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TMI Blog2021 (1) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... officer has power to summon a person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any enquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908. Section 70 (2) of the C.G.S.T. Act provides that every such inquiry referred to in sub-section (1) of Section 70 shall be deemed to be "judicial proceedings" within the menaing of Section 193 and Section 228 of the Indian Penal Code. He has submitted that the applicant has been summoned and he is ready to appear before the Proper Officer, C.G.S.T. Department, Agra to record his statement and to produce all documents but he is under apprehension that when he goes for the same, he may be detained and sent to jail. The apprehension is covered u/s 41 (A) of Cr.P.C. The maximum punishment u/s 132 (1) (b) of C.G.S.T. Act is 5 years. The applicant will cooperate with the inquiry but he will be definitely arrested and sent to jail. He will furnish reliable sureties, if granted anticipatory bail, as per the direction of this Court before the C.G.S.T. Department. He has been falsely implicated in this case on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has finally submitted that despite service of several summons, applicant did not appeared before the Proper Officer for recording of his statement. After grant of interim order by this Court, he appeared before him but on account of his threatening and presence of his local advocates and family members, his statement could not be recorded. Again notices were issued for his appearance on 17.12.2020. It is a financial fraud of more than 100 crores and if he is allowed to move around, he will manipulate the entire evidence. Hence, the applicant may be directed to appear before the Proper Officer for recording of his statement and cooperate in inquiry. He has further submitted that the applicant is not entitled to invoke the jurisdiction of this Court u/s 438 Cr.P.C. because the inquiry by the Proper Officer, C.G.S.T. Department is not a criminal proceeding but it is a judicial proceeding. 6. This Court after going through the judgement of the Punjab and Haryana High Court in the case of Akhil Krishan Maggu (supra) finds that the Court has considered the relevant judicial pronouncements from paragraph no. 7 onwards which are as follows :- 7. Before adverting to present controver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence. Specific to Section 89(1)(d) of the FA, it has to be determined with some degree of certainty that a person has collected service tax but has failed to pay the amount so collected to the Central Government beyond the period of six months from the date on which such payment is due and further that the amount exceeds Rs. 50 lakhs (now enhanced to Rs. 1 crore). (iv) A possible exception could be where a person is shown to be a habitual evader of service tax. Such person would have to be one who has not filed a service tax return for a continuous length of time, who has a history of repeated defaults for which there have been fines, penalties imposed and prosecutions launched, etc. That history can be gleaned only from past records of the ST Department. In such instances, it might be possible to justify resorting to the coercive provisions straightaway, but then the notes on file must offer a convincing justification for resorting to that extreme measure. (v) The decision to arrest a person must not be taken on whimsical grounds; it must be based on 'credible material'. The constitutional safeguards laid out in D.K. Basu's case (supra) in the context of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication much less an SCN, is required to be returned to them forthwith. (x) It was imperative for the DGCEI to first check whether the entity whose employees are sought to be arrested has regularly been filing service tax returns or is a habitual offender in that regard. It is only after checking the entire records and seeking clarification where necessary, that the investigating agency can possibly come to a conclusion that Section 89(1)(d) is attracted. None of the above safeguards were observed in the present case. The DGCEI acted with undue haste and in a reckless manner. (xi) Liberty is granted to the officials of MMT and IBIBO to institute appropriate proceedings in accordance with law against the officers of the DGCEI in which the supplementary affidavits filed in these proceedings and the replies thereto can be relied on. This holds good for the officials of the DGCEI as well when called upon to defend those proceedings in accordance with law. (xii) The Court cannot decline to exercise its jurisdiction and clarify the legal position as regards the interpretation of the scope and ambit of the powers under Sections 89, 90 and 91 of the FA. This is clearly within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ething that is not permitted within the four corners of law." 81. In Technomaint Contractors Ltd. v. Union of India- 2014 (36) S.T.R. 488 (Guj.), the Gujarat High Court held that Section 73C of the FA cannot be activated for making a recovery even before adjudication. 82. In the context of the provisions for arrest under the Central Excise Act, 1944, the DGCEI has published a Manual in 2004 containing guidelines to the CE Officers on when and in what circumstances resort should be had to the coercive step of arrest. In Chapter X Para 7 of the said Manual, it is stated that arrest can be made prior to the issue of an SCN but only "where fraudulent intent is clear (prima facie there is evidence of mens rea) or where the evidence is enough to secure a conviction or where the person is likely to abscond, tamper with evidence or influence the witnesses if left at large. Arrest at the investigation stage should be resorted to only when it is unavoidable." (Emphasis supplied) Concededly, Hon'ble Supreme Court vide order dated 23.01.2019 has upheld aforesaid decision of Delhi High Court. 7.1 Relying upon decision of Delhi High Court, in the case of Jayachandran Alloys (P) Ltd. Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n recovery is made subject to 'determination' in an assessment, the argument of the department that punishment for the offence alleged can be imposed even prior to such assessment, is clearly incorrect and amounts to putting the cart before the horse. 