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TMI Blog2024 (12) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... from the respective contentions regarding detention for the two days, what is very significant, and disturbing is the charade that seems to have been carried out in issuance of summons to petitioner. The first summons issued under Section 70 of the CGST Act, which this Court has perused, is signed by the Superintendent/Appraiser/Senior Intelligence Officer on 27th November, 2024. It demands the appearance of the petitioner on 28th October 2024 at 1730 hours at DGGI, DZU, Dwarka Office. However, the DIN generation time, as per the online system, shows the generation at 21:55:20 hours on 28th November 2024, i.e. about 5 hours after the petitioner was expected to have appeared before the agency. CBIC circular dated 05th November 2019 directed that no search authorization, summons or Arrest Memo shall be communicated/issued to a taxpayer or any other person without a computer-generated DIN, which would be quoted prominently in the body of communication, hosted on an online portal cbicddm.gov.in - Having used the DIN on the first summons to elicit the generation time, petitioner contends that the summons never existed at the time they were served or at the time which was scheduled for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner was taken taken in his own car from premises of the Company, accompanied by the officers of the respondent, to the respondent s office located at Dwarka at around 1600 hours and was illegally detained there, without reason or information. His mobility was restricted, and he was not allowed to leave the premises of the respondent; his phone was also cloned at respondent s premises without his consent. 5. On the intervening night of 29th and 30th November 2024, petitioner was arrested. Allegations pertained to availing Input Tax Credit ( ITC ) amounting to Rs. 10,76,99,292/- by procuring fake invoices without actual supply of goods through the firms operated by co-accused Shri Ayyub Malik in contravention of Section 132 (1) (c), CGST Act. 6. On 30th November 2024, at 1245 hours, petitioner was produced before the Chief Judicial Magistrate (Special Court), Patiala House Court, New Delhi ( CJM ) along with a remand application seeking 14 days judicial custody. 7. Petitioner contested the remand application vehemently before the CJM making various submissions; however, the CJM disposed of the remand application granting 13 days judicial custody. Submissions on behalf of Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al platform for generation of DIN is hosted on the Directorate of Data Management (DDM)'s online portal cbicddm.gov.in 10. Discrepancies in Arrest Memo 10.1 Arrest Memo along with Jamatalashi (also with a DIN) was generated on 30th November 2024 declaring petitioner s arrest at 0100 hours by stating that grounds of arrest have been informed to the petitioner and the intimation of the arrest has been given to the Father Shri B.P. Suman at his Mobile No. 995844590 . The Arrest Memo and Jamatalashi are reproduced as under for ease of reference: 10.2 It was submitted that the Arrest Memo itself shows that it was made at 0100 hours and verified by a witness with signature dated 30th December 2024 . Same is in contravention to the respondent s statement before the CJM that the arrest was made at 0030 hours on 30th November 2024. 11. Non-supply of Grounds of Arrest 11.1 Under Section 69 (1), CGST Act, reasons to believe are required and once those are formed, condition under Section 69 (2) is triggered which has two prerequisites: a. the officer authorized to arrest the person shall inform such person of the grounds of arrest, and b. produce him before a Magistrate within 24 hours. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Anr. 1990 SCC OnLine Bom wherein it was held that arrest of a person commences from the time restraint is placed on the arrestee s liberty, and not from the time of arrest officially recorded by the police. Thus, it was argued that the consequential custody of the petitioner herein is illegal. 12.3 Reference was also made to the guidelines formulated by the Supreme Court in the landmark judgement of D.K. Basu v. State of West. Bengal 1997 (1) SCC 416. 13. Insufficient compliance of Section 69 (2), CGST Act 13.1 Respondent s argument of the remand application subsuming grounds of arrest was vehemently contested by Senior Counsel for petitioner. It was contended that Section 69 (1), CGST Act deals with the reasons to believe formed by the Commissioner before the arrest of the accused/taxpayer. However, Section 69 (2), CGST Act categorically deals with arrest compliances involving two prerequisites as noted in paragraph 11.1 above. Difference between reasons to believe and grounds of arrest as propounded by the Supreme Court in Prabir Purkayastha (supra) were adverted to. 13.2 Even if the argument of grounds of arrest being subsumed in the remand application is accepted, Senior Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s supplied on the 30th November 2024, when the petitioner was produced before the CJM. Remand application explicitly outlined the reasons for arrest, fulfilling the procedural requirements. The grounds of arrest were effectively communicated to petitioner at the time of arrest, though the records of the communication were not preserved. Arrest Memo was duly prepared and signed at 0010 hours, ensuring compliance with procedural mandates. Petitioner was produced before the CJM at 1245 hours, and the remand application was supplied outside the court. 16.2 Remand proceedings inherently subsumed the arrest process, reflecting procedural adherence. Call records substantiate that the petitioner was in contact with his family members during the relevant period, indicating transparency in the arrest procedure. The petitioner was allowed to leave on the night of 28th November 2024 and voluntarily returned on 29th November 2024, whereupon he was formally arrested at 0100 hours on 30th November 2024. Therefore, during this process, there was no arbitrary deprivation of the petitioner s personal liberty. 