TaxTMI 
TaxTMI 
2026 (7) TMI 1265
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Commissioner of Central Tax & Central Excise, Secunderabad GST Commissionerate, Hyderabad. 3. I have heard Mr. B. Chandrasen Reddy, learned Senior Counsel, argued on behalf of Mr. B. Vamshidhar Reddy, learned counsel for the petitioners and Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Excise, Customs & Service Tax Department and DRI, appearing for respondent No. 2. 4.1. Learned Senior Counsel appearing for the petitioners submits that the petitioners are the partners of M/s. Vijay Industrial Needs LLP, a firm engaged in the business of supplying stainless steel products and ferrous scrap, registered under the provisions of the Central Goods and Services Tax Act, 2017 ("CGST Act"). The Directorate General of GST Intelligence (DGGI), Visakhapatnam Zonal Unit, initiated an investigation alleging wrongful availment of Input Tax Credit ("ITC") during the period from 15.05.2019 to 10.06.2024. 4.2. It is submitted that, though the petitioners extended full cooperation throughout the investigation, they are apprehending arrest pursuant to the summons issued under Section 70 of the CGST Act. He further submits that petitioner No. 1 appeared before the in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppear before the investigating authority as and when required and to abide by any condition that may be imposed by this Court. 4.6. Learned Senior Counsel placed reliance on Tarun Jain v. Directorate General of GST Intelligence, 2021:DHC:3841, and Raghav Agrawal v. Commissioner of Central Tax and GST, Delhi North, 2024:DHC:7272-DB, wherein the Delhi High Court granted anticipatory bail in cases involving allegations of fraudulent availment of ITC, holding that arrest cannot be made as a matter of course and that the necessity of custodial interrogation must be established. Reliance is also placed on P.V. Ramana Reddy v. Union of India, 2019 SCC OnLine TS 333, wherein this Court observed that the power of arrest under Sections 69 and 132 of the CGST Act must be exercised strictly in accordance with the statutory requirements. 4.7. Reliance is further placed on Shravan A. Mehra v. Superintendent of Central Tax, (2019) 73 GST 105 (Kar.), Sapna Jain v. Union of India, 2019 SCC OnLine Bom 13064, Daulat Samirmal Mehta v. Union of India, AIRONLINE 2021 BOM 516, and Sri Hanumanthappa Pathrera Lakshmana v. State by Senior Intelligence Officer, DGGI, AIRONLINE 2020 KAR 1282, wherein th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er No. 1 was absent due to ill-health. During the search, it was noticed that the firm was engaged in the business of pipes, fittings and valves, while the invoices and computer records relating to the business were maintained at a different office. The officers further found that no stock register was maintained and invoices had not been issued in respect of certain cash sales. Four box files containing quotations and purchase orders were recovered and seized under Form GST INS-02 for the purpose of investigation. No other goods or documents were seized, and the search proceedings concluded peacefully at about 2:30 p.m. in the presence of independent witnesses. 5.3. Learned Senior Standing Counsel further submitted that the investigation disclosed several discrepancies in the business transactions of the firm. It is alleged that the petitioners fraudulently availed excess ITC amounting to approximately Rs.94.96 crores by claiming credit on the strength of invoices without actual receipt of goods and by relying upon invoices issued by fake or non-existent suppliers. According to the Department, excess ITC of nearly Rs.70.93 crores, over and above the ITC reflected in GSTR-2A/2B,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is submitted that they are not entitled to the relief of anticipatory bail. 5.7. In support of the above submissions, learned Senior Standing Counsel relied upon P. Chidambaram v. Directorate of Enforcement, (2020) 13 SCC 791, wherein the Hon'ble Supreme Court held that economic offences constitute a distinct class and that the nature and gravity of the accusation, the magnitude of the offence, and the necessity for custodial interrogation are relevant considerations while deciding an application for anticipatory bail. Reliance was also placed on Tarun Jain v. Directorate General of GST Intelligence (DGGI), Bail Application No.3771 of 2021, decided on 26.11.2021 (Delhi High Court), wherein it was observed that custodial interrogation is not necessary in every case, particularly where the accused cooperates with the investigation. It is, however, contended that the petitioners herein failed to cooperate despite repeated summons. 5.8. Reference was further made to Shravan A. Mehra v. Superintendent of Central Tax (Karnataka High Court) and Raghav Agrawal v. Commissioner of Central Tax and GST, Delhi, to contend that grant of anticipatory bail depends upon the facts of each....