrested by the officers of CGST, Gautam Buddha Nagar after being detained for much more than 24 hours. The applicant was formally arrested on 13.06.2025 at 6:35PM by the officers of the respondent department at CGST, Gautam Buddha Nagar and was produced before the Ld. Duty MM on 14.06.2025 at around 5:00 PM for his judicial remand for 14 days. A copy of the first remand order dated 14.06.2025 has been annexed herewith as Annexure-A3. It is a non disputed fact that the applicant was summoned by an officer of the department to present himself before him on 12.06.2025 at 11:00 AM vide summon dated 11.06.2025. A copy of the summon dated 11.06.2025 issued to the applicant has been annexed....
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....n. It is pertinent to mention that the applicant was detained for more than 48 hours (2 days) before he was presented before the Ld Duty MM for remand on 14.06.2024. That it is possible that the department might have taken false and self implicating statements of the applicant under threat and coercion and therefore the same has been duly retracted before the Ld. Chief Judicial Magistrate. That a copy of the retraction submitted before the Ld. Chief Judicial Magistrate has been annexed herewith as Annexure-A6. The remand application alleged the accused to be instrumental in availing fraudulent ITC amounting to Rs. 23.48 crores on the strength of bogus invoices without concomitant supply of goods. That the allegation has been placed whimsically and without considering the fact that the alleged non-existent firms where very much existent when the business transactions with the applicant firm has taken place. The applicant has duly received the goods from his suppliers and has made due payments against proper invoices. That having stated that, the input tax credit has been taken as per Section 16 of the CGST Act, 2017. The copy of the invoices along with the relevant receipts are anne....
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....nt to be fraudulently passing on inadmissible input tax credit to a non existent firm, namely Ambashakti Industries Ltd.. That in this regard it is pertinent to mention that the department is erroneously and arbitrarily implicating the applicant as not even a single piece of evidence or any record or any data could be furnished by the department. That it is most respectfully submitted that such act of the department is nothing but a futile attempt to substantiate their baseless case against the applicant. A copy of the ground of arrest has been annexed herewith as Annexure-A8. It is by now a well established principle of the GST Law that buyer cannot be penalised on the default of his suppliers. That the Hon'ble Delhi High Court has also held that input tax credit cannot be denied on the premise that the registration of the suppliers has been retrospectively cancelled. It is pertinent to mention that the applicant has entered into business relations with the alleged fake suppliers prior to their registration cancellation. That it is most respectfully submitted that the applicant has entered into business transactions with the alleged non existent firms at the time when their re....
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....e 22(2) of the Indian Constitution clearly stipulates that no police officer (Respondent herein) shall detain in custody a person arrested without warrant for a longer period than 24 hours excluding the time of journey from the place of arrest of the Magistrate's Court, in absence of a special order of a Magistrate under Section 187. On plain reading of the aforesaid provision, it is evident that the period of 24 hours reckons from the time of detention and not from the time of arrest. Further, the period of detention starts the moment, accused (applicant herein) stands apprehended by the Police and the personal liberty of the said accused gets restrained under the confines of the Police. In the instant case, the applicant was detained by the officers of the respondent department at the very moment when he presented himself before the officers of CGST Commissionerate, Gautam Buddha Nagar, and his mobile phone was taken from him and his personal liberty was restrained .i.e. from around 11:00 AM of 12.06.2025. It is evident that on 12.06.2025, at about 11:00 AM, the applicant was taken into custody and even after detaining for more than 24 hours, he was not allowed to contact ....
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....ilty of the offence, and to furnish the reasons to the arrestee. This ensures an element of fairness and accountability. It is most respectfully submitted that the respondent's disregard to the law established further expose their wilful misconduct and premeditated intent to unlawfully detain the applicant. The applicant's detention began at around 11:00 AM on 12.06.2025 and he was produced before the Magistrate after an expiry of more than 48 hours. That this delay in itself violates the legal requirement to produce a detainee before a magistrate within 24 hours, rendering the detention prima facie illegal. The Section 58 of the Bhartiya Nagarik Suraksha Sanhita, 2024 read with Article 22(2) of the Indian Constitution clearly stipulates that no police officer (Respondent herein) shall detain in custody a person arrested without warrant for a longer period than under all circumstances of the case is reasonable and such period shall not, in absence of a special order of a Magistrate under Section 187 exceed twenty four hours exclusive of the time necessary for the journey from the place of arrest of the Magistrate's Court. On plain reading of the aforesaid provision, it ....