16.3 SSC for respondent submitted that petitioner s claim of being detained beyond 24 hours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oudhary and Ors v. Union of India and Ors. 2022 SCC OnLine SC 929. The arrest was effected within a reasonable time frame, adhering to the 24-hour timeline mandated under law, as interpreted in Ram Kishor Arora v. Enforcement Directorate, (2024) 7 SCC 599. The procedural standards under GST laws were met, and any typographical errors in documentation were incidental and did not undermine the validity of the arrest or remand proceedings. 17.2 SSC for respondent further contended that the remand application provided specific grounds for arrest, including violations under penal statutes and the involvement of individuals in the infractions. Paragraphs of the remand application outlined crucial details: paragraph 1 referenced three GST registration numbers; paragraph 2 highlighted searches conducted at multiple locations; paragraph 2.6 detailed evidence gathered during inspections; paragraph 3 reported findings of non-functioning suppliers; paragraph 5.5 recorded statements on 29th November 2024; paragraph 6 explained the modus operandi; paragraph 9 noted financial discrepancies amounting to availment of over Rs. 10 crores fraudulent ITC; and paragraph 12 specified the grounds of arres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... communication which does not bear the electronically generated DIN and is not covered by the exceptions mentioned in para 3 above, shall be treated as invalid and shall be deemed to have never been issued . 5. Any communication issued without an electronically generated DIN in the exigencies mentioned in para 3 above shall be regularized within 15 working days of its issuance, by: (i) obtaining the post facto approval of the immediate superior officer as regards the justification of issuing the communication without the electronically generated DIN; (ii) mandatorily electronically generating the DIN after post facto approval; and (iii) printing the electronically generated pro-forma bearing the DIN and filing it in the concerned file. 17.5 Lastly, petitioner s claim that the grounds of arrest were not furnished is baseless, as evidenced by the petitioner s acknowledgment on the Arrest Memo. Moreover, CJM s remand order dated 30th November 2024, corroborates compliance with procedural requirements, stating: In the present case, allegations are that accused Ayyub Malik availed fraudulent ITC of Rs. 12,69,93,694/- and accused Kshitij Ghildiyal availed and utilized fraudulent ITC of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inct from other fiscal statutes and does not necessitate disclosure to the accused. Judicial review is permissible to ascertain the existence of reasons, and due procedural compliance has been demonstrated in the present case. 18.4 Counsel contended that the authorization for arrest under Section 69 (1), CGST Act was not mechanical but was predicated on substantial evidence, including: a. Documentary material collected during the investigation; b. Statements of co-accused and suppliers; and c. Correlation of evidence indicating the petitioner's involvement in offenses under Section 132 (1), CGST Act. These factors collectively establish that the Commissioner exercised due diligence and objective satisfaction before granting approval. 18.5 Petitioner s contention that the reasons were pre-emptive or baseless was refuted. It was submitted that the arrest was sanctioned only after a thorough evaluation of evidence. The remand application underscores the seriousness of the process, and the corroboration of transactions with non-existent firms and statements of co-accused with independent evidence fulfils the statutory threshold of reasons to believe. 18.6 Respondents have contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en committed by the petitioner under Section 132 (1) (c), CGST Act are punishable under Section 132(2)(i) or (ii), CGST Act. The arrest was made under Section 69, CGST Act. 21. For ease of reference, the relevant provisions are extracted as under: Section 69. Power to arrest (1) Where the Commissioner has reasons to believe that a 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, authorise any officer of central tax to arrest such person. (2) Where a person is arrested under sub-section (1) for an offence specified under sub-section (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours. (3) Subject to the provisions of the Code of Criminal Procedure, 1973(2 of 1974), (a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of any of the offences mentioned in clauses (a) to (k) of this section, shall be punishable (i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; (ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine; (iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enunciated by the Supreme Court and other Courts in relation to legality of arrest. 27. The jurisprudence relating to legality of arrest has developed, largely within the contours of PMLA and UAPA. Both these statutes have stringent bail requirements, essentially what is termed as the twin conditions . Using the constitutional peg under Article 22 (1) which mandates that no person shall be detained without being informed as soon as may be of the grounds for such arrest, the jurisprudence on grounds of arrest has slowly evolved into a significant area of law. The most relevant decisions of the Supreme Court, in this jurisprudential journey, of more recent vintage, are inter alia Vijay Madanlal Choudhary (supra) 2023, V. Senthil Balaji (supra) 2023, Pankaj Bansal (supra) 2023, Ram Kishor Arora (supra) 2023, Prabir Purkayastha (supra) 2024, and finally Arvind Kejriwal (supra) 2024. 28. In the July 2024 decision of Arvind Kejriwal (supra), all the prior decisions have been adverted to and principles were culled out. It may not be necessary for the purposes of this adjudication to advert to all such principles. 