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TMI Blog2018 (8) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 89 (1) (ii) of the Finance Act, 1994 read with Section 174 of the Central Goods & Services Act, 2017, being continued by him until conclusion of enquiry/investigation culminating into filing, if any, of regular criminal complaint before the competent criminal court. 3. The contention of the petitioner is that he is an Ex-Director of M/s Proplarity Infratech Private Limited, a Company incorporated under the provision of Companies Act, 1956 having its registered office in G.B. Nagar which deals in real estate. The said Company was established by the petitioner and two others i.e. Satyendra Singh Tomar, Pawan Kumar Jasuja in the year 2015. A personal dispute erupted between the petitioner and the other directors as a result of which, the petitioner was made to resign from one of Companies i.e. M/s Proplarity Infratech Private Limited and, thereafter, on 12.12.2016, he resigned from the Directorship also which was duly reported to the Registrar of the Company in accordance with law. 4. The other two partners i.e. Satyendra Singh Tomar and Pawan Kumar Jasuja had divested the petitioner from being signing authority in the bank account of the said Company with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh Tomar and Atul Vikram Singh appeared before respondent no.4 in response to the summons issued to them in his office on 19.1.2018, both of them were arbitrarily arrested and were later on produced before the Court of Special C.J.M., Meerut who had remanded them to judicial custody accepting the remand request made by the I.O. which was completely uncalled for and malicious. In this regard, guidelines have been issued from the office of respondent no.3, Directorate General of Goods and Services Tax (D.G.G.I.), Meerut Zone vide circular dated 30.9.2016. As per provisions, after making and concluding investigation of the offence punishable under the aforesaid Act, I.O. was duty bound to file a regular criminal complaint case under chapter XV of the Cr.P.C. for which also he was required to obtain sanction from the superior authority i.e. respondent no.3 and the said offences were compoundable. In view of the above, the applicant also apprehends that if he appears voluntarily to give evidence pursuant to the summons dated 18.1.2018, he could also be arrested. He has placed reliance upon the case of Joginder Singh Vs. State of U.P., A.I.R. 1994 (SC) 1349, wherein Supreme Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein after referred to be service tax) at the rate of 14%. On the value of all services other than those services specified in the negative list provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Further, the definition of a 'person' under Section 65 (B), clause 37 of the said Act includes a 'Company' also, hence, the said Company is person under the Finance Act, 1994 and under Section 9AA of the Central Excise Act, 1994 which is applicable to the service tax matters vide Section 83 of Finance Act, 1994, there is a vicarious responsibility cast upon the Directors to pay the service tax. The said Section 9AA of the Act makes it absolutely clear that the Directors of the Company and other persons are liable for the offence. The Section 168 of the Companies Act, 2013 stipulates that the Director who has resigned shall also be liable even after his resignation for the offences which occurred during his tenure. Thus, the penal/statutory liability which has been imposed by a statute (in this case Section 9AA of Central Excise Act, 1944 and proviso to sub- Section (2) of Section 168 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es along with service tax had been collected by the Company. Further it is submitted that due to personal dispute with Co-Directors, the petitioner was removed and divested of the right of being signing authority in the bank account of the said Company with effect from 27.5.2015 and, thereafter, he resigned with effect from 12.12.2016 but as per record, petitioner remained Director in the said Company from 29.8.2013 to 12.12.2016 and during his Directorship, more than two crores of service tax was received by him from the customers but the same was not deposited into Government account. It is further submitted that there are six essential ingredients laid down by C.B.E.C. vide circular dated 30.9.2016 relating to arrest which have been mentioned in the written submissions of the counteraffidavit in para 18 which are required to be established to the satisfaction of the competent authority before ordering arrest. However, if the alleged offender is assisting in the investigation and has deposited at least half of the evaded tax, then the need to arrest may not arise. In the case at hand, all the ingredients were established to the satisfaction of the competent authority. The service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also stated by him that both the other Co-Directors had already been arrested by the respondent no. 4, the investigating officer when they appeared in his office in response to summons issued to them because they could not make the payment of outstanding amount of service tax which constituted an offence under Sections 89 (1) (ii) of the Finance Act, 1994. Therefore the petitioner is apprehending his arrest also in case he appears before respondent no. 4 who had issued notice to the petitioner also in the same matter. According to the petitioner the arrest of the Co-Directors was arbitrary and illegal because in a case punishable with imprisonment of up to 7 years as laid down in Arnesh Kumar vs State of Bihar (supra) the arrest of an accused should be made only in exceptional conditions given in Section 41 Cr. P.C. and hence his likely arrest in case of vacating the stay would also be illegal. On the other hand the respondents have clearly stated that according to the documentary evidence the said Company is shown to have collected service tax for the period 2014 - 15, 2015 - 16 and 2016 - 17 to the tune of Rs. 4.80 crore and the investigation reveals that no deposit of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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