9911796707
TMI Blog2021 (6) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation on the receipt of the summonses. The present anticipatory bail application is allowed and it is ordered that in the event of arrest, the petitioners be released on bail on their furnishing a personal bond in the sum of ₹ 5,00,000/- each with one surety each of the like amount subject to the satisfaction of the IO/court concerned and subject to conditions imposed - bail granted. - BAIL APPLN. 458/2021 & CRL.M.A. 2101/2021 - - - Dated:- 4-6-2021 - HON'BLE MR. JUSTICE RAJNISH BHATNAGAR Petitioners Through: Mr. Shubhankar Jha, Adv. Respondent Through: Mr. Harpreet Singh, Sr. Standing Counsel with Ms. Suhani Mathur, Adv. ORDER RAJNISH BHATNAGAR, J. 1. The present application U/s 438 of Cr.P.C has been preferred by the petitioners challenging the order dated 04.02.2021 passed by the Ld. A.S.J., Patiala House Court, New Delhi by virtue of which anticipatory bail application of the petitioners had been rejected. 2. It is submitted by the Ld. counsel for the petitioners that the investigation against the company M/s KMG Industrial Traders Pvt. Ltd. in which the applicants are directors by GST department started in June 2018 and sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as salaries, EMIs, TDS, GST etc. It is further submitted that it was agreed with the respondent (GST Department) that account will only be defreezed on the condition of depositing ₹ 2.5 crores and also credit will be opened. 4. It is further submitted that the said amount was deposited on 08.09.2020. However, bank debit was partially allowed to discharge liabilities towards salary of 70% and also no credit was allowed to be used. It is further submitted by the counsel for the petitioners that the petitioners have co-operated in the investigation and even deposited the amount as agreed but despite that the department is harassing the petitioners with the sole objective of arresting them but no purpose would be served by keeping the petitioners in custody. 5. It is further submitted that other co-accused persons who are the creators of the alleged documents namely Sanjay Dhingra and Gulshan Dhingra are on regular bail and now the investigation has been completed and show cause notice have been issued to them, wherein the amount alleged to be wrongly availed by M/s KMG is already sought to be demanded from the said people. It is further submitted that in the case of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent (department) that statement of Pawan Goel was recorded on 18.02.2021 and he was asked about M/s Everest Road Lines and he showed ignorance about the whereabouts of the transporter and stated that the payment of the transporter was done by his vendors and as regard purchase from M/s Sant Overseas, he stated that they deal with Gulshan Dhingra and Sanjay Dhingra. It is further submitted by the Ld. Sr. Standing Counsel that during the course of investigation, statement of one Suresh Bansal of M/s Balaji Roadways was recorded who stated that he has never transported any goods to M/s Sant Overseas, however, he further stated that he had provided bilties to Sanjay Dhingra, who is the owner of M/s Kwality Limited who used to pay him transportation commission and after the transfer of money in his bank account, the said Sanjay Dhingra used to take money in cash from him. It is further submitted that as far as Everest Road Lines is concerned, it is a proprietorship concern of M/s Ashok Kumar Dhingra, who runs this proprietorship firm from his residential house and search was conducted but nothing was found in relation to transportation of these supplies. 10. It is further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iting 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 Excise officer or an officer of the DGCEI duly empowered and authorised in that behalf to be satisfied that a person has committed an offence under Section 89(1) (d) of the FA, it would require an enquiry to be conducted by giving an opportunity to the person sought to be arrested to explain the materials and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 requirement of the law. The search of the premises of the two petitioners is in clear violation of the mandate of Section 82 of the FA. It is unconstitutional and legally unsustainable. (ix) The Court is unable to accept that payment by the two petitioners of alleged service tax arrears was voluntary. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 that, if the Central Excise Officer is of the opinion that for the purpose of protecting the interest of the Revenue it is necessary provisionally to attach any property belonging to the person on whom the notice is served under Section 73 or Section 73A of the Act, he is empowered to do so, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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, mutatis mutandis, apply for determination of amount to be recovered. 38. Thus, 'determination' of the excess credit by way of the procedure set out in Section 73 or 74, as the case may be is a pre-requisite for the recovery thereof. Section 73 and 74 deal with assessments and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 concerned, it is distinguishable on facts, as at Paragraph 20 thereof, the Learned Judge records that the petitioner therein did not controvert the claim that the claim of Input Tax Credit is made based on fake invoices. Thus, no defence was put forth by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 10 Supreme Court in the case of D.K. Basu vs. State of West Bengal reported in 1997 (1) SCC 416 = 2002-TIOL-230-SC MISC. 7.3. Gujarat High Court in the case of CLEARTRIP PVT LTD MUMBAI ORS Vs THE UNION OF INDIA 2016-TIOL-863-HC MUM-ST has concluded in relevant para as below: 16. We are clear in our minds and from the scheme of the Act and the Law as a whole that coercive measures, including effecting any arrest, would arise only when inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IONER 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 thereafter, if required. Issue notice on condition that the petitioner shall deposit ₹ 2,00,00,000/- (Rupees Two Crores) to the credit of C.No. IV/16/27/201HPU on the file of the Commissioner of GST Central Excise, Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 caused to the free, fair and full investigation and there should be prevention of harassment, humiliation and unjustified detention of the accused; ix. The court to consider reasonable appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it should be curtailed only when it becomes imperative according to the peculiar facts and circumstances of the case. 13. The judgments cited on behalf of the Ld. Sr. Standing Counsel for the respondent (department) has not considered any of the relevant authorities on the point. In the present case, there is no allegation of prior tax evasion against the petitioners and they have joined the investigation as and when required. The petitioners have also not been avoiding any notices issued to them. 14. Relying upon the judgment of Punjab and Haryana High Court, in the case of Akhil Krishan Maggu (supra) and the Judgment of Allahabad High Court in Criminal Misc. Anticipatory Bail Application U/s 438 Cr.P.C. No. 4116 of 2020, Nitin Verma Vs. State of U.P. and Another decided on 05.01.2021 , this Court finds that the petitioners have no prior criminal antecedents brought on record. In the present case, the petitioners have not challenged any section or procedure relating to GST or applicability of Cr.P.C. and this is a simple application for grant of anticipatory bail with the contention that there is no need for custodial interrogation of the present petitioners. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
