TaxTMI 
TaxTMI 
2025 (9) TMI 1597
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....mentioning of the heading "Section 47 of BNSS" in Ground of Arrest and "Section 48 of BNSS" in the Notice to the Relative, as well as for not providing the Grounds of Arrest to the relative of the respondents. 3. The case as has been projected in the petition is that the respondent no. 1 (Sashi Kumar Choudhury) is involved in fraudulent availment of Input Tax Credit (ITC) of Rs. 8.27 crores during the financial year 2024-2025 in the name of the firm, namely, M/s S. K. Enterprise and the respondent no. 2 (Ankit Choudhury) is involved in fraudulent availment of ITC of Rs. 8.26 crores during the Financial Year 2024-2025 in the name of the firm, namely M/s Ankit Enterprise. A case was registered under Section 132 (1) (c) of the Central Goods and Services Tax Act, 2017 (CGST Act of 2017) and the accused persons were arrested on 05.06.2025 in connection with Case No. DGGI/INV/GST/1208/2025 on allegations of fraudulent availment of ITC amounting to Rs. 8.27 crores and Rs. 8.26 crores respectively. The respondents were arrested at Kolkata, West Bengal and were produced before the learned CJM, Barasat, Kolkata, West Bengal, on 06.06.2025. The learned CJM, Barasat, Kolkata, West Bengal, w....
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....een arrested in connection with evasion of CGST by way of availment of ineligible ITC. He further submits that the whole proceeding was carried out under the audio-video recording in presence of other family members of the respondents. 7. The learned counsel for the petitioner submits that absence of specific headings in the Arrest Memos as well as in the Notice to the Relative have not violated any provisions of law and thereby, has not vitiated the arrest process. He submits that when the substances/the contents were available in the aforesaid Arrest Memos and Notices to Relative, which complied with the mandates of the aforesaid Sections 47 and 48 of the BNSS, non mentioning of the Sections of BNSS as the headings of those Arrest Memos and Notices to the Relative had not caused any prejudice to the respondents. Therefore, he submits that the learned CJM, Kamrup (M), Guwahati has committed a grave error by granting bail to the respondents on the aforesaid grounds. 8. The learned counsel for the petitioner submits that the relative of the respondents have been given the notices under Section 48 of BNSS, providing the reasons of arrest of the respondents. Therefore, he submit....
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....large. Any liberal approach in construing the stringent provisions of the Special Acts may frustrate the very purpose and objective of the Acts. It hardly needs to be stated that the offences under the PMLA or the Customs Act or FERA are the offences of very serious nature affecting the financial systems and in turn the sovereignty and integrity of the nation. The provisions contained in the said Acts therefore must be construed in the manner which would enhance the objectives of the Acts and not frustrate the same. Frequent or casual interference of the courts in the functioning of the authorized officers who have been specially conferred with the powers to combat the serious crimes, may embolden the unscrupulous elements to commit such crimes and may not do justice to the victims, who in such cases would be the society at large and the nation itself. With the advancement in Technology, the very nature of crimes has become more and more intricate and complicated. Hence, minor procedural lapse on the part of authorized officers may not be seen with magnifying glass by the courts in exercise of the powers of judicial review, which may ultimately end up granting undue advantage or be....
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....sed due to such non-mentioning of the headings as the contents were duly provided in the aforesaid Grounds of Arrest as well as in the notice to a relative. In view of the above, he submits that considering the facts and circumstances of the case, the omission, at best, could be termed as irregular rather than illegal, which is curable and not fatal. 15. The learned counsel for the petitioner submits that misquoting or non-quoting of provision of law is not a ground to dismiss an application or a legal proceeding, if the petition is otherwise maintainable in the eye of law, the same shall be entertained, treating the same, as one filed under the relevant provision. In this connection, the learned counsel relied on the case of "The Mattancherry SC/ST Co-operative Society Ltd. & Anr., vs. A.P. Thomas OP(C) No. 160 of 2020), decided on 12.01.2022" by the High Court of Kerela, at Ernakulam. 16. In view of the aforesaid submissions, the learned counsel for the petitioner submits that the learned CJM, Kamrup (M), Guwahati, has committed an error apparent on the face of the order dated 07.06.2025, as the Grounds of Arrest and Authorization to Arrest were duly communicated to the acc....
