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2024 (2) TMI 129 - HC - GSTSeeking grant of bail - illegal claim of refund of accumulated ITC on account of trade/supply of goods - obtained GST Registration on fictitious documents and has never conducted any business activity from the registered premises - HELD THAT:- In view of Section 69 of the CGST Act, 2017, 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. 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. 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. From the material collected on record, the reasons recorded are that during search some documents were found showing that the applicant is also running several firms on one PAN and without supplying any goods and though the said firms are not in existence and claimed ITC on account of trade/supply of goods. In the case of ARNESH KUMAR VERSUS STATE OF BIHAR & ANR [2014 (7) TMI 1143 - SUPREME COURT], the Honourable Apex Court while laying down some guidelines clarified that directions issued would not only be applicable to cases under 498-A of the Indian Penal Code or Section 4 of the Dowry Prohibition Act but also would cover cases where offence is punishable with imprisonment for a terms which may be less than seven years or which may extend to seven years whether with or without fine. Thus, when facts of the present case are taken into consideration, it reveals that the applicant was arrested. Necessary investigation is carried out and the statement of the applicant is recorded. The maximum punishment provided is imprisonment upto five years. The facts of the case show that the dispute is regarding the tax evasion and the applicant has already paid Rs. 81.00 lacs towards the said tax amount. The offence is under the CGST Act, 2017 except with the limited exceptions are compoundable. The detention of the applicant in jail is not required. The applicant is not involved in a heinous crime like murder or terrorism. The basic rule is, ‘bail is rule and jail is exception’. The allegations of serious financial impropriety are levelled against the applicant. The criminal application is allowed.
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