TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 220
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....ad Partapur, Meerut, 250205. Shri Somil Agarwal is partner in M/s Harish Chemical Products (09AAGFH4793K1ZS) and he is the key person who handles all the sale and purchase related activities of the firm. During search at residential premise of Sh. Somil Agarwal, various incriminating documents were resumed from his possession. In these resumed records, details of the cash transactions of M/s Harish Chemical Product were also found recorded. As well as, two mobile phones and laptop were also resumed from possession of Sh. Somil Agarwal. Forensic examination of these resumed mobile phones and laptop were conducted by forensic expert. As well as, the documents resumed from the possession of Sh. Somil Agarwal were analyzed and gone through." As outcome of this investigation, it has emerged that M/s Harish Chemical Products had procured AGU in place of TGU fraudulently. They had procured such a huge amount of AGU in violation of various provisions. As well as, M/s Harish Chemical Product had wrongly availed and utilized ITC amounting to Rs. 9,32,05,807/- and not paid GST amounting to Rs. 57,82,089/- in respect of supply to some of its recipients. Shri Somil Agarwal was beneficiating by ....
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....ry to the settled proposition of law. The applicant submits that whatever goods have been received or supplied the same have been supplied and received on proper cover of invoices, e-way bill, and transport documents. The Input Tax Credit has been availed only after confirmation of GSTN portal of department. The applicant can't take single amount of Input Tax Credit without approval of GSTN portal of respondent department. Being so, allegation of wrong availment of Input Tax Credit as much as passing of wrong ITC is completely baseless and without any basis. The applicant fully cooperated to the respondent department during the course of investigation and will cooperate in future too. The aforesaid both documents filed by department are not supported with any evidence against the applicant and as such the arrest of the applicant is completely unjustified and against the basic tenets of the established law. That applicant has been arrested without ascertaining the liability of firm of the applicant and without following the procedure prescribed in the Act in terms of Section 73/74, the arrest of the applicant is not only illegal but also against the law settled in regard to Sect....
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.... 26.06.25 conducted forensic examination of the electronic devices resumed from the residential premises of applicant/accused on 24.06.2025. As per panchnama dated 25.06.2025 and 26.06.2025 the forensic was started on 25.06.2025 at 9:30 hrs and it was over at around 2:00 hrs on 26.06.25. It is very important to mention that as per panchnama dated 25.06.25 and 26.06.25 two Panchas namely Sh. Amit and Sh. Gurmeet Singh reached Respondent (DGGI) office at 9:15 hrs. and they along with Sh. Somil Agarwal (Applicant), DGGI officers namely Sh. Gaurav Kumar, SIO and Sh. Sumit Tyagi, IO along with forensic analyst Sh. Vipul Saxena sat together and unsealed, the seized devices. Thereafter, the procedure of data retrieval from the devices was started at 9:30 Hrs. It is very intriguing that applicant Sh. Somil Agarwal was directed to appear before the Respondent officer on 25.06.2025 at 10:30 am as per the summon dated 24.06.2025. However, on 25.06.2025 when panchas visited the Respondent office on 25.06.2025 at 9:15 hrs the applicant was already present there. It is strongly submitted that the applicant was illegally detained by the Respondent officers on 24.06.2025 itself and he was kept in....
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....t case is completely false, fabricated, and wrong. He has wrongly been implicated in the present case. The department invoked section 132(1) (a) and (c) of the CGST Act, 2017 without appreciating that the same cannot be invoked against the present applicant. The sub-sections are: invoked without appreciating the fact that the basic ingredients of the sub-section do not apply in the case of the present applicant. Section 132 (1) (c) reads as under:- (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; (c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit or refund of tax A bare perusal of the aforesaid sub-section suggests that the present applicant has, not supplied any good or service without issue of invoice. For sub-clause 132 (1) (c) it is submitted that he has not taken Input tax credit wrongly being so there is no question arises to invoke the present against the applicant. The respondent has not appreciated that the applicant fully cooperated with the respondent department dur....