39. The exceptions to this rule of assessment are only those cases where the assessee is a habitual offender, that/who has been visited consistently and often with penalties and fines for contraventions of statutory provisions. It is only in such cases that the authorities might be justified in proceedings to pre-empt the assessment and initiate action against the assessee in terms of Section 132, for reasons to be recorded in writing. There is no allegation, either oral or in writing in this case that the petitioner is an offender, let alone a habitual one. 40. In the present case, the Department does not dispute that action was intended or envisaged in the light of Section 132 of the CGST Act, the counter fairly stating that the provisions of Section 132 of the CGST Act were 'shown' to the Assessee. There is thus no doubt in my mind that the Department intended to intimidate the petitioner with the possibility of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court, in Anticipatory Bail Application, in the case of Meghraj Moolchand Burad v. Directorate General of GST (Intelligence), Pune and Another, Anticipatory Bail Application No. 2333 of 2018 [2019 (21) G.S.T.L. 125 (Bom.)] has considered a similar case and has rejected the Anticipatory Bail taking into consideration the conduct of the applicant, gravity of offence and the serious allegations made. This order has travelled to the Supreme Court in Petition for Special Leave to Appeal Crl. Nos. 244/2019, dated 9-1-2019 [2019 (24) G.S.T.L. J82 (S.C.)] by the petitioner therein, wherein the Bench has issued notice and granted interim protection in the following terms :- ' Issued notice. In the meantime, the petitioner shall not be arrested, provided he appears before the Directorate General of GST Intelligence and in the event of his arrest, he shall be released on bail on furnishing security to the satisfaction of the competent authority. Learned Counsel for the petitioner has submitted that the petitioner shall regularly appear, as and when he is called. ' 45. Moreover, the High Court of Karnataka at Bengaluru in Criminal Petition No. 979 of 2019 c/w Criminal Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions including protective measures, which would enable the Petitioners to resist any arrest, as apprehended. In the scheme of the Criminal Law and particularly the Finance Act, 1994 as well, if it contains any penal provisions, it is not as merely because the investigations are underway that the arrest would be effected. Eventually, all that the Respondents are presently contemplating is to investigate the matter. The Petitioners do not dispute the right to investigate and in accordance with law. That they have already attended the offices of the concerned Respondents and once the statement of the Petitioners was recorded goes without saying that on further summons being issued and on called upon to attend the Officers of the Respondents, they will attend and co-operate in these investigations by producing all the documents and answering the requisite queries, subject, of course, to their rights in law. It is only when these investigations conclude that the authorities would be in a position to take a decision whether to launch any prosecution. In such a prosecution as well, if the provisions of the Criminal Law, which enable arrest in cases of cognizable offences and nonbailable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, notice returnable within three weeks. Dasti, in addition, is permitted. For a period of one week, no coercive action be taken against the petitioner in connection with the alleged offence and the interim protection will continue upon production of receipt in the Registry about the deposit made with the Department within one week from today, until the disposal of this Special Leave Petition. 7.5. Telangana High Court in the case of P.V. RAMANA REDDY Vs. UNION OF INDIA 2019 (25) G.S.T.L. 185 (Telangana) relied upon by the Respondent has concluded in relevant Para as below: " 48. That takes us to the next question as to whether the petitioners are entitled to protection against arrest, in the facts and circumstances of the case. We have already indicated on the basis of the ratio laid down by the Constitution Bench in Kartar Singh and the ratio laid down in Km. Hema Mishra that the jurisdiction under Article 226 of the Constitution of India to grant protection against arrest, should be sparingly used. Therefore, let us see prima facie, the nature of the allegations against the petitioners and the circumstances prevailing in the case, for deciding whether the petitioners are e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the prosecution, in the normal course of events, the accused is entitled to an order of bail. 123. The arrest should be the last option and it should be restricted to those exceptional cases where arresting the accused is imperative in the facts and circumstances of that case. 124. The court must carefully examine the entire available record and particularly the allegations which have been directly attributed to the accused and these allegations are corroborated by other material and circumstances on record. 125. These are some of the factors which should be taken into consideration while deciding the anticipatory bail applications. These factors are by no means exhaustive but they are only illustrative in nature because it is difficult to clearly visualise all situations and circumstances in which a person may pray for anticipatory bail. If a wise discretion is exercised by the concerned judge, after consideration of entire material on record then most of the grievances in favour of grant of or refusal of bail will be taken care of. The legislature in its wisdom has entrusted the power to exercise this jurisdiction only to the judges of the superior courts. In consona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made under cognizable and non-bailable offences u/s 132 (5) of the C.G.S.T. Act, if the allegations are found to be correct. The applicant has not given any statement in inquiry till date due to fear of arrest. As disclosed above, the personal liberty guaranteed under Article 21 of the Constitution of India is a fundamental right and in every case, arrest is not necessary. Under Section 438 Cr.P.C., where the implication of a person is for a non-bailable offence, he can apply for anticipatory bail. If the applicant cooperates with the inquiry, there is no requirement of his arrest. The applicant is having his own address of residence and business. He can give surety ensuring his appearance. He does not appears to be habitual offender, prosecuted or convicted earlier. Therefore, he deserves to be granted limited protection for the purpose of conclusion of inquiry by the Proper Officer. 10. The applicant, Nitin Verma, shall be enlarged on anticipatory bail for a period of six weeks or till the inquiry is concluded by the Proper Officer under Section 70 (1) of the C.G.S.T. Act, whichever is earlier, on execution of a personal bond of Rs. 5,00,000/- and two sureties of the like am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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