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....he remand application failed to place on record a single concrete evidence which can even prima facie implicate the applicant in the present case and hence the respondent department failed to establish a single ground which justifies the continued incarceration of the applicant. That it has time and again been established by the Hon'ble Apex Court that jail is exception and bail is rule. In this regard it is stated that all the documents in the GST System are portal based and are in whole and sole control of the respondent department. That having stated that no question of tampering with the evidences must arise. That also the department has extensively investigated the issue by now but could not substantiate the allegation against the applicant in any way. That admittedly all documents and electronic devices including printers and mobile phones of the accused/applicant have already been seized by the department. The offences under the CGST Act are compoundable under Section 138 of the CGST Act and hence, the arrest is wholly unnecessary. The object and purpose of the CGST Act is not penal in nature, but it is economic for the purpose of legislation being to recover any amount,....
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....authority is bound by procedure laid down by the statute. If a statute provides for a thing to be done in a certain manner, that must be followed. Reliance is placed on Davinder Singh v. State of Punjab v. State of Punjab, (2008) 1 SCC 728, Hussain Ghadially Vs. M.H.A. Shaikh & Ors. v. State of Gujarat, 2014 (8) SCC 425. There is absolutely no likelihood of the Applicant absconding and/or tampering with the evidence or fleeing from the justice, which are the paramount considerations for the grant of bail. That the Hon'ble Supreme Court of India in the case of Gurcharan Singh and Ors. Vs. State AIR 1978 SC observed that two paramount considerations, while considering petition for grant of bail in non-bailable offence, apart from the seriousness of the offence, are the likelihood of the accused fleeing from justice and his tampering with the prosecution witnesses. The applicant has not been alleged with similar kind of allegations in past. The applicant has clean antecedent and has not convicted in similar kind of other case in past and having deep root in society. The applicant having family and they are residing in Sikandarabad, Dist-Bulandshahr being so there is no apprehensio....
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....s and when required. After the remand of the applicant, the respondent department has nothing more to interrogate. In fact no recent physical interrogation of the accused has been sought hence it is clear that no more custodial interrogation of the applicant is required by the respondent and hence the applicant is liable to be released on bail. It is stated that the arrest of the applicant and his continued incarceration is gross-misuse of power given to the authority. The applicant is languishing in custody since long and respondent has already completed the investigation. The applicant is ready and willing to accept any other conditions as may be imposed by the Court or the police in connection with the case. Hence, they prayed for bail. 5. Per-contra, Shri Lakshay Kumar Singh, learned counsel for the C.G.S.T. Department inter alia submitted that M/s NEW GLOBAL SCRAP TRADERS (herein referred to as M/s NGST), having declared Principal Place of business at 0, near Radhika garden, Gulaothi road, Sikandrabad, Bulandshahr, Uttar Pradesh, 203205 is registered with GST department having GSTIN :09AIVPA9027C126. As per GST registration, the said company is engaged in trading of various....
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.... firm M/s New Global Scrap Traders(GSTIN-09AIVPA9027C126) he stated that Purchase Orders were placed orally. No written communication is done for placing the purchase orders. In his statements dated 12.06.2025 and 13.06.2025 he confessed that in respect of these 09 fake/non-existent firms, he had taken invoices only without any accompanying goods, for availment and passed on of fake ITC. In this regard, answers of question No. 3,4, 5 and 6 of statement dated 13.06.2025 may be referred. Thus, the illegal availment and utilization of input tax credit by Shri Azharuddin, Proprietor of M/s NEW GLOBAL SCRAP TRADERS was quantified to be of more than rupees five crore and accordingly the offences committed by Shri Azharuddin falls under under clause (c) of sub-section (1) of Section 132 ibid and punishable under clause (i) being a cognizable and non-bailable offence with imprisonment for a term which may extend to five years and with fine. Therefore, he was placed under arrest on 13.06.2024 under the provisions of Section 69 of CGST Act 2017. 6. Shri Lakshay Kumar relied on Ram Narain Popli vs CBI 2003 1 AD (Crl.) SC 253, it was observed as under :- "The cause of the community....