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....st where the commissioner has "Reason to believe" for violation of any provision related to the offense under Section 132 of the CGST Act, 2017. This "Reason to believe" is not an empty formality. The reason has to be based upon sound legal principal backed by a good amount of evidence in form of documentaries and other evidence. The respondent department failed to demonstrate a reason to believe in the form of documentary and other evidence in the present case. The terms "Reason to believe" has been settled by Hon'ble Apex court in plethora of judgments. The applicant relies on following judgments in this regard :- (i) Sheonath Singh' Vs Appellate ACIT [1972, SCC 234] (ii) Pratap Singh (DR) Vs Director of enforcement [1985 (3) SCC), Further the same has also been settled by Hon'ble High Court in following matters: (i) Jagdish Arora Vs UOI [2020 (41) GSTL 3 (MP)] (ii) Bindal Smelting Pvt Ltd Vs DGGI [2020 (34) GSTL 592 (P & H)] The respondent department arrested the present applicant under violation of the parameters of settled law of the Hon'ble Supreme Court in the matter of Amesh Kumar Vs State of Bihar. The Hon'ble Apex Court in the matter of A....
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....ble, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable". Admittedly in the présent case, no notice was issued in aforesaid sections and any coercive action under the threat of arrest is bad in law and liable to be set-aside. The proceedings under section 74 can be initiated within period of five years from the date wrongful availment of Input Tax Credit. The applicant submits that in the present case no assessment has been done. No notice has been issued. No hearing has been done. Being so, this arrest is nothing but illegal exercise of respondent department. The respondent department failed to appreciate that the section 132 of CGST Act, 2017 says "Commit" and department without proving that the applicant has committed the violation cannot proceed against him. The Hon'ble High Court judicature of Madras in the matter of Jayachandran Alloys (P) Ltd Vs Superintendent of GST Salem [ 2019 (25) GSTL 321 (Mad.)/ has held as under:- The use of words 'commits' make it more than amply clear that the act of committal of the offence is to be fixed first before punishment i....
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....hus no doubt in my mind that the Department intended to intimidate the petitioner with the possibility of punishment under 132 and this action is contrary to the scheme of the Act. While the activities of an assessee contrary to the scheme of the Act are liable to be addressed swiftly and effectively by the Department, (the statute in question being a revenue statute where strict interpretation is the norm), officials cannot be seen to be acting in excess of the authority vested in them under the statute. I am of the considered view that the power to punish set out in Section 132 of the Act would stand triggered only once it is established that an assessee has 'committed' an offence that has to necessarily be post-determination of the demand due from an assessee, that itself has to necessarily follow the process of an assessment. I draw support in this regard from the decision of the Division Bench of the Delhi High Court in the case of Make My Trip (India) (supra), as confirmed by the Supreme Court reiterating that such action, as in the present case, would amount amount to a violation of Constitutional titutional rights of the petitioner that cannot be countenanced. The....
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....cer. The offenses 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 are not penal in nature, but it is economic for the purpose of the legislation is to recover any amount, that may be due to the Government exchequer. The Hon'ble High Court of Punjab and Haryana at Chandigarh in the matter of Akhil Krihshn Maggu Vs DGGEI [2020 (32) GSTL 516 (P&H)] held that Power of arrest to be resorted in exceptional circumstances and with full circumspection. The relevant para of the judgment reads as under:- "Power of arrest should not be exercised at the whims and caprices of any officer or for the sake of recovery or terrorizing any businessman or create an atmosphere of fear, whereas it should be exercised in exceptional circumstances during investigation; which illustratively may be: (i) a person is involved in evasion of huge amount of tax and is having no permanent place of business, (ii) a person is not appearing in spite of repeated summons and is involved in huge amount of evasion of tax, (iii) a person is a habitual offender and he has been prosecuted or convicted on e....
