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TMI Blog2024 (8) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... HE SUPERINTENDENT OF GST AND CENTRAL EXCISE, THE DEPUTY COMMISSIONER OF GST AND CENTRAL EXCISE HEAD QUARTERS PREVENTIVE UNIT, THE ADDITIONAL COMMISSIONER OF GST AND CENTRAL EXCISE, THE COMMISSIONER OF GST AND CENTRAL EXCISE [ 2019 (5) TMI 895 - MADRAS HIGH COURT] , the allegation of the revenue was that the petitioner-company had contravened the provisions of Section 16(2) of the CGST Act and availed excess ITC insofar as there had been no movement of goods as against the supplier and the petitioner and the transactions were bogus and fictitious, created only on paper solely to avail ITC. Show cause notice issued under Section 74(1) of the HGST Act/CGST Act upon him is yet to be adjudicated upon and the exact liability of the petitioner/his firm is yet to be fixed. The sentence to be awarded in this case is directly linked with the quantum of evasion of tax and the prosecution of the petitioner is also linked with determination of evasion of tax because if there is no evasion of tax, there can be no criminal liability. The determination of tax liability is subject to the challenge before tribunals and courts and does not fall within the realm of criminal courts. The determination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC ) and was discharging its GST liability mainly through utilization of credit ledger by discharging less than 1% of its liability through cash ledger. Inquiry was initiated. Inspection/search proceedings were carried out in the business premises of the firm of the petitioner and it was found that no business was in fact being carried out at the given address. The additional place of business of his firm, as disclosed by the petitioner, was also checked and documents kept therein were taken into possession. Reports were sought from the jurisdictional authority of the State of Delhi, as per which, all the 29 firms shown as suppliers of the firm of the petitioner were either non-existent or were nonfunctional or were carrying out no business activity or were involved in fraudulent activities and none of those firms was registered for dealing in the business of iron scrap. It was revealed that the firm of the petitioner had availed and utilized wrongful ITC worth Rs. 12,48,60,671/-. 3. As per further allegations, the bank account of the petitioner/his firm was attached and it came to notice that the petitioner, on 12.04.2023, had transferred an amount of Rs. 75,00,000/- to one unkn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2024 without adjudication and assessment of tax liability of his firm under the provisions of HGST Act and CGST Act, which prescribe a specific procedure for assessment and unless such assessment or adjudication was conducted determining the liability of his firm, no offence was made out and even prosecution could not be launched against him. He has further argued that the petitioner was under a bonafide belief that the investigation stood culminated on cancellation of GST certificate of his firm, which stood cancelled w.e.f. 01.04.2020, vide order dated 10.10.2023 and he was given to believe that the proceedings under Sections 73 and 74 of HGST Act for adjudication of the allegations would be conducted to determine the legal tax liability of his firm but instead of making adjudication, he was arrested in this case, which was illegal and, therefore, it is urged that on this ground alone, he deserves to be extended benefit of bail. To substantiate his argument, learned counsel for the petitioner has relied upon the authorities cited as Akhil Krishan Maggu another vs. Deputy Director, Directorate General of GST Intelligence others : 2020 (77) GST 279, Jayachandran Alloys (P) Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the absence of any credible piece of information. It is further submitted that even otherwise since the maximum sentence for commission of offences punishable under Sections 132(1)(b) and (c) of the HGST Act/CGST Act is 05 years and he has remained in custody for about a period of 06 months, therefore, he deserves to be released on bail. To buttress his argument on this point, learned counsel for the petitioner has relied upon the authorities cited as Ashutosh Garg vs. Union of India, Special Leave to Appeal (Crl.) No. 8740 of 2024, decided on 26.07.2024 and Yash Goyal vs. Union of India : Criminal Appeal No. 2784 of 2024, decided on 28.06.2024 by Hon ble Supreme Court. 8. Respondent has filed reply resisting the claim made by the petitioner. Learned State counsel, assisted by Mr. Mukesh Gautam, authorized representative of GST Department, while not disputing the fact that on completion of investigation, a complaint has been presented against the petitioner before the concerned Court and pre-charge evidence is yet to be recorded and also admitting that a show cause notice for adjudication and assessment of tax liability of the firm of the petitioner and M/s Tata Steels Ltd. ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gfully taken exceeds Rs. 500 Lakhs, the concerned person shall be liable to undergo imprisonment for a term which may extend to 05 years with fine. 11. The provisions of Section 132 of HGST Act, which are pari materia with Section 132 of CGST Act are relevant for the purpose. As per Section 132 (1)(b) and (c), whoever issues an invoice or bill without supply of goods or service or both in violation of provisions of this Act, leading to wrongful availment or utilization of Input Tax Credit or refund of tax or avails Input Tax Credit using such invoice or bill commits the offence under this Section and is liable for punishment with imprisonment for a term which may extent to 05 years and with fine in cases where the amount of tax evaded or the amount of Input Tax Credit wrongly availed or utilized or the amount of refund wrongly taken exceeds Rs. 500 Lakhs. In Jayachandran s case (supra), the allegation of the revenue was that the petitioner-company had contravened the provisions of Section 16(2) of the CGST Act and availed excess ITC insofar as there had been no movement of goods as against the supplier and the petitioner and the transactions were bogus and fictitious, created only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. a total sum of Rs. 7,62,04,508/-. The said claim is yet to be determined by the competent authority of the respondent by making proper assessment/adjudication. As such, it is only after the adjudication/assessment that the liability of the firm of the petitioner with regard to exact amount of evasion of tax is to be determined and, therefore, the question as to the exact liability of the petitioner would be decided only after adjudication of the same under Section 74 of the HGST/CGST Acts. Hence, assuming that the petitioner is liable for punishment under Section 132(1)(b) and (c) of the HGST Act is yet to be decided and is pre-mature at this stage. 13. In Akhil Krishan Maggu s case (supra), a Division Bench of this Court, while relying upon Jayachandran s case (supra), had observed that keeping in mind the provisions of Sections 69 and 132 of HGST Act which empower Proper Officer to arrest a person who has committed any offence involving evasion of tax more than Rs.5 Crore and prescribe maximum sentence of 5 years which fell within the purview of Section 41A of Cr. P.C., the power of arrest should not be exercised at the whims and caprices of any officer or for the sake of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a complaint under Section 132 of the HGST Act read with the provisions of IGST Act has been filed against him. The trial is likely to take time. Show cause notice issued under Section 74(1) of the HGST Act/CGST Act upon him is yet to be adjudicated upon and the exact liability of the petitioner/his firm is yet to be fixed. The sentence to be awarded in this case is directly linked with the quantum of evasion of tax and the prosecution of the petitioner is also linked with determination of evasion of tax because if there is no evasion of tax, there can be no criminal liability. The determination of tax liability is subject to the challenge before tribunals and courts and does not fall within the realm of criminal courts. Further in view of the fact that one M/s Tata Steels Ltd. has also been issued notice under Section 74(1) of the HGST Act/CGST Act jointly with the petitioner on the allegations of being major recipient of the ITC and its liability is also to be adjudicated upon, which obviously may reduce the liability to be imposed upon the petitioner, coupled with the fact that maximum period of punishment to be awarded under Section 132 of the HGST Act is 05 years and also i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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