TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 384
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....of the inward supply chain and its corresponding suppliers, it has been found that some of the suppliers are nongenuine/fake firms, through whom M/S Marvel Impex has allegedly received ineligible Input Tax Credit (ITC). Accordingly, the refund claim is not admissible to the extent of such ineligible ITC. During the course of investigation, it has been observed that Shri Deepak Kumar, the consultant of M/S Marvel Impex, was the person who applied for the said refund application. Upon further inquiry, Smt. Kavita, the alleged proprietor of M/S Marvel Impex, denied any association with the said firm when contacted telephonically. During the course of verification of refund, Shri. Deepak Kumar approached the Division office on 29.07.2025 for getting the status of the refund application filed by M/S Marvel Impex in the capacity of being a consultant. On being asked about Smt. Kavita that she telephonically denied that she does not know about the GST registration of M/S Marvel Impex & refund application, he could not give correct answer. Based on his evasive & suspicions replies, a summon was issued to Shri. Deepak Kumar on 29.07.2025 for tendering his statement. During the process of hi....
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....ity documents of various individuals by the applicant. These firms were engaged in issuing fake invoices without any actual or concomitant supply of goods or services, thereby facilitating fraudulent availment and accumulation of Input Tax Credit (ITC). Subsequently, fraudulent refund claims were filed on the basis of such accumulated fake ITC, causing loss to the Governemtn exchequer. 4. Learned counsel for the applicant submitted that the present bail application is being preferred by the applicant under section 483 of Bhartiya Nagarik Suraksha Sanhita, 2023, (Sec. 439 of CrPC) before this Hon'ble court seeking grant of regular bail. The bail application of the applicant has been rejected by the Ld. Special CJM court, Meerut vide order dated 12-08-2025. The present arrest of the applicant is a classic example of misuse of power and manipulation of documents by the respondent department. The applicant has been arrested without any basis and without any reasoning. There is no single piece of evidence against the applicant in the present case that even can suggest a prima facie case against the applicant. The applicant is a law-abiding citizen who has not violated any provisi....
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....ith night vision and audio recording facility. Thereafter, the applicant was kept in custody at the office of the respondent department throughout the night of 29.07.2025 and until around 3:30 PM on 30.07.2025, when the arrest memo was prepared. That however, in complete contradiction, at the very time mentioned in the arrest memo as the place and time of arrest, 3:30 PM at Ghaziabad, and the applicant was in fact produced before the Ld. Special CIM, Meerut at about 6.30 pm on 30.07.2025. The applicant had remained in the illegal custody of the respondents from 12.00 noon on 29.07.2025 to about 6.30 pm on 30.07.2025 for about 30% hours, before he was actually produced before the Ld. Spl. CJM, Meerut. The respondents have forged the summons/arrest memo etc. It is pertinent to mention that initially the respondent department moved a judicial custody application, but later, upon failing to show an alleged tax evasion exceeding 5 crores (the threshold required for arrest without warrant under the CGST Act), they prepared another application. That in this later application, they linked certain firms with the applicant which have no relation whatsoever with the applicant. Tthe applicant ....
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....eam, have not been so mentioned in the memo. In order to create a record, the officers of the department took the applicant's signatures on summons dated 29.07.2025 not on the said date, but on 30.07.2025, while he was still in their custody. That the arrest memo and the so-called "grounds of arrest" were handed over to the applicant only when he was being produced before the Ld. Special CJM, Meerut, which shows that these documents were prepared belatedly and were served upon him in the court premises itself. That this sequence of events makes it evident that the applicant was subjected to continuous illegal detention for over 24 hours and for about 30% hours, before any formal arrest procedure was undertaken, in blatant violation of Article 22 of the Constitution of India and the statutory safeguards under the CGST Act. On 29.07.2025 at around 05:20 PM the officers of the Anti evasion CGST Ghaziabad (Department) conducted search operation at both the office and residential premises (C-1107, Amrapali Greens, Indirapuram) of the applicant. The search proceedings concluded on 29.07.2025 at around 10:20 PM. It is further submitted that during at the search, no incriminating docum....