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....ion are based on the documents i.e., GST returns / ITC credit availed which are already available in the records of the investigating agency. Thus, no purpose would be served by keeping the applicant in jail. It has been settled that authorities under the Goods and Service Tax doesn't possess unfiltered power to arrest and many Hon'ble High courts have even granted anticipatory bail even for the huge allegation of wrongful availment of the Input Tax Credit. Some of the judgment are as under:- i. Nitish Wadhwani Vs State of MP [2020 (41) GSLT 155 (MP) ii. Hanumanthappa, Pathera Vs DGGI, Bengluru [2020 (38) GSTL 447 (Kar). iii. Abhisek Modgil Vs State of UT Chandigarh [2020 (38) GSTL 437 (P.G. Bhaskar Rao Vs DGGI, New Delhi [2020 (37) GSTL 273 (Telangana)] It is humbly stated that the aforesaid allegations against the Applicant are absolutely false, arbitrary, and illegal and it is humbly submitted that the Applicant has nothing to do with the wrong doings/ illegal acts of others if at all they have committed any. The Department has arrested the applicant in complete violation of the law laid down by the Division Bench of the Hon'ble Delhi High Court in Make My....
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....n was intended or envisaged in the light of Section 132 of the CGST Act, the counter fairly stating that the provisions of Section 132 of the CGST Act were 'shown' to the Assessee. There is thus no doubt in my mind that the Department intended to intimidate the petitioner with the possibility of punishment under 132 and this action is contrary to the scheme of the Act. While the activities of an assesse contrav to the scheme of the Act are liable to be addressed swiftly and effectively by the Department, (the statute in question being a revenue statute where strict interpretation is the norm), officials cannot be seen to be acting in excess of the authority vested in them under the statue. I am of the considered view that the power to punish set out in Section 132 of the Act would stand triggered only once it is established that an assesse has 'committed' an offence that has to necessarily be post-determination of the demand due from an assesse, that itself has to necessarily follow the process of an assessment. I draw support in this regard from the decision of the Division Bench of the Delhi High Court in the case of Make My Trip (India) (supra), as confirmed by....
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.... parents, wife and a daughter who are solely depend on him and presently not well due to trauma occurred. The family/parents of the applicant require love, affection and care of applicant at their advance age. The applicant/accused is a person of clear credential and has never been accused or wanted in any criminal investigation or proceedings pending in any court of law. The accused applicant is ready to furnish the reliable sureties to the satisfaction of the court and there is no apprehension to flee from the judicial proceedings and tempering with the evidences. The applicant is ready to abide by any condition imposed by this Hon'ble court. The applicant/accused further undertakes to appear before this Hon'ble court as and when required. The applicant/accused undertakes to cooperate investigation as and when required by the investigating agency. The applicant/accused is also ready to comply with any condition as put forth by this Hon'ble court as a condition of granting bail. The applicant/accused further undertakes to appear before this Hon'ble court as and when required. After judicial remand, the respondent department has nothing to investigate. In fact, they....
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.... Haryana at Chandigarh in case of Sanjay Dhingra Vs DGGI reported as Criminal Misc.-M-50256 of 2019 vide their order dated 23.01.2020 has rejected the bail application of the accused quoting the decision rendered by Hon'ble Supreme Court in Nimmagadda Prasad versus Central Bureau of SCC Investigation, 2013(3) (Criminal) 575, wherein it has been held as under:- "28. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences, affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country." The case is regarding the legal recourse of the country wherein a person has deliberately violated a legal provision with wilful intent and full planning. Therefore, the submission of the applicants that they have deep roots in the society and undertake to abide by all such conditions that may be imposed by this Hon'ble Court cannot be correlated with the gravity of their involvement in the case. It is pertinent to mentio....
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....roducts were conducted on 24.06.2025. During search proceedings at residence premise of the applicant accused person Somil Agarwal, various incriminating documents viz. hand-written ledgers related to cash-receipt and cash payment were resumed. On tabulation of all these cash-receipt and cash-payment entries, it was gathered that there are entries related to cash-transaction to the tune of Rs. 70 Crore (approx.). During search proceedings at his residence, two mobile phones and one laptop were also resumed. According to the concerned department, Forensic examination of these resumed mobile phones and laptop were conducted by forensic expert. As well as, the documents resumed from the possession of Sh. Somil Agarwal were analyzed and gone through by them. After the investigation, the concerned department noticed that M/S Harish Chemical Products had procured AGU in place of TGU fraudulently. They had procured such a huge amount of AGU in violation of various provisions. As well as, M/S Harish Chemical Product had wrongly availed and utilized ITC amounting to Rs. 9,32,05,807/- and not paid GST amounting to Rs. 57,82,089/- in respect of supply to some of its recipients. It is also evi....