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....ation) dated 17.08.2022 in paragraph 4.2, which directs that Arrest Memo must reflect the precise provisions of CGST Act of 2017 or other applicable laws, with inapplicable provisions struck of. 19. The learned counsel for the respondents submits that the power of arrest under CGST Act, 2007, being exercisable without warrant, is a drastic and extreme power and hence, such powers must be exercised in strict compliance of statutory safeguards. He further submits that the failure to mention the BNSS provisions in the Arrest Memo cannot be treated as a mere technical defect, which in fact, amounts to gross violation of binding statutory mandates and judicial pronouncements. 20. The learned counsel for the respondents submits that non communication of Grounds of Arrest to the relatives of the respondents is a violation of the mandates of the CGST Act, 2017 as well as the BNSS, 2023, and in the present case, the bail was granted also on the ground that the relatives of the respondents were not served with the written Grounds of Arrest at the time of arrest. In this connection, he submits that the Hon'ble Apex Court in the case of Vihaan Kumar vs. State of Haryana, reported in (202....
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....he learned counsel for the respondents further submits that the Grounds of Arrest mentioned in the Arrest Memo were inadequate as it did not provide sufficient materials for the basis of allegations, except stating that the respondents had availed ineligible ITC in contravention of eligibility of ITC as stipulated in Section 16(2)(c) of the CGST Act. 24. The learned counsel for the respondents submits that the "reasons to believe" must include a computation and/or an explanation, based on factors such as goods seized, from which a conclusion of guilt can be drawn. He submits that details are crucial as they facilitate judicial review of the exercise of the power of arrest. He submits that in the present case, no details whatsoever, had been provided with respect to how the amounts of Rs. 8.27 crores and Rs. 8.26 crores were arrived at by the Investigating Authority. He submits that there was no computation data or documents except a mere statement that the analysis of GST Returns indicated that the respondent no. 1 and respondent no. 2 had availed ineligible ITC of Rs. 8.27 crores and Rs. 8.26 crores respectively. 25. The learned counsel for the respondents further submits th....
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....xpanded to convert a criminal revision petition into a bail cancellation proceeding. He further submits that a cancellation of bail is a distinct remedy, governed by its own parameters and must be sought through an appropriate application before the competent Court. He submits that in the instance case, the proper course would have been to move an application before the learned CJM, who granted the bail, seeking cancellation on specific grounds by supported materials. He submits that the settled position of law is that the bail once granted should not be cancelled in a mechanical or routine manner. In this connection, he relied on the case of Daulat Ram vs. The State of Haryana, reported in (1995) 1 SCC 349 and Jibanshu Paul (supra). 29. The learned counsel for the respondents submits that the CGST Department has adopted a vindictive and abusive process to keep the respondents incarcerated, which is palpably evident from the fact that the respondents were again arrested at Siliguri, on the very same grounds alleging that transactions between their Guwahati registration and West Bengal registration were fictitious. He submits that after the aforesaid arrest in Siliguri, the Hon'b....
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....n has been filed not for cancellation of the bail but the petition has been filed for setting aside of the impugned order dated 07.06.2025, passed by the learned CJM, Kamrup (M), Guwahati, whereby, the respondents were allowed to go on bail. There is a distinction between the concept of setting aside an unjustified, illegal or perverse order and cancellation of an order of bail. In this connection, it may be worthwhile to refer to the case of Ranjit Singh vs. The State of Madhya Pradesh and Ors., reported in (2013) 16 SCC 797, wherein the Hon'ble Apex Court, while discussing the difference between the petition for setting aside the order of bail and cancellation of bail, has held as below in Paragraph-19: - "19. It needs no special emphasis to state that there is distinction between the parameters for grant of bail and cancellation of bail. There is also a distinction between the concept of setting aside an unjustified, illegal or perverse order and cancellation of an order of bail on the ground that the accused has misconducted himself or certain supervening circumstances warrant such cancellation. If the order granting bail is a perverse one or passed on irrelevant mater....