29. What is in focus here, is the legality of arrest tested on proper and me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e orally read out to the arrested person or read by such person with nothing further and this fact is disputed in a given case, it may boil down to the word of the arrested person against the word of the authorised officer as to whether or not there is due and proper compliance in this regard. In the case on hand, that is the situation insofar as Basant Bansal is concerned. Though ED claims that witnesses were present and certified that the grounds of arrest were read out and explained to him in Hindi, that is neither here nor there as he did not sign the document. Non-compliance in this regard would entail release of the arrested person straightaway, as held in V. Senthil Balaji [V. Senthil Balaji v. State, (2024) 3 SCC 51 : (2024) 2 SCC (Cri) 1] . Such a precarious situation is easily avoided and the consequence thereof can be obviated very simply by furnishing the written grounds of arrest, as recorded by the authorised officer in terms of Section 19 (1) PMLA, to the arrested person under due acknowledgment, instead of leaving it to the debatable ipse dixit of the authorised officer. 43. The second reason as to why this would be the proper course to adopt is the constitutional o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. In the case on hand, the admitted position is that ED's investigating officer merely read out or permitted reading of the grounds of arrest of the appellants and left it at that, which is also disputed by the appellants. As this form of communication is not found to be adequate to fulfil compliance with the mandate of Article 22 (1) of the Constitution and Section 19 (1) PMLA, we have no hesitation in holding that their arrest was not in keeping with the provisions of Section 19 (1) PMLA. Further, as already noted supra, the clandestine conduct of ED in proceeding against the appellants, by recording the second ECIR immediately after they secured interim protection in relation to the first ECIR, does not commend acceptance as it reeks of arbitrary exercise of power. In effect, the arrest of the appellants and, in consequence, their remand to the custody of ED and, thereafter, to judicial custody, cannot be sustained. (emphasis added) 31. In Prabir Purkayastha (supra), the Supreme Court reiterated the principles expounded in Pankaj Bansal (supra) and stated as under: 19. We may note that the modified application of Section 167 CrPC is also common to both the statutes. Thus, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in connection with an offence or a person placed under preventive detention as provided under Articles 22 (1) and 22(5) of the Constitution of India is sacrosanct and cannot be breached under any situation. Non-compliance of this constitutional requirement and statutory mandate would lead to the custody or the detention being rendered illegal, as the case may be. 31. Furthermore, the provisions of Article 22 (1) have already been interpreted by this Court in Pankaj Bansal(supra) laying down beyond the pale of doubt that the grounds of arrest must be communicated in writing to the person arrested of an offence at the earliest. Hence, the fervent plea of learned ASG that there was no requirement under law to communicate the grounds of arrest in writing to the accused appellant is noted to be rejected. (emphasis added) 32. The Supreme Court, in Arvind Kejriwal (supra), agreed with these enunciations in Pankaj Bansal (supra) and Prabir Purkayastha (supra) and stated as under: 18. We respectfully agree with the ratio of the decisions in Pankaj Bansal (supra) and Prabir Purkayastha (supra), which enrich and strengthen the view taken in Vijay Madanlal Choudhary (supra), on the interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to formulate their arguments during the remand, is a specious argument. must lean on the side of overcaution, exactitude, and punctiliousness, rather than otherwise. 40. A constitutional mandate must be understood and implemented in its right and rational perspective, and not cursorily and casually. Even if assuming, in favour of the prosecution, that the narrative in the remand application amounted to grounds of arrest, furnishing the said application just before the remand hearing would effectively negate and nullify the duty to inform meaningfully and at the earliest. 41. The arrest was at 0100 hours on 30th November 2024 till 1245 hours when the remand hearing took place. A time of about 11 hours would have been adequate for the arrestee to seek legal counsel and to prepare his defence based upon a crystallised set of grounds of arrest . The Supreme Court has frowned upon general grounds of arrest, stating that they had to be highly specific in nature. No such effort was made at the stage of arrest or immediately thereafter, and therefore, would vitiate the arrest itself, amounting to an infraction of the petitioner s right. 42. A perusal of the remand order would also show th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, three minutes after the first summons, the second DIN was generated, and a second summons was generated for summoning on 29th November 2024 at 0700 hours. A perusal of the said second summons would also show that it was signed on 27th November 2024, whereas the printed date on the summons is 28th November 2024. Therefore, while the second summons was generated at 21:58:35 hours on 28th November 2024 evening, the summons itself strangely shows the signatures of the officer as of 27th November 2024. This attempt, as per petitioner, of having detained petitioner without any paperwork, and then creating the paperwork subsequently to cover up the tracks. 46. Reliance by counsel for respondent on clause 4 and 5 of CBIC s circular dated 5th November 2019 with respect to regularisation of omission is unmerited since nothing was produced to show that the DIN was generated subsequently, and that the communication was given without the DIN previously; and even if it was generated later, whether the process of clause 5 was adhered to. 47. The discrepancy in these summons does point to the respondent s mismanagement of the arrest process. It also throws a serious doubt on the aspect of deten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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