GST Caselaw

#GSTCsae-75-Gist of Cases on Search and Seizure: Person creating Bogus Firms denied bail since the main person have not been arrested, Bail granted in case of Offence u/sec 132(1)(b) since the offence itself is compoundable and not punishable with death or imprisonment, Reason to believe mandatory for conducting search U/Sec 67, Bail granted cancelled on account of intimidating witnesses

#GSTCsae-75-Gist of Cases on Search and Seizure: Person creating Bogus Firms denied bail since the main person have not been arrested, Bail granted in case of Offence u/sec 132(1)(b) since the offence itself is compoundable and not punishable with death or imprisonment, Reason to believe mandatory for conducting search U/Sec 67, Bail granted cancelled on account of intimidating witnesses

 

CA Arpit Haldia

 

Case-1-: Jagdish kanani v. Commissioner, CGST & Central Excise, Indore [2019] 104 taxmann.com 21 (Madhya Pradesh), Mehul Kheria v. Commissioner, CGST & Central Excise, Indore [2019] 104 taxmann.com 19 (Madhya Pradesh)

Case-2-: Shravan A. Mehra, Mr. Anil K. Mehra v.Superintendent of Central Tax [2019] 103 taxmann.com 429 (Karnataka)

Case-3-: Mohit Minerals (P.) Ltd. v. Union of India [2019] 103 taxmann.com 169 (Gujarat)

Case-4-: Rajesh Jindal v. Commissioner of Central Tax GST, Delhi [2019] 101 taxmann.com 458 (Delhi)

Case-5-: Smt. Seema Gupta v. Union of India [2019] 101 taxmann.com 152 (Allahabad)

 

Case-1:- Jagdish kanani v. Commissioner, CGST & Central Excise, Indore [2019] 104 taxmann.com 21 (Madhya Pradesh), Mehul Kheria v. Commissioner, CGST & Central Excise, Indore [2019] 104 taxmann.com 19 (Madhya Pradesh)

Issue: Person engaged in creating bogus firms in the name of innocent persons denied bail since the main persons have not been arrested so far

Facts: Jagdish Kanani, proprietor of Gurukripa Traders, Thane (Maharashtra) collected address proof viz-a-viz electricity bill, Adhar Card, etc. of innocent persons for registration of the firm under the GST Act and defrauded the Government Exchequer. The present petitioner came in the contact with Mehul Kheria and along with Mehul Kheria created many bogus and fake firms and issued fake invoices to get the input tax-credit through these invoices and defrauded the Govt. Exchequer and as a result of the investigation till date it is found that in total, these firms received fake invoices of Rs. 9,217.14 Lakhs for inward supply and issued fake invoices of Rs. 9,799.09 Lakhs for outward supplies. Accordingly, Jagdish Kanani and his partner defrauded Govt. Exchequer and evaded the GST to the tune of Rs. 3,422.02 Lakhs i.e. @ 18% of total supply Rs. 19,016.23 Lakhs by creating such bogus firms. In his statement, he has disclosed all the information available with him and also admitted that he did not receive any goods physically nor he sold any goods and he did not submit any GST return. He is in contact with Mehul since 1994.

The petitioner was formally arrested on 5.1.2019 and produced before the Judicial Magistrate, First Class on 8.1.2019. Thereafter, he applied for regular bail u/s. 439 of Cr.P.C. Learned Addl. Sessions Judge has found that prima facie the petitioner has said to have committed offence not only u/s. 132(1)(a), (b) & (c) of GST Act but also u/s. 467, 468, 471 and 120-B of IPC and accordingly rejected the application for grant of bail. Hence, the present petition u/s. 439 of Cr.P.C. before this Court.

Contention by the Petitioner: Petitioner has falsely been implicated in the case. He is neither a supplier/purchaser nor a registered dealer under the GST Act. He has not rendered any services nor issued any invoice, therefore, he has wrongly been made accused u/s. 132 of the GST Act. His statement has already been recorded and his custody is not required for further investigation and he will cooperate in further investigation, if any, and is ready to appear before the respondent/prosecution as and when his presence is required. The investigation may take long time to conclude, hence he deserves to be released on bail.

Contention by the Respondent:  He submits that the statement recorded by the petitioner is admissible in evidence and which can be used against him in the trial as held by this Court in the case of M/s. R.S. Company v. CCE (CEA No.24/2012) decided on 8-2-2017. The main accused have not been arrested so far, hence the bail application be rejected.

Held: In view of the statement of the petitioner recorded u/s. 70 of the GST Act and the fact that the main accused have not been arrested so far, in the considered opinion of this Court, the petitioner is not entitled for grant of bail. Accordingly, this M.Cr.C. fails and is hereby dismissed.

 

Case-2-: Shravan A. Mehra, Mr. Anil K. Mehra v.Superintendent of Central Tax [2019] 103 taxmann.com 429 (Karnataka)

Issue: Anticipatory bail can be granted in case of Offences contemplated U/Sec 132 (1)(b) since the magnitude of the offence can be contemplated on the basis of maximum punishment provided under Act is five years and fine, not punishable with death or imprisonment for life and alleged offence is also compoundable with the Authority, who has initiated the said proceedings.

Facts: Petitioners have obtained Invoices from the Company of the respondent without delivery of the goods and thereby evaded payment of tax and they have committed an offence under Section 132(1)(b) of G.S.T Act.

Summons has been issued by the respondent and as per summons, the petitioners attended and have given their statement and once in such case when the witness has gone for giving the statement, he has been apprehended and taken to custody and as such, the petitioners will also apprehend that they are also likely to arrest. Though, they have now received the summons and in the event, they go to give their statement they may be apprehended, arrested and they may be taken into custody.