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.... Judge if certain new circumstances has arisen which were not earlier known to the State and necessarily, therefore, to that Court. The State may as well, approach the High Court being the superior Court, under Section 439(2) to commit the accused to custody, when, however, the State is aggrieved by the order of the Sessions Judge granting bail and there are no new circumstances that have cropped up except, those already existing, it is futile for the State to move the Sessions Judge again and it is competent in law to move the High Court for cancellation of the bail. This position follows from the subordinate position of the Court of Session vis-à-vis the High Court. 13. Our view is supported by the principles laid down in the case of Gurcharan Singh Vs The State (Delhi Admn.). In this case, it has been held by this Court that under Section 439(2), the approach should be whether the order granting bail, vitiated by any serious infirmity for which it was right and proper for the High Court, for the interest of justice, to interfere." 37. In view of the aforesaid legal propositions laid down by the Hon'ble Apex Court, it is clear that the petition for setting asid....
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....it case for granting bail to the accused persons Ankit Choudhary and Shashi Kumar Choudhary in the instant case. Accordingly, accused persons Ankit Choudhary and Shashi Kumar Choudhary are allowed to go on bail of Rs. 50,000/- (Fifty Thousand) with two suitable sureties each (one surety should be Government Employee) of like amount i.d. to judicial custody and subject to the following bail conditions: 1. The accused persons Ankit Choudhary and Shashi Kumar Choudhary shall appear before the I/O, 2. The accused Ankit Choudhary and Shashi Kumar Choudhary shall not commit any offence similar to the alleged offence; 3. The accused Ankit Choudhary and Shashi Kumar Choudhary shall in no way hamper or tamper with the investigation of the case; and 4. The accused Ankit Choudhary and Shashi Kumar Choudhary shall cooperate with the investigation and appear before the I.O. as directed. In the event of failure to comply with any of these conditions, the investigation agencies are at liberty to proceed against the accused persons as per law." 40. From the above, it is noticed that the learned CJM, held that the notice to the relatives unde....
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....d the GST, which is in violation of the provisions of Section 16(2) (c) of the CGST Act, resulting in evasion of GST. It was mentioned that such evasion is an offence under Section 132 (1) (c) of the CGST Act and a punishable, cognizable and non-bailable offence under Section 132 (5) of the CGST Act, 2017. It was also specifically mentioned that the respondent no. 1 was found to be involved in availment of ineligible ITC of Rs. 8.27 crores in contravention of the condition as stipulated in Section 16 (2) of the CGST Act, 2017 which is an offence specified in clause (c) of sub-section (1) of Section 132 of CGST Act and punishable under Clause (i) of sub-section (1) of the said Section. Therefore, he is liable for arrest under Section 69 of the CGST Act, 2017, for the offence committed as mentioned. The Authorization to Arrest further contained the reasons of arrest of respondent no. 1. A similar Authorization to Arrest was also given to the respondent no. 2 with identical contents. 42. From the above Authorization to Arrest, it is seen that the Grounds of Arrests have been mentioned in reasonable details in compliance to Circular: 2/2022-23 (GST-Investigation) (Instruction) dated....
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.... to believe that the alleged offender has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 which is punishable under clause (i) or clause (ii) of sub-section (1), or sub-section (2) of the Section 132 of CGST Act, 2017. Therefore, before placing a person under arrest, the legal requirements must be fulfilled. The reasons to believe to arrive at a decision to place an alleged offender under arrest must be unambiguous and amply clear. The reasons to believe must be based on credible material. 3.2. Since arrest impinges on the personal liberty of an individual, the power to arrest must be exercised carefully. The arrest should not be made in routine and mechanical manner. Even if all the legal conditions precedent to arrest mentioned in Section 132 of the CGST Act, 2017 are fulfilled, that will not, ipso facto, mean that an arrest must be made. Once the legal ingredients of the offence are made out, the Commissioner or the competent authority must then determine if the answer to any or some of the following questions is in the affirmative: 3.2.1 Whether the person was concerned in the non-bailab....