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.... overnight and on the next day i.e. 30.07.2025, the applicant was placed under arrest at around 3:30 PM, as per the arrest memo, whereas he had actually remained in custody for over 30 hours. The officers of the respondent department, at their office situated in Ghaziabad, obtained dictated statements from the present applicant under threat, duress, and coercion during the period from 29.07.2025 to 30.07.2025. The department is now portraying these statements as a voluntary admissions that the applicant was the creator and operator of the alleged firms. However, the factual position is entirely otherwise. The applicant has no role whatsoever in the business activities of any of the said firms, nor has he ever created, operated, or managed them in any manner. The so-called confessional statements, having been procured under coercion, have no evidentiary value in the eyes of law and cannot be relied upon to justify the continued custody of the applicant. The applicant submits that any statement recorded under section 70 of the Act is ipso facto not admissible. The same needs to be testified with due process of cross-examination as mandated under section 136 of the CGST Act, 2017. The....
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.... to Section 132 of the Act are satisfied. Failure to do so would result in an illegal arrest. With regard to the submission made on behalf of the Revenue that arrests are not made in case of bailable offences, in our considered view, the Commissioner, while recording the reasons to believe should state his satisfaction and refer to the 'material' forming the basis of his finding regarding the commission of a non-bailable offence specified in clauses (a) to (d) of sub-section (1) to Section 132. The computation of the tax involved in terms of the monetary limits under clause (i) of sub-section (1), which make the offence cognizable and non-bailable, should be supported by referring to relevant and sufficient material. The aforesaid exercise should be undertaken in right earnest and objectively, and not on mere ipse dixit without foundational reasoning and material. The W.P.(Crl.) No.336 of 2018 & Connected matters Page 47 of 63 arrest must proceed on the belief supported by reasons relying on material that the conditions specified in sub-section (5) of Section 132 are satisfied, and not on suspicion alone. An arrest cannot be made to merely investigate whether the c....
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.... he pleases. It stands to reason, therefore, that what label the Investigating Officer affixes to his act of restraint is irrelevent. For the same reason, the record of the time of arrest is not an index to the actual time of arrest, The arrest commences with the restraint placed on the liberty of the accused and not with the time of "arrest" recorded by the Arresting Officers. The Hon'ble Supreme Court in the case of Khatri vs. State of Bihar AIR 1981 SC 928 reiterated that provision inhibiting detention without remand is a very healthy provision which enables the magistrates to keep a check over the police investigation and it is necessary that the magistrates should try to enforce this requirement and where it is found to be disobeyed, come down heavily on the Police. Similarly, the Hon'ble Telangana High Court in the case of Smt. T. Ramadevi V. State of Telagana WP No. 21912 of 2024 reiterated the law laid down by the Hon'ble Bombay High Court in Hussain Allah Deta judgement held as follows :- However, as regards the first question of law being decided in favour of the detenues i.e. accused Nos. 3 and 4 to the extent of the period of initial appreh....
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....so reinforces the fundamental rights of an arrestee under Article 22(1) of the Constitution and Section 50 Cr.P.C., emphasising that grounds of arrest must be furnished immediately upon arrest. Any delay in doing so renders the arrest illegal and warrants the release of the arrestee. 39. However, since the petitioner's arrest is being set-aside on the ground of non-compliance of the mandatory requirements of section 50 of the Cr.P.C. and Article 22(1) of the Constitution, but the petitioner must continue to participate in the proceedings arising from the subject FIR in which chargesheet has been filed, this court deems it appropriate to direct that the petitioner - Marfing Tamang s/o Karnal @ Karan Bahadur Tamang - shall be released from judicial custody, subject to furnishing a personal bond of Rs. 25,000/- (Rs. Twenty-five Thousand Only) with 02 local sureties in the like amount, to the satisfaction of the learned trial court. Because reliance is placed on the judgement of the Hon'ble Bombay High Court in Sachin Mahipati Nimbalkar v. State of Maharashtra, Judgement dated 23.10.2024 passed in W.P.(Stamp) No. 17029/2024, which was a case involving offences under....
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....s 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 earlier occasion, (iv) a person is likely to flee from country. (v) a person is originator of fake invoices, i.e., invoices without payment of tax, and (vi) when direct documentary or otherwise concrete evidence is available on file/record of active involvement of a person in tax evasion. In Judicial Remand Application respondent department failed to demonstrate apprehension of tampering of evidence, influence of witness and flight risk. It has failed to demonstrate as to why applicant should be kept in judicial custody The department has not stated/claimed single apprehension regarding (i) flight risk (ii) tampering evidence (iii) influencing witnesses. The Petitioner satisfies all three conditions favou....
