2021 (10) TMI 365 - DSC - GST

Seeking protection form arrest - issuance of tax invoices without actually supplying any goods - availment of irregular credit - submission of the respondent No. 1 is that further interrogation with the applicant is necessary as well as there is every possibility of his tampering with the evidence certainly has substance - HELD THAT -The submission of respondent no. 1 appears quite probable because the applicant only knows about the details of those Companies. Any protection from arrest granted to him would in substance amount to granting him the opportunity to tamper with the evidence concerning the remaining almost 100 such entities. Availment of huge amount of tax even without actual supply of any goods is suspected and such suspicion is certainly well founded. Simply because certain cheque books and account books have been seized from the premises of the applicant it cannot be said that no further inquiry is to be made or nothing more is recoverable - Even the submission of the applicant that he was detained for more than 30 hours or was coerced to pay ₹ 15,00,000/or was coerced to sign a cheque for ₹ 2.31 Crores is not sufficient to deny the opportunity to the respondent No. 1 to proceed further with the investigation. The matter involves availment of huge amount of tax input credit. Therefore, a thorough investigation is certainly required. Any protection granted to the applicant from arrest would rather, be a sure impediment in such investigation. Such being the position, the submission of the applicant that personal liberty of an individual needs to be given paramount importance need not be given undue significance. Rather, the interest of the nation and society cannot be overlooked in such cases. Thus the applicant is not entitled for any protection from arrest. Application rejected.

Summary

Issues:
1. Application for protection from arrest under Section 132 of the Central Goods and Service Tax Act.
2. Allegations of coercion, detention, and demand for bribe during investigation.
3. Dispute regarding the validity of tax invoices submitted by the applicant.
4. Necessity of arrest for further interrogation and prevention of evidence tampering.

Analysis:
Issue 1: The applicant sought protection from arrest under Section 132 of the Central Goods and Service Tax Act, claiming apprehension of arrest by the Superintendent, Investigation, C.G.S.T. The applicant, engaged in trading of gold and diamonds, alleged coercion, detention, and demand for bribe during investigation, leading to the lodging of a complaint with the Central Bureau of Investigation. The applicant contended that all relevant records were submitted, and no assessment of tax liability was made, thus challenging the necessity of arrest.

Issue 2: The respondent resisted the application, arguing that the applicant availed input tax credit against non-existent suppliers, causing a loss to the State Exchequer. The respondent emphasized the seriousness of the offence, the need for further interrogation, and the risk of evidence tampering if the applicant remained free. The respondent sought rejection of the application to proceed with the investigation.

Issue 3: The applicant relied on various judgments emphasizing the necessity of assessment before concluding an offence and the entitlement to protection from arrest for individuals without criminal antecedents. In contrast, the respondent cited precedents highlighting that prosecution under Section 132 does not depend on assessment completion, and actions can be taken without issuing show cause notices.

Issue 4: The court analyzed the facts, noting that physically verified entities were found non-existent, supporting the respondent's claim of the need for further interrogation and prevention of evidence tampering. The court rejected the applicant's arguments of coercion and demanded bribe as insufficient to halt the investigation. Emphasizing the need for a thorough investigation due to the significant tax credit involved, the court denied protection from arrest, prioritizing national and societal interests over individual liberty.

In conclusion, the court rejected the application for protection from arrest, considering the seriousness of the alleged offence, the risk of evidence tampering, and the necessity for a thorough investigation into the significant tax credit issue.