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....esses 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 accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not excepted, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt." In para no.45 of the order dated 10.08.2020 of the Single Judge of Delhi High Court in Malwinder Mohan Singh Vs. State of NCT of Delhi, which inter-alia reads as follows :- Economic offences are offences which corrodes the fabric of democracy and are committed with total disregard to the rights and interest of the nation and are committed by breach of trust and faith and are against national economy and national interest." Observing that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail, in ....
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.... the one hand and interest of the society to have a fair trial on the other hand. When the witnesses are not able to depose correctly in the court of law, it results in low rate of conviction and many times even hardened criminals escape the conviction. It shakes public confidence in the criminal justice-delivery system. It is this need for larger public interest to ensure that criminal justice-delivery system works efficiently, smoothly and in a fair manner that has to be given prime importance in such situations. After all, if there is a threat to fair trial because of intimidation of witnesses, etc., that would happen because of wrongdoing of the accused himself, and the consequences thereof, he has to suffer" "While considering the correctness of the order granting bail, the approach should be whether the order granting bail to the accused is vitiated by any serious infirmity, in which case, the High Court can certainly interfere with the exercise of discretion. The materials available on record prima facie indicating the involvement of the accused, possibility of accused tampering with witnesses and the gravity of the crime were not kept in view by the Sessions Court.....
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....09AIVPA9027C126. As per GST registration, the said company is engaged in trading of various types of scrap like iron scrap, plastic scrap etc. Shri Azharuddin s/o Late Shri Nawab Ahmed is proprietor of the company and looks after all day to day activities including sales, purchase and others and is responsible for all the tax compliance related to M/S NGST. M/S S Rose As per information, M/S NEW GLOBAL SCRAP TRADERS have wrongly availed and utilized Input Tax Credit on strength of invoices issued by some fake/non-existent firms without supply of goods/services. On analysing the GSTR-2As of M/S NEW GLOBAL SCRAP TRADERS nine firms namely M/S Allied decorators, M/s Sony enterprises, M/S Asian traders, M/S Golden corporation trading company, M/S Victory sales corporation, M/S Shine enterprises, M/S Dauji enterprises and M/S Star enterprises were found suspicious. The above said 09 supplier firms appeared to be fake/non-existent and passed ITC amounting to Rs. 23,47,68,801/- during F.Y. 2021-22, 2022-23 and 2023-24. Thereafter, The department conducted searches at registerd premise of the said company and their suppliers but all the firms mentioned above turned out to be fake. It is als....
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....ourt in this regard has time and again stressed upon the paramount importance of the established rule of producing an accused before the judicial magistrate at the earliest after his detention, extendable maximum upto 24 hours in exceptional situations but from the perusal of the material on record and according to the concerned department are evident that Statements of applicant accused person was recorded on 12.06.2025 and 13.06.2025 under Section 70 of the CGST Act, 2017 voluntarily and without any pressure. In-both the statements the applicant accused person admitted that he have given the above statements to the best of his knowledge, voluntarily and in full senses, without any pressure. The applicant accused person and his relative Shri Kamil were informed in writing about the Arrest and Grounds of arrest. The same was acknowledged by Shri Azharuddin and his relative shri Kamil. The Applicant accused person was arrested on 13.06.2025 at 06.35 PM vide Arrest Memo under DIN 20250654YD000000F980 and produced before the Hon'ble Court on 14.06.2024 at about 04.00 PM which is well within 24 hours from the arrest whereas before 13.06.2025, the applicant accused was called only f....