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.... of the trial. The appeal is accordingly allowed. The applicant submits that offence under GST is triable by magistrate. Maximum punishment is 5 years. Offence is compoundable. The applicant submits that when maximum punishment is 5 years it proves that offence under GST is not grave and applicant is entitled to bail. This issue has been settled by Hon'ble Allahabad High Court in the matter of Peeyush Kumar Jain vs. UOI [Criminal MISC Bail Application No. 21223 of 2022], the relevant para of judgment reads as under :- "31. Having considered the facts and submissions made in light of the law laid down by the Hon'ble Supreme Court in various cases. which has been summarized in the preceding paragraphs and keeping in view that : - (9) the offences alleged carry a minimum punishment of six months imprisonment and a maximum of five years' imprisonment and that the offences are compoundable, which indicates that the offences are not grave :- (iii) the Department is yet to ascertain the applicant's tax liability: (v) the applicant has already spent more than 8 months in jail and during this period the department has not sought his ....
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....hat now the applicant is in a position to influence the investigation of the case; (5) the applicant is languishing in jail since 26-09-2021; (6) the maximum punishment that can be imposed upon the applicant is five years' imprisonment and (7) the offence is compoundable as per the provision contained in Section 138 of the CGST Act, I am of the considered view that the applicant is entitled to be released on bail". The applicant has neither been arrested nor been charge sheeted nor convicted in any other case whatsoever. The applicant has not violated provisions of Section 132 (1) (b), and (i) of the CGST Act, 2017. There are no single ingredients of aforesaid sub-clauses applied and satisfied against the applicant. The respondent wrongly invoked the aforesaid section without satisfying the basic ingredients of sections. Hence, the aforesaid sub-section was wrongly invoked against the present applicant. The alleged amount of ITC is in a very small quantum and the provisions of sections 73 and 74 are not complied with by the CGST Officers which are mandatory, hence the accused applicant is entitled to be released on bail. It is cardinal principle of....
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....ound that Shri. Deepak Kumar was running a cartel of the 17 fake firms for circular trading and generation of the fake ITC total amount of Rs. 29.81 Crs. During the verification of refund, Shri. Deepak Kumar approached the Division office on 29.07.2025 for getting the status of the refund application filed by M/s Marvel Impex in the capacity of being a consultant. On being asked about Smt. Kavita (Proprietor of M/s Marvel Impex) that she telephonically denied that she does not know about the GST registration of M/s Marvel Impex & refund application, he could not give correct answer. Based on his evasive & suspicions replies, a Summon was issued to Shri. Deepak Kumar on 29.07.2025 for tendering his statement. During the process of his statement and in light of this revelation of points the competent Authority decided to conduct a search on 29.07.2025 itself at the registered premises of M/s Marvel Impex as well as the residential premises of Shri Deepak Kumar. In the midst of these developments, Shri Deepak Kumar after receiving the summon tendered his voluntary statement on 29.07.2025 & 30.07.2025. It also learnt that Shri. Deepak Kumar was also made accused in the matter of W.P....
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....oviding consultancy services on international basis and under what authority the accused is having these stamps. It is clear that the accused was running fake firm cartel and controlling the same by having all the illegal material with him. A search was conducted at the residence of Sh. Deepak Kumar (C1107, Amrapali Greens, Indirapuram) under authorization issued in INS-01 dated 29.07.2025 by the Additional Commissioner, CGST Ghaziabad. The search was initiated under Section 67(2) of the CGST Act, 2017. During the search, Ms. Swakshi Dhembla (daughter of Sh. Deepak Kumar) arrived and cooperated. The search team, in the presence of panch witnesses, resumed various documents and electronic devices including mobile phones, iPads, a broken laptop. cheque books, and records related to several firms, all listed in Form INS-02. A parallel search was conducted at the registered premises of M/s Marvel Impex (GSTIN: 09FVCPK9727A1ZH), LGF50, Express Garden Market, Indirapuram, which was found locked. The search was authorized under a separate INS-01 issued under Section 67(2). No person was found present at the location, and hence no documents could be resumed from the premises at that time. ....