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rposes of investigation, such as preventing abscondence, tampering with evidence, influencing witnesses or otherwise obstructing the course of justice. While exercising jurisdiction under Section 482 of the BNSS, this Court is, therefore, required to examine whether custodial interrogation is genuinely indispensable or whether the investigation can effectively proceed without depriving the accused of personal liberty. 10. The material placed on record further discloses that proceedings had earlier been initiated by the State GST Authorities in respect of substantially the same assessment period. According to the petitioners, during those proceedings, searches were conducted and the relevant books of account, invoices, e-way bills, banking records, computers, laptops and other connected records were either seized or examined by the authorities. It is further their case that petitioner No. 1 appeared pursuant to statutory notices, cooperated with the investigation and furnished his statement. Thereafter, the DGGI initiated the present proceedings in respect of the same period. 11. The respondent-Department has clarified that the earlier proceedings initiated by the State GST Au....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id down by the Supreme Court in Joginder Kumar v. State of U.P., (1994) 4 SCC 260, wherein it was held that no arrest can be made merely because it is lawful to do so and that the existence of the power to arrest is distinct from the justification for its exercise. The same principle was reiterated in Arnesh Kumar v. State of Bihar, (2014) 8 SCC 273, wherein the Supreme Court held that arrest must be founded on necessity and cannot be effected routinely or mechanically. Though rendered in the context of the Code of Criminal Procedure, the constitutional principles safeguarding personal liberty apply with equal force to statutory powers of arrest under special enactments. 16. In Siddharth v. State of Uttar Pradesh, (2022) 1 SCC 676, the Supreme Court observed that arrest is not mandatory merely because investigation is pending and that where the accused has cooperated with the investigation and there is no likelihood of absconding or influencing witnesses, unnecessary arrest would offend constitutional guarantees. Likewise, in Satender Kumar Antil v. CBI, (2022) 10 SCC 51, the Supreme Court reiterated that arrest should remain an exception, particularly where the investigation ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses or tampering with evidence, and, above all, the necessity for custodial interrogation. None of these considerations can be viewed in isolation. 20. The submission of the respondent-Department that custodial interrogation is necessary to trace the money trail, identify fictitious suppliers, ascertain the ultimate beneficiaries and unravel the larger conspiracy cannot be lightly brushed aside. These are undoubtedly legitimate objectives of a criminal investigation. At the same time, the existence of such objectives does not, by itself, establish that custodial interrogation is indispensable. It is not in dispute that summons have been issued to the petitioners since 2024. The petitioners have responded to the summons, pursued legal remedies available under law and have consistently expressed apprehension of arrest. The counter affidavit filed by the respondent indicates that the arrest of the petitioners is not presently contemplated, though it reserves liberty to effect arrest, if circumstances so warrant in future. The continued issuance of summons itself indicates that, at this stage, the investigating agency seeks the petitioners' participation in the investigation rat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e interests of the investigation can be adequately safeguarded by directing the petitioners to cooperate fully with the investigating agency and by imposing appropriate conditions to secure their continued participation in the investigation. 24. Insofar as petitioner No. 2 is concerned, her plea that she holds only a one per cent partnership interest in the LLP and has no active role in its day-to-day management or financial affairs raises disputed questions of fact, which can only be examined during investigation and, if necessary, at trial. No final opinion on her role can, therefore, be expressed at this stage. Likewise, although the medical condition of petitioner No. 1 does not, by itself, constitute an independent ground for grant of anticipatory bail, it remains a relevant circumstance while balancing the competing considerations of personal liberty and investigative necessity. 25. Considering the totality of the circumstances, namely, the predominantly documentary nature of the evidence, the fact that substantial records have already been secured by the investigating agency, the absence of any material indicating a real likelihood of abscondence or tampering with evid....