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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 ..... Services Tax Act, 2017 ("CGST Act") carrying the business of e-waste management. 3. On 28th November 2024, respondent authorities carried out a search under Section 67, CGST Act at the Company's principal place of business at Gautam Buddha Nagar and UPSIDC Industrial Area, Gopalpur, Sikandrabad, District Bulandshahr, Uttar Pradesh. Allegedly, unaccounted stock was seized. 4. As per Senior Counsel for petitioner, pursuant to the search, petitioner 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power under section 168 (1) of the CGST Act, 2017/ Section 37B of the Central Excise Act, 1944 directs that no search authorization, summons, arrest memo, inspection notices and letters issued in the course of any enquiry shall be issued by any officer under the Board to a taxpayer or any other person, on or after the 8th day of November. 2019 without a computer generated Document Identification Number (DIN) being duly quoted prominently in the body of such communication. The digital 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'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Non-production before a Magistrate within 24 hours 12.1 Petitioner was taken into custody on 28th November 2024 at 1600 hours by the respondent restricting petitioner's mobility. Petitioner was produced before the Magistrate on 30th November 2024 at 1245 hours. Same was in gross violation of Section 58 of the BNSS read with Article 22(2) of the Constitution. 12.2 In this regard, reliance was placed on Bombay High Court's decision in Ashak Hussain Allah Detha v. Assistant Collector of Customs (P) Bombay & 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent submitted that all actions taken by the respondent agency were in strict compliance of the statutory framework under the CGST Act, and other applicable legal norms. The following points were addressed to refute the contentions raised by Senior Counsel for petitioner and to clarify the procedural correctness of the actions undertaken by respondent: 16. Detention of the Petitioner Beyond 24 Hours Misconceived 16.1 It was submitted that the grounds of arrest were duly provided through the remand application, which was 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illed. The omission of specific phrases does not nullify the substance of the grounds of arrest. Compliance with Section 69 (2), CGST Act was ensured, as the Arrest Memo bore the petitioner's signature, and the endorsement was done before the remand hearing. The statutory requirement to "inform" was effectively fulfilled. The remand order reflected the CJM's satisfaction regarding the necessity of the remand, after hearing both sides. The procedural requirements for judicial endorsement were duly met, as recognized in Vijay Madanlal Choudhary 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69 does not mirror the requirements of the CrPC or PMLA. 17.4 Counsel also emphasized that the respondent strictly adhered to procedural safeguards outlined by the CBIC in its Instruction No. 2/2022-23 dated 17th August 2022, which was followed during the petitioner's arrest. In any event, it was argued by counsel for respondent that, as per clauses 4 and 5 of the CBIC circular dated 5th November 2019, which are extracted as under, any omission in generating DIN could be regularised subsequently. 4. The Board also directs that any specified 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons to believe' is devoid of merit, as the application comprehensively reflects the evidence substantiating a prima facie case against the petitioner. 18.3 It was argued that the petitioner's reliance on cases such as Arvind Kejriwal v. Directorate of Enforcement, 2024 INSC 512 and V. Senthil Balaji v. State, 2023 SCC OnLine SC 934 is misplaced. While these decisions underscore the necessity of 'reasons to believe' being based on material evidence, they do not stipulate that such reasons must be disclosed to the arrestee. The statutory framework of the CGST Act is distinct 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edural compliance in this case aligns with the statutory framework under the CGST Act. The submissions categorically establish the petitioner's culpability and the fulfilment of statutory requirements under Section 132 (1), CGST Act. The allegations challenging the legality of the proceedings are, therefore, devoid of merit. Analysis 19. The petitioner essentially challenges petitioner's detention through 28th and 29th November 2024 and arrest at 0100 hours on 30th November 2024 by the respondent agency, who is responsible for prosecuting offences under the CGST Act. 20. The offences alleged to have been 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (j) tampers with or destroys any material evidence or documents; (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or (l) attempts to commit, or abets the commission 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing which was scheduled on 30th November 2024 before the Magistrate. 25. What can, therefore, be gleaned from the above is that firstly, petitioner was orally informed about the grounds of arrest at the time of serving him the Arrest Memo; secondly, the nature, scope, and expanse of that information is not documented in any form or manner; thirdly, no written grounds of arrest were given at the stage of the arrest nor prior to the remand; and fourthly, the remand application was handed over just prior to the Court hearing, which did not have specifically stated 'grounds of arrest'. 26. These facts and circumstances, therefore, have to be tested in the crucible of principles 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to plead and prove before the Special Court that there are grounds to believe that he/she is not guilty of such offence, so as to avail the relief of bail. Therefore, communication of the grounds of arrest, as mandated by Article 22 (1) of the Constitution and Section 19 PMLA, is meant to serve this higher purpose and must be given due importance. ... 42. That being so, there is no valid reason as to why a copy of such written grounds of arrest should not be furnished to the arrested person as a matter of course and without exception. There are two primary reasons as to why this would be the advisable course of action to be followed as a matter of principle. Firstly, in the event such grounds of arrest are 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PMLA. 45. On the above analysis, to give true meaning and purpose to the constitutional and the statutory mandate of Section 19 (1) PMLA of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception. The decisions of the Delhi High Court in Moin Akhtar Qureshi [Moin Akhtar Qureshi v. Union of India, 2017 SCC OnLine Del 12108] and the Bombay High Court in Chhagan Chandrakant Bhujbal [Chhagan Chandrakant Bhujbal v. Union of India, 2016 SCC OnLine Bom 9938 : (2017) 1 AIR Bom R (Cri) 929] , which hold to the contrary, do not lay down the correct law. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) and Article 22(5) of the Constitution of India regarding the communication of the grounds is exactly the identical. Neither of the constitutional provisions require that the 'grounds' of "arrest" or "detention", as the case may be, must be communicated in writing. Thus, interpretation to this important facet of the fundamental right as made by the Constitution Bench while examining the scope of Article 22(5) of the Constitution of India would ipso facto apply to Article 22 (1) of the Constitution of India insofar the requirement to communicate the grounds of arrest is concerned. 30. Hence, we have no hesitation in reiterating that the requirement to communicate the grounds of arrest or the grounds of detention in writing to a person arrested 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 inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only a post-facto interpretation/explanation, and in the opinion of the Court, is unmerited. 37. The communication to the arrestee, as per the Supreme Court, must be clear, categorical, and meaningful, and there is no reason as to why written grounds of arrest could not be given, particularly since, as per the prosecution, petitioner had been interrogated for two days prior to the arrest on the intervening night of 29th November 2024 and 30th November 2024. 38. Despite such categorical enunciations by the Supreme Court, there is no explanation offered by the respondent agency as to why they chose to omit compliance of this essential requirement. To contend that arrestee had been "effectively" informed about the grounds of arrest, which would be enough for the arrestee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urs 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 petitioner's appearance. This, it is argued, would bear out that petitioner was detained illegally at the respondent's office without summons, and the summons were generated subsequently. 45. Strangely enough, at 21:58:35, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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