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....mla who has received the same and signed on the same. The reason to believe and ground of arrest have been provided to the accused and her daughter. The statement dated 29.07.2025 of Sh. Deepak Kumar, he accepted that the entire refund claim filed in the name of M/s Marvel Impex was based on ineligible input tax credit (ITC), as the firm had not made any genuine purchases or supplies, and the documents used were fabricated. In the continuation of the events the residential address of Smt. Kavita, proprietor of M/s Marvel Impex on 01.08.2025 and in the presence of witnesses Smt. Kavita given statement that she does not know Shri. Deepak Kumar and stated that her credentials i.e. PAN, Aadhar, Bank details were used in taking GST registration, she has also lodged a police Complaint dated 19.07.2023 that her mobile phones were lost (Copy enclosed). Further, based on the statement dated 01.08.2025 now she has filed again Police complaint in the Mayur Vihar Phase-1, New Delhi Thana that her credentials were used by Shri Deepak Kumar for getting GST registrations fraudulently (Copy enclosed). However, in response to the question No.3 of the statement dated 29.07.2025 Shri. Deepak Kumar st....
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....es Marketing are same, and also residential address of proprietors were same. On verification both the firms found Non-existent at the declared PPOB and while searching the residential address it is found that the residence belongs to Shri. Jaspal Singh. Who has given written statement that he does not know both the proprietors given in their GST registration. From the findings it proves that these firms being operated by Shri. Deepak Kumar for Circular trading. In the answer of the question that M/s Marvel Impex is making payments to the suppliers of M/s Krishna International-namely, M/s Rahul Traders and M/s Raj Traders-despite not receiving any direct supply from them, he failed to provide any satisfactory explanation. His denial of such well-established facts appears to be a deliberate attempt to conceal material aspects of the case. He is a partner in M/s Askus Advisory Services along with his wife, Smt. Baljeet Kaur, holding equal partnership shares. The firm, located at NKP-13, GF-04, Nyay Khand-1, Indirapuram, provides consultancy services. His wife is not an active partner and all operational and consultancy work, including GST compliance, is handled by him. The said pr....
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....ients for day-today convenience in business operations such as issuing invoices. He accepted full responsibility for the possession of these instruments, which are otherwise sensitive financial and official tools. When questioned about the stamp of M/s Star Enterprises also found in his car, he admitted that he was keeping the stamp for ease of filing documents. He further stated that Star Enterprises was directed by his friend, Mr. Shubham Gupta, to take supplies from M/s Ansari Traders-a supplier from whom he himself was availing supplies in his other controlled entity, M/s Marvel Impex. These facts, in conjunction with prior admissions, make it evident that Deepak is not only in direct control of multiple entities, but is also actively facilitating transactions, using forged documentation, unauthorized possession of financial instruments, and manipulating business identities to enable fraudulent ITC claims. His involvement in these activities confirms his role as the central accused in orchestrating and operating a network of fake/bogus firms and circular transactions. The accused, Sh. Deepak, was shown a printout of WhatsApp chat conducted through his own mobile number 92509414....
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....efund claims, resulting in a massive loss to the government exchequer. Shri. Deepak Kumar was also made accused in the matter of W.P.(CRL) 960/2018 & CRL.M.A. 5948/2018 in Hon'ble High Court of Delhi against the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 ("COFEPOSA Act"). From the order, it is also learnt that the accused absconded to USA to escape the consequences of the case as he was well aware that the investigation was going on in that case. It was also stated that the accused kept on changing his residential address to escape from the detention. The accused had been declared proclaimed offender vide order dated 07.08.2002 passed by the Chief Metropolitan Magistrate, Delhi. It reveals that the person is not law abiding and having tendencies of habitual offender. The case having grave economic offence and to complete the investigation without any hinderance the accused person was arrested on 30.07.2025 at Ghaziabad under section 69 of the Central Goods and Services Tax Act, 2017 and rules made thereunder for offence prescribed under Section 132(1) (b) and (c) as punishable under Section 132(1)(i) of CGST Act, 2017 and being cognizab....
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.... The cause of the community deserves better treatment at the hands of the Court in the discharge of its judicial functions. The Community or the State is not a persona non grata whose cause may be treated with disdain. The entire community is aggrieved if economic offenders who ruin the economy of the State are not brought to book, murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye, unmindful of the damage; done to the National Economy and National Interest, as was aptly stated in State of Gujarat v. Mohanlal Jitamalji Porwal and Anr., AIR (1987) 1321). Unfortunately, in the last few years, the country has seen an alarming rise in white collar crimes which has affected the fibre of the country's economic structu....
