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TMI Blog2024 (7) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... registered on PAN. The investigating agency has seized a laptop from premises of the applicant and on forensic investigation, it revealed that 89 different firms are maintained by separate folders by the applicant. It further revealed that the applicant has carried out transactions of sale and supply by showing vexatious documents of existence of other firms and has never conducted any business activities through the said firms and illegally claimed Input Tax Credit (ITC) over the said transactions and thereby committed an offence. 4. The Directorate General of GST Intelligence (DGGI) Nagpur Zonal Unit conducted a search on 22.12.2023 and found that another firm namely "Shri Krishna Traders" in the name of Manoj Khobragade is also managed and operated by the applicant. The said firm is also engaged in availing and passing on fake ITC and has individually passed around Rs. 12.00 crores involving invoice value of Rs. 67.00 crores. The three Shell Firms owned and operated by the applicant cumulatively availed and passed on fake ITC around Rs. 37.00 crores. On the basis of these allegations, the crime was registered. 5. Learned Senior Counsel for the applicant submitted that the lapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Firms in his name, in the names of his relatives, and dummy persons and effected total bogus supply worth of Rs. 850.71 crores and availed fraudulent ITC of Rs. 153.11 crores and passed on bogus credit of Rs. 141.27 crores. Thus, there is evasion of tax. The investigation regarding evasion of tax in respect of other firms is in progress. Considering large magnitude of amount involved, the application deserves to be rejected. 8. In the light of the above submissions, if Scheme contemplated under Section 132 of the CGST Act, 2017 is considered, it provides punishment for certain offences and it is urged that it is only when a person supplies any goods or services or both without issue of any invoice, in 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons who are arrested in connection with non-cognizable and bailable offences and (2) in the light of the fact that the Commissioner of GST is conferred with the powers of search and seizure under Section 67 (10) of the CGST Act, 2017, in the same manner as provided in Section 165 of the Cr.P.C., 1973, the contention of the Additional Solicitor General that the petitioners cannot take umbrage under Section 41 and 41A of Cr.P.C. may not be correct. It is further held by the Honourable Apex Court that it may be remembered that Section 41 (3) of Code of Criminal Procedure, does not provide an absolute irrevocable guarantee against arrest. Despite the compliance with the notices of appearance, a Police Officer himself is entitled under Section 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 phras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a single PAN and without conducting any business and supply of any goods from the registered premises, illegally claimed refund of the accumulated ITC on account of trade/supply of goods and contravened provisions of the CGST Act. The office of the non-applicant recorded statements of the applicant and various witnesses. The non-applicant relied upon statements of witnesses including the applicant and submitted that the arrest of the applicant is justified. Section 136 of the CGST Act deals with relevancy of statement 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 an offence, 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 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 incap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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." 17. Upon considering the Scheme contained in Section 132 of Chap (XIX) of the CGST Act, 2017 and after taking into account the punishment provided, the decision in the case of Arnesh Kumar vs. State of Bihar supra was extensively reproduced in the case of Daulat Samirmal Mehta vs. Union of India, thr. the Secretary and ors supra which is reproduced as under: "The requirement under sub-section (1) of Section 69 is reasons to believe that not only a person has committed any offence as specified but also as to why such person needs to be arrested. From a perusal of the reasons recorded by the Principal Additional Director General, we find that other than paraphrasing the requirement of Section 41 Cr.P.C., no concrete incident has been mentioned therein recording any act of tampering of evidence by the petitioner or threatening / inducing any witness besides not co-operating with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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