2023 (7) TMI 814 - HC - GST

Grant of Interim Bail - Constitutional validity of Section 69 of the Central Goods and Service Tax Act 2017 - said provision is arbitrary and ultra vires of Articles 14 and 21 of the Constitution of India or not. The ground taken by the petitioner is that the sanction order dated 27.6.2023 is silent regarding the requirement specified in Section 41 (1) of Cr PC or the Arrest Memo does not record any satisfaction and opinion regarding the necessity to arrest and whatever reason recorded is regarding the commission of offence besides they are silent and the same ought to have been followed in the light of the general directions issued by the Supreme Court. HELD THAT - There is no force in the argument raised by the Department that the release of the petitioner by this Court may hamper the investigation. Undisputedly the Department has merely asked for judicial custody of the petitioner and it appears that they were satisfied with the interrogation held by them till seeking of such judicial remand and till date no request has been made by the Department before the Court that they need the petitioner for any interrogation. Prima facie the conduct of the Department shows that they are satisfied with the interrogation made by them and they may not be interested to further interrogate the petitioner. Moreover assurance has been given by the petitioner that he will cooperate in the investigation and will not in any manner hamper the same. The law laid by the Apex Court in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. 2022 (8) TMI 152 - SUPREME COURT and Arnesh Kumar 2014 (7) TMI 1143 - SUPREME COURT very specifically state about the investigation and arrest of a person. Further this law has been duly followed by all the courts. Thus the petitioner has made out a case for proper construction of Section 69 of the Act 2017 and the issues concerning violation of statutory and constitutional procedural safeguards in the matter of arrest do merit consideration and in the meantime a case for bail is also made out. It is directed that petitioner Ashish Kakkar be released on bail on furnishing a personal bond in the sum of Rs. 1.00 crore and two sureties each in the like amount to the satisfaction of the Court concerned with the conditions being imposed in the interest of justice - Petition allowed.

Summary

Issues Involved:
1. Constitutionality of Section 69 of the Central Goods and Service Tax Act, 2017.
2. Alleged illegal arrest and procedural violations.
3. Interim relief and bail application.

Summary:

1. Constitutionality of Section 69 of the CGST Act, 2017:
The petitioner challenged Section 69 of the Central Goods and Service Tax Act, 2017, claiming it is arbitrary and ultra vires of Articles 14 and 21 of the Constitution of India. The petitioner sought either a declaration of unconstitutionality or a construction of the section in a manner deemed fit by the Court.

2. Alleged Illegal Arrest and Procedural Violations:
The petitioner argued that his arrest on 27.6.2023 under Section 69 of the Act was illegal. He cited a lack of compliance with Section 41 (1) of Cr PC and the Supreme Court's directions in Arnesh Kumar vs. State of Bihar and Satendra Kumar Antil vs. CBI. The petitioner contended that no show cause notice or adjudication was done to ascertain tax evasion before his arrest. The arrest memo did not show the 'necessity to arrest,' and there was no mention of any past conduct indicating non-cooperation with the investigation.

3. Interim Relief and Bail Application:
The petitioner sought interim bail, arguing that the Department was not keen on further investigation after recording his confession. The Court noted that the arrest memo used the word 'may,' indicating discretion, and found no satisfaction of 'necessity to arrest.' The Court referenced the Bombay High Court's decision in Daulat Samirmal Mehta vs Union of India, which mandated compliance with Section 41 (1) of Cr PC in every arrest under the Act, 2017, and was upheld by the Supreme Court.

The Court granted interim relief, directing the petitioner to be released on bail under specific conditions, including cooperation in the investigation, non-tampering with evidence, and surrendering his passport. The Court emphasized that any willful violation of these conditions could lead to the cancellation of bail.

Conclusion:
The Court allowed the interim relief, releasing the petitioner on bail with stringent conditions to ensure cooperation with the investigation and adherence to legal procedures. The case was listed for further proceedings after eight weeks.