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....ed to be exercised by a gazetted officer of the Customs Department. Sub-section (3) enjoins on the person summoned by the officer to state the truth upon any subject respecting which he is examined. He is not excused from speaking the truth on the premise that such statement could be used against him. The said requirement is included in the provision for the purpose of enabling the gazetted officer to elicit the truth from the person interrogated. There is no involvement of the magistrate at that stage. The entire idea behind the provision is that the gazetted officer questioning the person must gather all the truth concerning the episode. If the statement so extracted is untrue utility for the officer gets lost". Radheshyam Kejriwal vs State of West Bengal & Aur on 18 February, 2011 S.C CrA No. 1097/2003 :- Didwania (supra) and K.C. Builders (supra) wherein this Court had taken a view that when there is categorical finding in the adjudication proceeding exonerating the person which is binding and conclusive, the prosecution cannot be allowed to stand. Judgments of this Court are not to be read as statute and when viewed from that angle there does not seem any con....
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....red with, the larger interests of the public/State and other similar considerations. Govind Agarwal vs State Of U.P. And Another on February, 2020 ILC (ALL) (C.R.P.C. 438 No. 1337/2020 Misc. :- Arrest-Power to arrest- When to be exercised. Section 69 and 132 of Central Goods and Services Tax Act, 2017,-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 maybe: (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 earlier occasion, (iv) a person is likely to flee from country. (v) a person is originator of fake invoice, i.e. invoices without payment of tax, and (vi) when direct documentary or otherwise concrete evidence is available on file/record of active involve....
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....ious than offences like murder, dacoity etc. Such offences are committed after hatching conspiracy. This circumstance needs to be kept in mind by Court as the granting of relief of anticipatory bail hampers investigation and such approach causes damage to the image of judiciary. Hence, He prayed rejection of the bail of the applicant. 7. A perusal of record reveals that the present applicant Deepak Kumar is accused of fraudulently creating and operating several non-operational firms by misusing the identity documents of various individuals and by doing so, he manipulated multiple GST-registered entities with the help of other co-accused his CA to generate, claim, and pass on fraudulent ITC, including fraudulent refund claims, resulting in a massive loss amounts to Rs.29.81 crores to the government exchequer. It is also evident from the perusal of the record that the accused person Deepak Kumar claimed to be a consultant of M/S Marvel Impex controlling & running the firm applied for the refund of 31,45,410/-through FORM GST RFD-01, bearing ARN No. AA090625074348S dated 13.06.2025, on account of export of goods without payment of tax (i.e., refund of accumulated Input Tax Credi....
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....de any genuine purchases or supplies, and the documents used were fabricated and the credentials i.e. PAN, Aadhar, Bank details of Smt. Kavita, were used in taking GST registration. At this stage, this shows that the accused was running fake firm cartel and controlling the same by having all the illegal material with him. It has also been stated by the prosecution that the applicant accused Deepak Kumar was made accused in the matter of W.P.(CRL) 960/2018 & CRL.M.A. 5948/2018 in Hon'ble High Court of Delhi against the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 ("COFEPOSA Act"). From the order, it is found that the accused absconded to USA to escape the consequences of the case as he was well aware that the investigation was going on in that case. It was also stated that the accused kept on changing his residential address to escape from the detention. The accused had been declared proclaimed offender vide order dated 07.08.2002 passed by the Chief Metropolitan Magistrate, Delhi. It reveals that the person is not law abiding and having tendencies of habitual offender. The applicant accused Deepak Kumar was having surname "Dhemla" which i....
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....d in Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 439 are under :- "The cause of the community deserves better treatment at the hands of the Court in the discharge of its judicial functions. The Community or the State is not a persona non grata whose cause may be treated with disdain. The entire community is aggrieved if economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of the moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters which view white-collar crimes with a permissive eye, unmindful of the damage; done to the National Economy and National Interest, as was aptly stated in State of Gujarat v. Mohanlal Jitamalji Porwal and Anr., AIR (1987) 1321)." "Economic offences constitute a class apart and need to be visited with a differ....