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2021 (2) TMI 762 - HC - GSTSeeking grant of Bail - Constitutional validity of section 132(1) (b) of the Central Goods and Services Tax Act, 2017 - Seeking declaration that the power under section 69 of the CGST Act can only be exercised upon determination of the liability - HELD THAT:- The Commissioner may authorize arrest of a person only if he has reasons to believe that such a person has committed any offence under the clauses mentioned therein. The expression ‘reasons to believe’ is an expression of considerable import and in the context of the CGST Act, confers jurisdiction upon the Commissioner to authorize any officer to arrest a person. This expression finds place in a number of statutes including fiscal and penal. Without dilating much, it can safely be said that the expression ‘reasons to belief’ postulates belief and the existence of reasons for that belief. The belief must be held in good faith: it cannot be merely a pretence. Reasons to believe does not mean a purely subjective satisfaction. It contemplates existence of reasons on which the belief is founded and not merely a belief in the existence of reasons inducing the belief. The belief must not be based on mere suspicion; it must be founded upon information. Such reasons to believe can be formed on the basis of direct or circumstantial evidence but not on mere suspicion, gossip or rumour. It is open for a court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief. A rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the officer and the formation of his belief. Courts have also held that recording of reasons distinguishes an objective from a subjective exercise of power and is a check against arbitrary exercise of power. The Principal Additional Director General has recorded her reasons after going through the facts and the arrest proposal put up before her. She recorded that she had reasons to believe that the petitioner had committed the two offences as mentioned above, which are cognizable and non-bailable. Thereafter she noted that during the course of the investigation, petitioner had not co-operated with the department and had tried to mislead the investigation. Offences were committed with full disregard to the statutory provisions with intent to defraud Union of India of its legitimate revenue. Therefore, she agreed with the proposal to arrest the petitioner in order to ensure that he does not tamper with crucial evidence and does not influence the witnesses as well as does not hamper in the investigation process. The requirement under sub-section (1) of section 69 is reasons to believe that not only a person has committed any offence as specified but also as to why such person needs to be arrested. From a perusal of the reasons recorded by the Principal Additional Director General, we find that other than paraphrasing the requirement of section 41 Cr.P.C., no concrete incident has been mentioned therein recording any act of tampering of evidence by the petitioner or threatening / inducing any witness besides not co-operating with the investigation, not to speak of fleeing from investigation. In such circumstances, we are of the view that the Principal Additional Director General could not have formed a reason to believe that the petitioner should be arrested. Bail jurisprudence which has evolved over the years stands on a different footing altogether. This is more so in the present case when admittedly respondents have not lodged any first information before the police under section 154 Cr.P.C. Respondents have also not filed any complaint before the competent magistrate under section 200 Cr.P.C. In fact there was no formal accusation against the petitioner prior to arrest. The first time such accusation has been placed on record was after arrest that too in the form of remand application. A remand application by its very nature cannot be construed to be a first information or a complaint as is understood in law. If the remand application is excluded, then till today after 26 days of custody of the petitioner, there is still no formal accusation against the petitioner - the continuing the detention of the petitioner may not at all be justified. In a case of this nature, it is the duty of the constitutional court to strike a fine balance between the need for custodial interrogation and the right of an accused to personal liberty. It is directed that the petitioner shall be enlarged on bail subject to the following conditions:- 1) petitioner shall be released on bail on furnishing cash surety of ₹ 5,00,000.00 before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai and within two weeks of his release, to furnish two solvent sureties of the like amount before the said authority; 2) petitioner shall co-operate in the investigation and shall not make any attempt to interfere with the ongoing investigation; 3) petitioner shall not tamper with any evidence or try to influence or intimidate any witness; 4) petitioner shall also deposit his passport before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai.
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