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....ating to arrest and the procedure thereof, must be adhered to. It is, therefore, advised that the Pr. Commissioner/Commissioner should ensure that all officers are fully familiar with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974). 4.2. The arrest memo must be in compliance with the directions of Hon'ble Supreme Court in the case of D.K. Basu v. State of West Bengal reported in 1997 (1) SCC 416 (see paragraph 35). Format of arrest memo has been prescribed under Board's Circular No. 128/47/2019-GST, dated 23rd December, 2019 [2020 (32) G.S.T.L. C3]. The arrest memo should indicate relevant section(s) of the CGST Act, 2017 or other laws attracted to the case and to the arrested person and inapplicable provisions should be struck off. In addition, 4.2.1 The grounds of arrest must be explained to the arrested person arid this fact must be noted in the arrest memo; 4.2.2 A nominated or authorized person (as per the details provided by arrested person) of the arrested person should be informed immediately and this fact shall be mentioned in the arrest memo; 4.2.3 The date and time of arrest shall be mentioned in the arrest memo ....
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.... be seen from the Authorization to Arrest that the authorized officer concerned to issue the Authorization to Arrest, has come to a prima facie finding that the respondent no. 1 is found to be involved in availment of ineligible ITC of Rs. 8.27 crores in contravention of the eligibility, as stipulated in Section 16 (2) of the CGST Act, 2017. A similar finding is also available in the Authorization to Arrest in respect of respondent no. 2 for Rs. 8.26 crores. It may be relevant herein to reproduce the relevant paragraphs from the Authorization to Arrest to the respondent no. 1: - "Investigation has revealed that Sh. Shashi Kumar Chaudhary, prop. of M/s SK. Enterprise, Assam has self generated ITC of Rs. 8.27 Cr. The inward supply of goods has not suffered the GST. This is in violation of provisions of Sec 16(2)(c) of the COST Act. This has resulted in evasion of GST. This is an offence under Sec 132(1)(c) of the CGST Act. This offence is punishable under see 132(1)(i) of the CGST Act and it is a cognizable and non-bailable offence under sec 132 (5) of the CGST Act. Shri Shashi Kumar Choudhary, Proprietor of M/s SK Enterprises (GSTIN 18ACNPC6284D1ZJ) aged about 45 y....
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.... be undertaken in right earnest and objectively, and not on mere ipse dixit without foundational reasoning and material. The 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 conditions are being met. The arrest is to be made on the formulation of the opinion by the Commissioner, which is to be duly recorded in the reasons to believe. The reasons to believe must be based on the evidence establishing to the satisfaction of the Commissioner that the requirements of Sub-Section (5) to Section 132 of the GST Act are met. 58. Our attention was drawn to the judgment of the High Court of Delhi in Makemytrip (India) Private Limited and Another v. Union of India and Others, 2016 SCC Online Del 4951 which is a decision interpreting the power of arrest under the Finance Act, 1994. These provisions are related to service tax. Excise duty, service tax, and other taxes are subsumed under the GST regime. Accordingly, we are in agreement with the findings recorded in this decision to the extent that t....
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.... observed that any liberal approach in construing the stringent provisions of the Special Acts may frustrate the very purpose and objective of the Acts. It was observed that minor procedural lapse on the part of authorized official may not be seen by magnifying glass in exercise of power under judicial review, which may ultimately end up granting undue advantage or benefit to the person accused of very serious offences under the Special Acts. 49. This Court has carefully gone through the guidelines issued vide the aforesaid F. No. GST/INV/Instructions/2021-22, dated 17-Aug-2022, as well as the principles laid down by the Hon'ble Apex Court in the case of Radhika Agarwal (supra). It is discernible from the aforesaid Authorization to Arrest and the Grounds of Arrest that the Investigating Agency of DGGI, Guwahati Zonal Unit has complied with the mandates of the CGST Act, 2017, reading with the aforesaid guidelines dated 17-Aug-2022, while recording the "reasons to believe". It is seen from the Authorization to Arrest that specific materials in terms of availment of ineligible ITC of Rs. 8.27 crores (respondent no. 1) and Rs. 8.26 crores (respondent no. 2), were prima facie found a....
