TaxTMI 
TaxTMI 
2026 (7) TMI 216
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....walk-in customers and resale of the same under Section 32(5) of the CGST Rules, 2017 through more than 200 branches across India and employing over 1500 persons. The petitioner came to be appointed as a Director only in the year of 2024. While facts being so, on 12.06.2026, the petitioner was arrested by the respondent in connection with alleged offence punishable u/s. 132(1) of CGST Act 2017 and he was remanded to judicial custody on 13.06.2026. 4. The learned Senior Counsel for the petitioner further submitted that, it is the case of the prosecution that the company is said to have misused the Margin Scheme by transporting old gold purchased at its branches at Bangalore, melted and converted the same into Gatti Gold and resold the same without proper accounting and thereby allegedly suppressed taxable turnover and evaded GST said to have exceeded to the tune of Rs. 100 corres. The learned Senior Counsel for the petitioner further contended that the search/inspection were carried out by the respondent at the corporate office and its branches on 29.05.2026, 30.05.2026, 01.06.2026 and 02.06.2026. In the said search, several records including Hard discs,Tally data, melding and tra....
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.... direction of the Hon'ble Apex Court in Radhika Agarwal Vs. Union of India cited supra. 7. The learned Senior Counsel for the petitioner further submitted that the Central Board of Indirect Taxes and Customs, issued a circular dated 17.09.2022, with regard to the procedures and conditions precedent to arrest. Wherein, the Commissioner of the competent authority must satisfy the following questions. 3.2.1 Whether the person was concerned in the non- bailable offence or credible information has been received, or a reasonable suspicion exists, of his having been so concerned? 3.2.2 Whether arrest is necessary to ensure proper investigation of the offence? 3.2.3 Whether the person, if not restricted, is likely to tamper the course of further investigation or is likely to tamper with evidence or intimidate or influence witnesses? 3.2.4 Whether person is mastermind or key operator effecting proxy/ benami transaction in the name of dummy GSTIN or non-existent persons, etc. for passing fraudulent input tax credit etc.? 3.2.5 As unless such person is arrested, his presence before investigating officer cannot be ensured. 8. The learned Senio....
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....ability. The word "willful" would mean a deliberate attempt to circumvent the tax law. 10. The learned Senior Counsel for the petitioner contended that in the counter, the respondent has mentioned in one place that the tax evasion is Rs. 100 crore and in another place, is contended that, the due is yet to be quantified. Therefore, the based on the vague allegations, the petitioner cannot be arrested. 11. The learned counsel for the petitioner further relied on the decision of the Hon'ble High Court of Punjab and Haryana in Akhil Krishan Maggu Vs. Deputy Director, DGGI and another reported in 2019 SCC online P & H, 7785 to say that the offence punishable is to the maximum of 5 years. Therefore, the directions of the Hon'ble Apex Court in Arnesh Kumar Vs. State of Bihar would apply. The learned Senior Counsel for the petitioner has bring out the following observations of the Hon'ble High Court of Punjab and Haryana at Chandigarh in a case Akhil Krishnan Maggu Vs. Deputy Dir., D.G. of GST is as follows: Taking cue from judgment of Delhi High Court in the case of Makemytrip (supra) followed by Madras High Court in the case of Jayachandran Alloys (P.) Ltd., (supra), law l....
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....rtment, (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. Therefore, according to the learned Senior Counsel for the petitioner the arrest cannot be used as a mode for recovery for the alleged Tax evasion without determination for adjudication. 14. The learned Senior Counsel for the petitioner further relied upon the decision of the Delhi High Court in Makemytrip India (P) Ltd Vs. Union of India and others, reported in 2016 SCC online, Del 4951 to say as follows:- "116. To summarise the conclusions in this judgment: The scheme of the provisions of the Finance Act 1994 (FA), do not permit the DGCEI or for that matter the Service Tax Department (ST Department) to by-pass the procedure as set out in....
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.... based on the reason stated in the said reason to believe and not from the material supplied before this court by way of counter. Therefore, the learned Senior Counsel for the petitioner prays bail for the petitioner. 17. Per contra, the learned Special Public Prosecutor for GST contended that the Accused is the main Director and in charge of all the affairs of company M/s. Attica Gold Private Ltd. The said Attica involved in the purchase of 2nd hand gold jewels from private people. They in their GST returns claimed that they resell the old gold purchased to 3rd party individual buyers. However, in the reality position, the said old gold transported to Bangalore, melted and sold as Gatti Gold to other jewellery manufactures for value of consideration received from them. The melted gold jewels attracts 3% GST. On reliable information, summons were issued to the Accused and others connected with Attica, the Accused and other staff failed to co-operate with the investigation team, and they did not provide proper reply and they were evasive and seeking time repeatedly. 18. The Accused on 29.05.2026 and 30.05.2026 has sought time for clarifications, but failed to do so even after ....
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....ld is melted and sold as Gatti gold, a flat 3% GST would attract. According to the investigation agency, the Attica Gold Pvt. Ltd., has filed returns claiming that most of the jewels they purchased were resold to 3rd parties for margin and submitted GST returns accordingly. 22. However, the GST team got intelligence that most of the gold purchased by the M/s.Attica Gold Pvt. Ltd., were melted and sold to other Gold manufacturers. Therefore, a search was conducted in the corporate office on 29.05.2026, 30.05.2026, 01.06.2026 and 02.06.2026. The search team were collected various materials such as Hard discs, tally data, melting and transport records, CCTV footage, electronic devices and statements. The petitioner being one of the Directors of the said company has summoned several time u/s. 17 of the GST Act and they did not any reply. 23. The statement of the petitioner was recorded on 29.05.2026 wherein he admitted his guilty. Further, in response to question no.15, and question no.23, he submitted that he would provide particulars within 7 days. Further in respect of question no.31, he submitted that he is ready to cooperate with the investigation. However, contrary to the s....
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....tenable. 26. Though the learned Senior Counsel for the petitioner contended that the quantum of evasion exceeding Rs. 100 corers is vague one, from the submission of the learned special public prosecutor, it is found that the investigation is in initial stage, the materials so far collected discloses that the evasion may exceed Rs. 100 crores. From the submissions of the learned Special public prosecutor, it is clear that the investigation still on and alleged evasion may go beyond the one indicated in the reason to believe. The judgments relied on by the learned Senior Counsel for the petitioner are relating to recovery of GST without adjudications. Hence, no application for consideration of bail. 27. From the submissions of the learned special public prosecutor, it is found that the investigation agency not yet collected the entire records and scrutinized. Therefore, the process of adjudications is not yet started. As per sec. 69 of CGST Act, what is required for according approval for arrest is some materials to believe that the arrestee has committed an offence punishable u/s. 132 of CGST Act and not the final adjudication. The word reason to believe, is not defined in CG....