TaxTMI 
TaxTMI 
2026 (9) TMI 1191
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.... similar, they are heard together and disposed of by this common order. 3. Heard the learned Counsel for the parties. 4. Petitioners herein are the Proprietors of firms known as M/s. ANZ Traders, M/s. ZMS Enterprises and M/s. AF Trading, respectively, and they have obtained valid CGST Registration Certificate for dealing with steel and old scrap materials. It appears that they had purchased aluminium scrap material from the firms known as M/s. KH E-Waste Recyclers and M/s. SKS Traders, who are herein after referred to as 'Suppliers'. 5. It appears that respondents had conducted a raid over the business premises of M/s. KH E-Waste Recyclers and M/s. SKS Traders, and arrested its Proprietors viz., Salimulla Baig and Hassain Baig, respectively. Subsequently, summons were issued to the petitioners herein under Section 70 of the Act and were directed to appear before the concerned authorities along with supportive documents with regard to purchase of aluminium scrap material from the suppliers. Apprehending arrest in the said case, petitioners had filed Crl. Misc. No.5209/2026, Crl. Misc. No.4922/2026 & Crl. Misc. No.4921/2026, which were dismissed by the jurisdictional....
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....dable, cannot be a ground for granting anticipatory bail. In support of his arguments, he has placed reliance on the following judgments: (i) RADHIKA AGARWAL VS UNION OF INDIA - (2025)6 SCC 545; (ii) SHAILESH RAJPAL VS COMMISSIONER - 2019 SCC OnLine MP 6396; (iii) GST INTELLIGENCE DIRECTORATE VS CHAMAN GOEL - (2024)1 HCC (Del) 277. 8. It is the case of the prosecution that the petitioners had availed the benefit of ITC based on the concocted invoices raised by the suppliers, though actual goods were not supplied to the petitioners and the tax amount which was credited to the account of the suppliers was encashed by the petitioners through hawala transactions. 9. It is not in dispute that petitioners are holders of valid GST Registration Certificates for the purpose of dealing with steel and other scrap material, and according to the petitioners, they had purchased aluminium scrap material from the suppliers, for which invoices were raised and they had paid the invoice value as well as the tax to the suppliers through bank transactions, and ever since their registration, have periodically submitted their returns up to date. 10. The GST frame work ....
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....itted that petitioners are ready and willing to produce those documents which are in their custody to prove the actual receipt of goods and services from the suppliers. 15. In a genuine case where a purchaser has paid the invoice value and GST, and also has submitted returns periodically, he cannot be held liable or penalized for the default of the supplier, except under exceptional circumstances. Denial of judicial protection in such a case would amount to injustice. Commercial reality is a factor which the courts need to consider in these type of cases. In a case where the purchaser has invoices raised by the supplier, has paid invoice value and tax to the supplier and also has submitted the returns periodically along with the copy of the invoices within the prescribed statutory period, only for the purpose of finding out whether there was actual receipt of goods or services, which can be proved by producing necessary documents, in normal circumstances, custodial interrogation of the purchaser would not be necessary, unless there is some prima facie material to show his collusion with the supplier. 16. Section 132 of the Act deals with punishment for the offences and Sectio....
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....red under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act; (g) obstructs or prevents any officer in the discharge of his duties under this Act; (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (j) tampers with or destroys any material evidence or documents; (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) s....
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.... the Commissioner." 17. Section 69 of the Act states that where the Commissioner has reason to believe that the person 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 (ii) of sub-section (1) or sub-section (2) of the said section, he may by order, authorize any officer of central tax to arrest such person. Sub-section (2) requires that where a person is arrested under sub-section (1) for an offence specified under sub-section (5) of Section 132, the officer authorized to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within 24 hours. From the aforesaid, it is apparent that only on authorization by the Commissioner under sub-section (1) of Section 69 of the Act, a person can be arrested for an offence specified under sub-section (5) of Section 132 of the Act. 18. A reading of Section 132 of the Act would go to show that the Principal Offender for the purpose of the said provision would be the supplier. In the present case, the supplier who was arrested has been granted regular bail. In Radhika Agarwal'....
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....nces. We would reject the said submission because there is a difference between the compounding of offences and the arrest of a person. We have already stipulated sufficient safeguards to ensure that no arrests are made till the Commissioner is able to show and establish, on the basis of material and evidence, that the conditions of clauses (a) to (d) as well as clause (i) of sub-section (1) to Section 132 of the CGST Act are satisfied and therefore the offences are non-bailable." 20. In Shailesh Rajpal's case supra, the supplier of goods who had not deposited the tax collected from the purchasers, was arrested, and it is under these circumstances, his regular bail application was rejected, since it was found that tax evasion was huge and investigation was under progress. 21. In Chaman Goel's case supra, the supplier who had actually not supplied the goods, but availed the benefit of ITC, the anticipatory bail granted to the supplier was cancelled by the High Court of Delhi. Under the circumstances, the judgment in Shailesh Rajpal's case supra and Chaman Goel's case supra, cannot made applicable to the facts of the present case. 22. In Akram Pasha's cas....
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....nt to highlight that the offences under the Act are bailable and non-cognizable except for the offence under Section 132(5) of the Act. Additionally, under Section 135 of the Act, in any prosecution under the Act requiring culpable mental state, the court is bound to presume culpable mental state of the accused. The section further states that the accused will have a defense to prove that he had no such mental state. Also, section 138 of the Act states that the offences under the Act shall be compoundable either before or after the prosecution. 53. The task before this Court is two-fold, first being to ensure that no unwarranted abuse of process is allowed to impinge upon life and liberty of the petitioner, and second to ensure that the investigation is not hampered, procedure of administration of justice is not adversely impacted and ultimately the guilty is prosecuted. 54. These are competing interests included in an anticipatory bail application i.e., the liberty of the accused and the interest of the investigative authorities for discovering the particular of offence. It is the case of the Petitioner that he failed to appear due to his ill health, which eviden....
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...., humiliation and disgrace is attached to the arrest. Arrest leads to many serious consequences not only for the accused but for the entire family and at times for the entire community. Most people do not make any distinction between arrest at a pre-conviction stage or post-conviction stage." 27. It is not in dispute that the petitioners herein do not have any antecedents of similar nature. It is also not in dispute that they have paid the invoice value plus the tax claimed in the invoice to the account of the supplier through bank transactions and have submitted their returns periodically along with the copy of the invoice within the prescribed statutory period. Petitioners have undertaken to co-operate with the respondent-authorities and to produce necessary documents to prove the receipt of goods/services from the suppliers. They have also undertaken to abide by the conditions that may be imposed on them by this Court. Under the circumstances, in view of the aforesaid analysis of the matter, I am of the opinion that the prayer made by the petitioners for grant of anticipatory bail needs to be answered affirmatively, subject to the appropriate conditions: 28. The petitions ....