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TMI Blog2021 (1) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no requirement of his arrest. The applicant is having his own address of residence and business. He can give surety ensuring his appearance. He does not appears to be habitual offender, prosecuted or convicted earlier. The applicant shall be enlarged on anticipatory bail for a period of six weeks or till the inquiry is concluded by the Proper Officer under Section 70 (1) of the C.G.S.T. Act, whichever is earlier, on execution of a personal bond of ₹ 5,00,000/- and two sureties of the like amount before the Proper Officer - application allowed. - Criminal Misc Anticipatory Bail Application U/S 438 CR.P.C. No. - 4116 of 2020 - - - Dated:- 5-1-2021 - Hon'ble Siddharth, J. For the Applicant : Kandarp Srivastava,Kaustubh Srivastava For the Opposite Party : G.A.,B.K.Singh Raghuvanshi ORDER HON'BLE SIDDHARTH,J. 1. Heard Sri Kaustubh Srivastava, learned counsel for the applicant, Sri B.K. Singh Raghuvanshi, learned counsel for the opposite party no. 2 and learned A.G.A. for the State. 2. This anticipatory bail application has been filed praying for grant of anticipatory bail to the applicant with reference to summon/notice dated 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon the judgement of the Apex Court in the case of D.K. Basu Versus State of West Bengal, 1997 (1) SCC 416, granted interim stay of arrest to the applicant. 5. Learned counsel appearing on behalf of the C.G.S.T. Department, has vehemently opposed the prayer of applicant for grant of anticipatory bail. He has submitted that in the instant case, G.S.T. evasion of more than ₹ 100 crores is involved. It is a cognizable and non-bailable offence as per Section 132 (1) (i) of the C.G.S.T. Act, 2017 r/w Section 132 (5) of the C.G.S.T. Act. During search of the applicant s premises, number of incriminating documents were recovered which prove his involvement in G.S.T. evasion of more than 100 crores. Hence, notice u/s 70 of the C.G.S.T. Act was issued to the applicant. The inquiry is still in progress and 111 fake firms, have been found and bogus invoices numbering 373 have been recovered. The applicant is the mastermind of the entire fraud. The goods were sold on paper only without any actual production or supply. He has relied upon the Division Bench judgement of this Court in Criminal Misc. Writ Petition No. 2703 of 2018, Saurabh Kumar Pandey Versus State of U.P. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person under Sections 90 and 91 of the FA. The power of arrest is to be used with great circumspection and not casually. It is not to be straightway presumed by the DGCEI, without following the procedure under Sections 73A(3)and (4) of the FA, that a person has collected service tax and retained such amount without depositing it to the credit of the Central Government. (ii) Where an assessee has been regularly filing service tax returns which have been accepted by the ST Department or which in any event have been examined by it, as in the case of the two petitioners, without commencement of the process of adjudication of penalty under Section 83A of the FA, another agency like the DGCEI cannot without an SCN or enquiry straightway go ahead to make an arrest merely on the suspicion of evasion of service tax or failure to deposit service tax that has been collected. Section 83A of the FA which provides for adjudication of penalty provision mandates that there must be in the first place a determination that a person is liable to a penalty , which cannot happen till there is in the first place a determination in terms of Section 72 or 73 or 73A of the FA. (iii) For a Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re has to be a determination that a person is a habitual offender. There is no such determination in any of these cases. There cannot be a habitual offender if there is no discussion by the DGCEI with the ST Department regarding the history of such assessee. Assuming that, for whatever reasons, if the DGCEI does not talk to ST Department, certainly it needs to access the service tax record of such assessee. Without even requisitioning that record, it could not have been possible for the DGCEI to arrive at a reasonable conclusion whether there was a deliberate attempt of evading payment of service tax. In the case of MMT, the decision to go in for the extreme step of arrest without issuing an SCN under Section 73 or 73A(3) of the FA, appears to be totally unwarranted. (viii) For the exercise of powers of search under Section 82 of the FA, (i) an opinion has to be formed by the Joint Commissioner or Additional Commissioner or other officers notified by the Board that any documents or books or things which are useful for or relevant for any proceedings under this Chapter are secreted in any place, and (ii) the note preceding the search of a premises has to specify the above re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted. Para 80-82 are extracted below: 80. One caveat, however, may be where a person is shown to be a habitual evader of service tax. Such person would have to be one who has not filed a service tax return for a continuous length of time, who has a history of repeated defaults for which there have been fines, penalties imposed and prosecutions launched, etc. That history can be gleaned only from past records of the ST Department. In such instance, it might be possible to justify resorting to the coercive provisions straightaway. But then the notes on file must offer a convincing justification for resorting to that extreme a measure. What, however, requires reiteration is that the potent power of arrest should not be lightly and casually exercised to induce fear into an assessee and the consequential submission to the unreasonable demands made by officers of the investigating agency during the interrogation and while in custody. To again quote the Bombay High Court in ICICI Bank Ltd. v. Union of India (supra) : At the cost of repetition we may say that if a tax payer fraudulently or with the intention to deprive Revenue of its legitimate dues evades payment thereof not only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is complete and taking into account the submissions of the Assessee and careful weighing of evidence found and explanations offered by the Assessee in regard to the same. 37. The use of words 'commits' make it more than amply clear that the act of committal of the offence is to be fixed first before punishment is imposed. The allegation of the revenue in the present case is that the petitioner has contravened the provisions of Section 16(2) of the Act and availed of excess ITC in so far as there has been no movement of the goods in the present case as against the supplier and the Petitioner and the transactions are bogus and fictitious, created only on paper, solely to avail ITC. The manner of recovery of credit in cases of excess distribution of the same is set out in Section 21 of the Act. This section provides that where the Input Service Distributor distributes credit in contravention of the provisions contained in Section 20 resulting in excess distribution of credit to one or more recipients, the excess credit so distributed shall be recovered from such recipients along with interest, and the provisions of Section 73 or Section 74, as the case may be, shall, mutati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I draw support in this regard from the decision of the Division Bench of the Delhi High Court in the case of Make My Trip (India) (supra), as confirmed by the Supreme Court reiterating that such action, as in the present case, would amount to a violation of Constitutional rights of the petitioner that cannot be countenanced. 