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2021 (2) TMI 437 - SESSIONS COURT KARNALGrant of Bail - fake invoices without supply of goods - fraudulent availment of ITC - offence punishable under Section 132 of GST Act - HELD THAT:- The contention of the respondent that information is pouring in and, as of date, wrongful availment of ITC to the tune of ₹8,82,55,520/- has come to the fore, cannot be ex-post facto justification for arrest of the applicant. It will not be out of place to mention that wrongful/fraudulent availment of ITC of more than ₹5 crores has to be seen at the time of authorizing arrest. If the amount falls short, then the Commissioner has no reason to believe that a person has committed a cognizable and non-bailable offence within the meaning of Section 132 of the Act so as to justify his arrest in order to investigate further. Needless to say that in ₹5 cases where there is no cogent material to show that ITC of more than ₹5 crores has been wrongfully/ fraudulently availed, the authorities may continue with the investigation without arrest of the applicant. If, on conclusion of investigation, it is found that the amount so availed was more than ₹5 crores, complaint will be instituted under 132 (a) or (b) or (c) or (d) of sub Section 1 read with Clause (i) of sub Section 1 of Section 132 of the Act. Otherwise, complaint will be filed either under Clause (ii) or clause (iii) or clause (iv) of sub Section 1 of Section 132 of the Act but, by no stretch of imagination, can arrest of a person be justified to enable the department to collect evidence if at the time of arrest, the material fell short of indicating the availment of ITC of more than ₹5 crores. The manner in which the statement of Nitish was pleaded to have been recorded at his residence, but now it is being tried to be projected that it was recorded in the office of CGST at Kamal in response to notice under Section 7 of the CGST Act raises a serious suspicion about manipulation, so is the attempt by the authorities to surreptitiously incorporate in the panchnama that record pertaining to M/S Dholagiri Enterprises was recovered from the premises of the applicant. It will not be out of the place to mention that the statement of the applicant was recorded on 9.1.2021. He was allegedly shown the panchnama dated 8.1.2021 drawn at the registered premises of M/s Dholagiri Enterprises and was asked about invoices worth ₹133.47 crores involving ITC amounting to ₹24.28 crores approximately. It is not clear as to how and on what basis this figure of ₹133.47 crores was arrived at particularly when in his statement Nitish Kumar has simply referred to ITC amounting to ₹24.25 crores. Needless to say that the applicant acknowledged having received the invoices but never admitted availment of ITC amounting to ₹24.28 crores. He is alleged to have admitted that he wrongly availed ITC amounting to ₹4.50 crores approximately from Dholagiri Enterprises. This was all the more a reason for the commissioner not to pull the trigger by authorizing arrest of the applicant even after he had reversed an amount of ₹2.55 crores immediately. In Rakesh Arora Versus State of Punjab CRM-M 1511- 2021 on which reliance is being placed by counsel for respondent, the Hon'ble High Court did not differ with the guidelines laid down in Akhil Krishan Maggu [2019 (11) TMI 942 - PUNJAB AND HARYANA HIGH COURT], but it rejected the plea for bail of the applicant on the ground that the case was covered by illustration 6. In this case, the guidelines/illustrations at serial No.l, 2, 3 and 5 are not applicable. In so far as the guideline at serial No.4 is concerned, there is least possibility of the applicant fleeing from country given the fact that he has a large number of government contracts in his hands. Even otherwise, this aspect can be taken care of by making a condition for surrender of passport. Coming to guideline No.6, as observed, herein above, there was no direct documentary or otherwise concrete evidence available on record indicating tax evasion of more than ₹5 crores. Moreover, the applicant has established business. It is not denied that he is paying good amount of direct and indirect taxes. He is not a fly by night operator - As rightly pointed out by counsel for the respondent, the guidelines are illustrative and not exhaustive, but he has not been able to persuade the court as to apart from these guidelines/ illustrations which other grounds could be there. The court is conscious that in some aspects it has gone into merits which, at the time of deciding application for bail is not advisable, but this was necessary because the contention before the court was that the applicant was authorised to be arrested by the Commissioner without there being material to form a reasonable belief that he had committed offence punishable under Clause (i) of Sub-Section 1 of Section 132 of the Act. In view of the law laid down in Akhil Krishan Maggu (supra), the Court was required to look into the entire facts and circumstances to find out if there was credible material to justify arrest of the applicant. In Dhruv Krishan Maggu versus Union of India decided by the Hon'ble Delhi High Court on January 8, 2021 on which reliance has been placed by the respondent also, it was held that though it was not inclined to interfere with investigation at that stage and that too, in writ proceedings, but at the same time innocent persons cannot be arrested or harassed. The Hon'ble High Court went on to observe that "it has no doubt that the trial court, while considering the bail or remand or cancellation of bail application, will separate the wheat from the chaff and will ensure that no innocent person, against whom baseless allegation has been made, is remanded to police judicial custody". It follows that a bail application in a case under CGST Act has to be treated differently from a bail application in oridnary matter in which merits are not to be dwelt upon. The court is of the opinion that while authorising arrest of the applicant, there was no credible material with the commissioner to form a reasonable belief that the application had wrongfully/fraudulently availed ITC of more than ₹5 crores. Moreover, there was nothing to suspect that the applicant was a fly by night operator, who would vanish if not arrested immediately. Therefore, his arrest may not be justifiable. Now that, he is in custody since 9.1.2021 and, he has already paid ₹2.55 crores which is 10 per cent of the disputed liability, he deserves bail as on the same condition the Hon'ble Supreme Court had directed no coercive action against the petitioner in C.Pradeep Versus the Commisioner of GST and Central Excise Selam and another Special leave to appeal (Crl.) No.6834/2019. The apprehension of the respondents that he will interfere in investigation by tampering with evidence or by winning over the witnesses seems to be unfounded for the reason that entire record is in the custody of department - Whatever information is to be collected from other entities will be available with them or on the portal/ in the records of the department. At this stage, no entity will be in position to manufacture or destroy record. If the department has become more active after filing reply in the Court on 29th January 2020 and has searched the premises of various suppliers of M/s Dholagiri Enterprises and the applicant has placed on record affidavits of some of those suppliers that they were forced to make statements, it cannot be said that he is so powerful as to influence the witnesses. There are always two sides of coin. The Court does not want to go into the question as to whose version is correct, but definitely this is not a case to justify further incarceration of the applicant. The application is admitted to bail on his furnishing personal bonds in the sum of ₹5 lacs with one surety in the like amount to the satisfaction of Ilaqua/Duty Magistrate. He shall not leave India without prior permission of the Court and shall surrender his passport while furnishing bonds - Application allowed.
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