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TMI Blog2024 (2) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ere must be a direct nexus or live link between the material coming to the notice of the officer and the formation of his belief. From the material collected on record, the reasons recorded are that during search some documents were found showing that the applicant is also running several firms on one PAN and without supplying any goods and though the said firms are not in existence and claimed ITC on account of trade/supply of goods. In the case of ARNESH KUMAR VERSUS STATE OF BIHAR ANR [ 2014 (7) TMI 1143 - SUPREME COURT ] , the Honourable Apex Court while laying down some guidelines clarified that directions issued would not only be applicable to cases under 498-A of the Indian Penal Code or Section 4 of the Dowry Prohibition Act but also would cover cases where offence is punishable with imprisonment for a terms which may be less than seven years or which may extend to seven years whether with or without fine. Thus, when facts of the present case are taken into consideration, it reveals that the applicant was arrested. Necessary investigation is carried out and the statement of the applicant is recorded. The maximum punishment provided is imprisonment upto five years. The facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of any kind of business activity of the said trade firm was found. It further alleged that another trade firms viz. Mehal Construction and Supplier had not declared any supplies in GST Returns. Thus, the applicant failed to give any documents regarding huge trade amongst firms alleged to be managed by the applicant. Thus, the applicant through the said fake and bogus business firms has shown fake transactions and has claimed ITC (Input Tax Credit) over the said sale/transaction and thereby committed the offence. 6. Learned counsel Shri Sahil Dewani for the applicant, submitted that with false allegations, summons was issued to the applicant under Section 70 of the CGST Act, 2017 dated 28.11.2023 and the applicant was called to remain present with allegation of evasion of GST. Despite the said summons dated 28.11.2023, he was called to appear at 5:30 in the evening. Though the summons was showing the timing of the evening, he was called at 1:30 pm under the garb of unlocking his phone which was seized. Accordingly, the applicant has attended the office and he was shown to be arrested. There was non compliance in view of Section 41A of the Code of Criminal Procedure. It is further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 twenty-four hours. He further submitted that in view of Section 4(2) of the Code of Criminal Procedure, if there is separate provision in respect of any subject in a special statute, the same will prevail over general provisions of the Code of Criminal Procedure. Under Section 69 of the CGST Act, 2017, the condition as to when a person can be arrested has been given and, therefore, by virtue of Section 4(2) of the Code of Criminal Procedure, the application of Section 41 is restricted in respect of arrest made under the CGST Act, 2017. Therefore, the provision that is Section 41A of the Code will not apply and the applicant cannot take the aid of section 41A. He further submitted that as far as the merit of the matter is concerned, the accused during his statement dated 22.11.2023 has accepted that he has obtained GST Registrations of Mehal Construction and Suppliers, M/s., Mehal Association, and M/s. Arihant Traders on same PAN. He has further accepted that he has issued invoices without ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violation of the provisions of the Act and with an intention to evade taxes or issues any invoice or bill without supply of goods or services or both in violation of the provisions of the Act, leading wrongful availment of the utilization of ITC or refund of the tax or avails ITC using such invoice or bill or collects any amount as tax but fails to pay same to the Government beyond a period of three months, he can be said to have committed offences under clauses (a) or (b) or (d) of the Ac which is cognizable and non bailable and the imprisonment imposed by way of punishment, on being convicted for the said offences, may extend to five years or fine, if the amount of ITC is wrongly availed or the amount of refund wrongly taken exceeds Rs. 500 lacs. In all other cases, punishment prescribed is imprisonment which may extend to three years and with fine. 12. In the light of the above provisions prescribing the punishment, learned counsel for the applicant would invoke the law laid down by the Honourable Apex Court in the cases of Satender Kumar Antil vs. CBI supra and State of Gujarat etc. vs. Choodamani Parmeshwaran Iyer and anr supra and submitted that considering penalty to be imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41A(3) Code of Criminal Procedure, for reasons to be recorded, arrest a person. At this stage, we may notice the difference in language between Section 41A(3) of the Code of Criminal Procedure and 69(1) of the CGST Act, 2017. Under Section 41A(3) of the Code of Criminal Procedure, reasons are to be recorded , once the Police Officer is of the opinion that the persons concerned ought to be arrested. In contrast, Section 69(1) uses the phrase reasons to believe . There is a vast difference between reasons to be recorded and reasons to believe. 14. This Court at Principal Seat in the case of Daulat Samirmal Mehta vs. Union of India, thr. the Secretary and ors supra dealt with the issue and held that power to arrest is provided in Section 69. As per sub-section (1), where the Commissioner has reasons 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. Chapter XIX deals with offences and penalties. Section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a clear admission on the part of the applicant towards his act of wrong doing and thus committed offence under Section 132(1)(b) and (c) of the CGST Act, 2017 and his arrest has been justified. Section 136 of the CGST Act, 2017 deals with relevancy of statements under certain circumstances. As per the said Section, a statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the court and the court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court in Arnesh Kumar (supra), no concrete step has been taken to comply with the mandate of Section 41A of the Code. This Court has clearly interpreted Section 41(1)(b)(i) and (ii) inter alia holding that notwithstanding the existence of a reason to believe qua a police officer, the satisfaction for the need to arrest shall also be present. Thus, sub-clause (1)(b)(i) of Section 41 has to be read along with sub-clause (ii) and therefore both the elements of reason to believe and satisfaction qua an arrest are mandated and accordingly are to be recorded by the police officer. 21. The submission made by learned counsel for the non-applicant that the observations are restricting only if the police officer may not apply to the officer of GST Department, exercising powers of arrest under the CGST Act, 2017, may not hold any water as whatever may be statute under which particular to an offence, arrest undisputedly would result in the same consequences. The guidelines issued by the Honourable Apex Court thus are to be followed in the backdrop of severe congestion in the jail and denial of the bail is an exception, where the custody for the purpose of investigation is not warranted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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