Held: On close reading of the Section 132, 138 and 139 of CGST Act, 2017, maximum punishment provided under Act is five years and fine and if that is taken into consideration, the magnitude of the alleged offence and it is not punishable with death or imprisonment for life. Even as per the said provision, the alleged offence is also compoundable with the Authority, who has initiated the said proceedings. The only consideration which the Court has to consider while releasing the petitioners on anticipatory bail is, that whether petitioners can be secured for the purpose of investigation or for the purpose of trial. Under such circumstances, court felt that by imposing stringent conditions if the petitioners are ordered to be released on anticipatory bail, it would meet the ends of justice. The Court relied upon its judgement in Avinash Aradhya v. Commissioner of Central Tax [2019] 103 taxmann.com 50 (Karnataka).

Mr. Shravan.A.Mehra and Mr. Anil.K.Mehra were ordered to be released on anticipatory bail in the event of their apprehension or arrest in O.R.No.40/2018-19 filed under Section 132 of G.S.T.Act, subject to the conditions stated by the Court.

 

Case-3-: Mohit Minerals (P.) Ltd. v. Union of India [2019] 103 taxmann.com 169 (Gujarat)

Issue: Whether reason to believe a mandatory aspect before conducting a search under Section 67 of CGST Act, 2017

Facts: From the record of the case, it appears that the proper officer could not have any reason to believe as contemplated under sub-section (2) of section 67 of the Act, and hence, the entire search proceedings are without authority of law.

Held: Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 21st February, 2019. Direct service is permitted.

 

Case-4-: Rajesh Jindal v. Commissioner of Central Tax GST, Delhi [2019] 101 taxmann.com 458 (Delhi)

Issue: Bail Granted to Petitioner was cancelled on account of Intimidating Witnesses

Facts: Pursuant to the last order dated 24.12.2018, the respondent has presented before the Court counter-affidavit dated 28.12.2018, explaining its stand in relation to the allegations on the basis of which bail granted to the petitioner was cancelled by the Sessions Court by order dated 22.12.2018.

Contention by the Petitioner:  Impression given to the Sessions Court was that the quantum of tax evasion involved is not Rs. 4.58 crores but Rs. 85 crores, which is false and baseless. Secondly there is no material to sustain the allegation that the petitioner has been intimidating witnesses; and for the foregoing reasons, the cancellation of the petitioner’s bail is wholly unjustified and illegal.

Contention by the Respondent: Statements have been recorded inter alia of Sh. Deepak Taneja and Sh. Ravinder Tyagi, both of whom have stated, giving specifics, that the petitioner has threatened them since they were made dummy directors by the petitioner in certain companies which were used to generate fake tax invoices in order to fraudulently pass on input tax credit, without actually supplying material.

Held: It appears to the Court that the figure so inserted in handwriting is not ’85’ but ‘8.5’. Whether the amount mentioned is Rs. 85 crores or Rs. 8.5 crores is, however, irrelevant since under Section 132(1)(i) in a case where the amount of tax evaded or input tax credit wrongly availed or utilized exceeds Rs.5 crores, the offence is punishable with imprisonment for a term which may extend to 5 years and with fine.

It is evident that order cancelling petitioner’s bail does not proceed on the basis of the quantum of tax evasion involved but on the basis that petitioner has attempted to intimidate witnesses whom he had made dummy directors/proprietors in certain companies/firms. In view of the above, this Court is of the opinion that there is no infirmity in order dated 22.12.2018 made by Sessions Court cancelling petitioner’s bail; and that, petitioner having misused and abused liberty granted to him, is not entitled to the benefit of bail, at this stage. Both applications are accordingly dismissed, however with no order.

 

Case-5-: Smt. Seema Gupta v. Union of India [2019] 101 taxmann.com 152 (Allahabad)

Issue: Petitioner not to be taken into custody till the next listing. Ground taken Section 138 of the said Act of 2017 provides for compounding of offences, till date complaint has not been filed and only on the basis of raid itself, arrests are being effected; without calculating and determining whether any offence has been committed or not.

Facts: Petitioner, along with her husband namely Sunil Kumar Gupta is a partner in two firms. A raid was conducted on 30.10.2018 on the business premises, Sunil Kumar Gupta, Rachin Gupta, and one Jaideep Kumar Agarwal were taken by the raiding party and their arrest was shown on 01.11.2018.

The petition seeks issuance of a writ in the nature of certiorari quashing the impugned proceedings/First Information Report or complaint dated 01.11.2018 as DGGI Case No. 79/2018-19, under Section 132(1)(b), 132(1)(c), 132(1)(i) Read with Sections 16(2)(b) and 132(5) of the Central Goods and Services Tax Act, 2017, Police Station DGGI, Zonal Office, District Lucknow as well as writ in the nature of mandamus commanding the respondents not to arrest and harass the petitioner pursuant to the First Information Report mentioned above

Contention by the Petitioner: Petitioner is sought to be arrested. It has been argued that Section 138 of the said Act of 2017 provides for compounding of offences also. It has been argued that till date complaint has not been filed, to the knowledge of the petitioner. On the basis of raid itself, arrests are being effected; without calculating and determining whether any offence has been committed or not. It has been argued that the raiding officers were ill equipped to assess GST. They are not the assessing officers.

Held: The petitioner to appear in the office of respondent no. 4 on 04.12.2018, and thereafter as and when required by the inquiry officer. The Investigating officer shall furnish a questionnaire to the petitioner. The questionnaire be also furnished to the petitioner at her e-mail address so that subsequently, it is not disputed whether questionnaire was given or not and whether the petitioner responded or not. The petitioner would be obliged to answer the questionnaire and furnish the answers available with her. The petitioner shall not be taken in custody, till the next date of listing. The petitioner is directed to join investigation.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top