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....utional mandate of informing the grounds of arrest to the person arrested in writing has been explained in Pankaj Bansal so as to be meaningful to serve the intended purpose which has been reiterated in Prabir Purkayasthas. The said constitutional mandate has been incorporated in the statute under Section 50 CrPC (Section 47 of the BNSS). It may also be noted that the aforesaid provision of requirement for communicating the grounds of arrest, to be purposeful, is also required to be communicated to the friends, relatives or such other persons of the accused as may be disclosed or nominated by the arrested person for the purpose of giving such information as provided under Section 50-A CrPC. As may be noted, this is in the addition of the requirement as provided under Section 50(1) CrPC. 42. The purpose of inserting Section 50-A CrPC, making it obligatory on the person making arrest to inform about the arrest to the friends, relatives or persons nominated by the arrested person, is to ensure that they would be able to take immediate and prompt actions to secure the release of the arrested person as permissible under the law. The arrested person, because of his detention, ma....
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....ly complied with. In view of the above, he has submitted that the impugned order dated 07.06.2025 is not sustainable being against the ratio laid by the Hon'ble Apex Court in the case of Sri Darshan (supra). 52. The Hon'ble Apex Court, while pronouncing the judgment in the case of Sri Darshan (supra) has considered the ratio laid down by the Hon'ble Apex Court in the case of Vihaan Kumar (supra). Some of the findings of the Hon'ble Apex Court in the case of Sri Darshan (supra) are reproduced herein below: - "20.1.1. ************************************** 20.1.2. Article 22(1) of the Constitution mandates that "no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest, nor shall he be denied the right to consult and to be defended by, a legal practitioner of his choice." Similarly, Section 50 (1) Cr.P.C. requires that "every police officer or other person arresting any person without warrant shall forthwith communicate to him full particulars of the offence for which he is arrested or other grounds for such arrest. 20.1.3. The constitutional and statutory framework thus mandates that....
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.... 53. From the aforesaid ratios, as has been laid down in the cases of Vihaan Kumar (supra) and Sri Darshan (supra), it is seen that both the cases have laid down the principles to be complied with while arresting a person without committing any violation of Article 21 & 22 (1) of the Constitution of India. In the considered opinion of this Court, that both the cases complement each other rather than having any conflicts between them. While Vihaan Kumar (supra) provides that the requirement of communicating the Grounds of Arrest is not confined to the arrested person alone, at the same time, to be purposeful, such communication must also extent to the friends, relatives or nominated persons of the respondent, as contemplated under Section 48 of the BNSS, 2023, Sri Darshan (supra) provides for a prejudice-oriented test while examining the alleged procedural lapses. It provided that mere absence of written grounds of arrest does not ipso facto renders the arrest illegal unless it results in demonstrable prejudice or denial of a fair opportunity to defend. This needs to be added that the aforesaid was held by the Hon'ble Apex Court in the context of compliance under Section 50 Cr.P.C. ....
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....th the annexures were acknowledged by the respondents by putting their signatures in the Arrest Memos. The respondents have also acknowledged that they have been explained about the grounds of their arrests. It is also seen that intimations (Notice to Relatives) of the arrests of the respondents were immediately given to Smti Vandana Choudhary at 11:00 PM on 05.06.2025, who happens to be the wife the respondent no. 1 and the mother of the respondent no. 2. The intimations have been duly acknowledged by her by putting her signature in the respective intimations. The contents of the intimations have already been reproduced in a preceding paragraph. 58. Therefore, from the above factual matrix, it is seen that respondents as well as their family members were well aware of the Grounds of Arrest immediately on their arrests. Further, as discussed in the preceding paragraphs, the respondents had applied for bail immediately on 06.05.2025 before the learned Court of CJM, Barasat, West Bengal and their bails were rejected by the CJM Barasat, however, they had been sent on transit remand to Guwahati for production before the CJM, Kamrup (M), Guwahati. It is seen that in both the Courts n....