42. The decision of this Court in Criminal Original Petition No. 30467 of 2018 (batch case), dated 12-2-2019 is relied upon by the respondents. The Learned Single Judge states that 'in the light of the grave position put forth by the prosecution and also the fact that the investigation was at very early stages', the request for Anticipatory Bail should be rejected and proceeds to do so. This decision does not take into consideration the decision of the Delhi High Court in the case of Make My Trip (India) Pvt. Ltd., (supra), confirmed by the Supreme Court and also does not take into account the relevant statutory provisions of the Revenue enactment, that in my view are necessary to appreciate the lis in proper perspective. The decision is thus distinguishable on facts and in law. 43. As far as the decision rendered by the Rajasthan High Court is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2 Gujarat High Court in the case of VIMAL YASHWANTGIRI GOSWAMI Vs STATE OF GUJARAT 2019-TIOL-1746-HC-AHMGST has concluded in relevant Para as below: 3.1 To put it in other words, the powers of arrest under Section 69 of the Act, 2017 are to be exercised with lot of care and circumspection. Prosecution should normally be launched only after the adjudication is completed. To put it in other words, there must be in the first place a determination that a person is liable to a penalty . Till that point of time, the entire case proceeds on the basis that there must be an apprehended evasion of tax by the assessee. In the two decisions referred to above, emphasis has been laid on the safeguards as enshrined under the Constitution of India and in particular Article 22 which pertains to arrest and Article 21 which mandates that no person shall be deprived of his life and liberty for the authority of law. The two High Courts have extensively relied upon the decision of the Supreme Court in the case of D.K. Basu vs. State of West Bengal reported in 1997 (1) SCC 416 = 2002-TIOL-230-SCMISC. 7.3. Gujarat High Court in the case of CLEARTRIP PVT LTD MUMBAI ORS Vs THE UNION OF I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, then, all the more, any detailed discussion by referring to the arguments in-depth, consideration of the case law becomes unnecessary. 7.4 Hon'ble Supreme Court in the case of C. PRADEEP Petitioner(s) VERSUS THE COMMISSIONER OF GST AND CENTRAL EXCISE SELAM ANR. Special Leave to Appeal (Crl.) No(s). 6834/2019 has passed interim order as below: Learned counsel for the petitioner submits that indisputably assessment for the relevant period has not been completed by the Department so far. In which case, invoking Section 132 of the Central Goods and Services Tax Act, 2017 does not arise. He further submits that, even if, the alleged liability of ₹ 19 crores as is assumed by the Department is accepted, it is open to the petitioner to file appeal after the assessment order is passed; and as per the statutory stipulation, such appeal could be filed upon deposit of only 10% of the disputed liability. In that event, the deposit amount may not exceed ₹ 2,00,00,000/- (Rupees Two Crores), which the petitioner is willing to deposit within one week from today without prejudice to his rights and contentions in the assessment proceedings and the appeal to be filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before arrest is made; ii. The antecedents of the applicant including the fact as to whether the accused has previously undergone imprisonment on conviction by a Court in respect of any cognizable offence; iii. The possibility of the applicant to flee from justice; iv. The possibility of the accused's likelihood to repeat similar or the other offences. v. Where the accusations have been made only with the object of injuring or humiliating the applicant by arresting him or her. vi. Impact of grant of anticipatory bail particularly in cases of large magnitude affecting a very large number of people. vii. The courts must evaluate the entire available material against the accused very carefully. The court must also clearly comprehend the exact role of the accused in the case. The cases in which accused is implicated with the help of sections 34 and 149 of the Indian Penal Code, the court should consider with even greater care and caution because over implication in the cases is a matter of common knowledge and concern; viii. While considering the prayer for grant of anticipatory bail, a balance has to be struck between two factors namely, no prejudice should be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary or unjustified and that such unjustified police action accounted for 43.2% of the expenditure of the jails. 127. Personal liberty is a very precious fundamental right and it should be curtailed only when it becomes imperative according to the peculiar facts and circumstances of the case. 8. The judgement cited on behalf of the learned counsel for the department has not considered any of the relevant authorities on the point. Respondents had found from the documentary evidence that the company has collected service taxes for number of years amounting to ₹ 4.80 crores but the same was not deposited. Therefore, the writ petition was dismissed. There was evidence of prior tax evasion against the petitioner. In the present case, there is no such allegation against the applicant. In that case, the petitioner was avoiding notice u/s 14 of the Central Excise Act, 1944 and was also having proven record of tax evasion. Therefore, this Court rightly dismissed the writ petition filed praying for direction to not to arrest the petitioner on his appearance before the Proper Officer in the inquiry for alleged evasion of service tax in violation of Section 89 (1) (ii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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