GST CASE LAW 29 / 21-22 HC: Rejects anticipatory-bail considering offence gravity, assessee’s non-cooperation, chances of tampering evidence
CA Vivek Agarwal
FCA | CS | LLB | Author | Speaker | GST | Income Tax | Partner at HAA
Nileshbhai Natubhai Patel vs. The State of Gujarat
Oct 21, 2021
Gujarat HC dismisses?anticipatory?bail?plea filed u/s 438 of Criminal Procedure Code (CrPC), observes that?“custodial interrogation would be required”?as there are more than 700 transactions between assessee and other persons of dummy firms involving more than Rs. 737 crores;?
The applicants were apprehending their arrest w.r.t case registered in connection with?offence?relating to issue of fake bills and wrongful claim of Input Tax Credit (ITC) and in addition, the applicant challenged validity of Section 69 of CGST Act/GGST Act before the Supreme Court;?
HC relies on decision of Division Bench rendered in case of?Nathalal Maganlal Chauhan, thereby, dismissing the assumption of assessee that Commissioner is empowered to delegate his powers to his subordinate, as per Section 69 of GGST Act, reasonable belief should be that of the Commissioner;?Categorically,?holds that,?“the power under Section 69 of the GGST Act can be exercised by the authority upon whom the power is delegated provided the delegatee has reasons to believe that the assessee has committed?offence?under Section 132 of the GGST Act”;
On cancellation of GST registration, HC held that there is provision in GGST Act, 2017 that the registration of the firm can be cancelled with retrospective effect;?
Notes a specific contention of Ld. Public Prosecutor that assessee has not co-operated with the investigation and have given evasive reply to certain important questions and weighs- in the information supplied by Department, confidential papers to opine that?“the applicants have not cooperated with the Investigating Agency”;?
Deems as?“misconceived”?assessee’s submissions regarding entitlement to be released on?anticipatory?bail?noting that though the concerned accused was in jail since 1 year and 8 months, the SC had not exercised the discretion in favour of the said accused;
Distinguishes reliance placed on SC case of Satendra Kumar Anil, remarking that?“the present?offence?can be categorized as “economic?offence” where huge public money in the form of alleged tax liability of Rs.137.00 Crores is involved. This Court has considered the seriousness of the charges and the fact that the applicants have not cooperated with the investigating agency…”;?
In rebuttal to assessee’s contention that authorized officer cannot arrest the person alleged to have committed?non-cognizable and bailable?offence?without a warrant of arrest issued by the Magistrate under the provisions of the Code of Criminal Procedure, 1973, HC refers to the case of?Vimal Yashwantgiri;?Opines that?“any person can be arrested for any?offence?under Section 69…by the authorized officer….when any person is arrested by the authorized officer in exercise of power under Section 69 of the CGST/GGST Act, the authorized officer effecting arrest is not obliged in law to comply with the provision of Sections 154 to 157 of the Code”; Thus,?considering?the apprehension shown by Ld. Public Prosecutor that if enlarged on?anticipatory?bail?there are all?chances?of assessee?tampering?with?evidence, witnesses at the time of trial and looking to the?gravity?of the?offence, declines to favour assessee:HC GUJ
It was alleged by the prosecution that the present applicants in connivance with other persons, entered into transaction with 36 dummy firms and false invoices and sales were raised and in pursuance thereto, the Company has issued cheques to 36 dummy firms including four person, who are now arrested by the Department.
·There were receipts of more than Rs.737.00 Crores and amount has been withdrawn by bearer cheque or transferred to other Company or by RTGS to dummy firms and during the course of investigation from one Mr. Afzal, certain material is collected.
·It was contended by learned Public Prosecutor that after the withdrawal of the amount by dummy firms, the said amount is transferred to the applicants through Angadia in cash.
·The Department has collected certain material during the course of investigation with other accused, who have been arrested. It is the specific case of the department that the transaction worth of Rs.737.00 Crores were entered into with 36 dummy firms and there would be liability of more than Rs.137.00 Crores.
·There are provisions in the GGST Act that the registration of the firm can be cancelled with retrospective effect. In the present case, during the course of investigation, it has been revealed that at the time of registration of the firm, the concerned persons have provided necessary documents for the purpose of registration, however as per the case of the prosecution, subsequently it was found that without there being any actual movement of the goods, false invoices were raised and after the arrest of four persons and during the course of investigation, it is revealed that those 36 firms were dummy firms.
·Thus in the facts of the present case, the custodial interrogation of the applicants is necessary.
·Though directed, the applicants have not cooperated with the Investigating Agency
·HC was not inclined to exercise the discretion in favour of the assessee
·The power under Section 69 of the GGST Act can be exercised by the authority upon whom the power is delegated provided the delegatee has reasons to believe that the assessee has committed offence under Section 132 of the GGST Act.
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·Thus, the condition precedent, i.e. 'reasonable belief', for the purpose of exercise of power under Section 69 of the Act remains the same
·The submissions canvassed by the applicants on this aspect is misconceived because the decision rendered by the Division Bench in case of Nathalal Maganlal Chauhan is clear on this point
·In case of Vimal Yashwantgiri Goswami it is specifically held by the Division Bench that any person can be arrested for any offence under Section 69 of the GGTS Act by the authorized officer to whom the authority to arrest is given by the Commissioner if the Commissioner has reasons to believe that such person has committed an offence punishable under Section 132 of the CGST/GGST Act.
·Held that when any person is arrested by the authorized officer in exercise of power under Section 69 of the CGST/GGST Act, the authorized officer effecting arrest is not obliged in law to comply with the provision of Sections 154 to 157 of the Code, however, the authorized officer, after arresting such person, has to inform such person about grounds of his arrest and the person arrested will have to be taken to Magistrate without unnecessary delay if the offences are cognizable and non-bailable
Thus, HC rejected the anticipatory bail application.
Source: TaxSutra??[TS-545-HC(GUJ)-2021-GST]
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Disclaimer: Update is meant for information purpose only and does not purport to be advice or opinion. It is prepared based on the understanding of the provisions as applicable as on date. The author is not responsible for any error or omission?or?for any action taken based on its contents.