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TMI Blog2024 (8) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... t the aforementioned complaint has been filed by the respondent-complainant on the allegations that the petitioner was proprietor of M/s Jai Shree Balaji Traders, registered under the provisions of HGST Act, CGST Act and IGST Act, which was a trading concern engaged in the business of iron scrap/ferrous scrap. On examination of GST returns of this firm, it was found that the firm had shown inward supplies of iron scrap/purchases from various suspicious dealers/tax payers of the State of Delhi, had been availing wrongful Input Tax Credit (for short 'ITC') and was discharging its GST liability mainly through utilization of credit ledger by discharging less than 1% of its liability through cash ledger. Inquiry was initiated. Inspection/search proceedings were carried out in the business premises of the firm of the petitioner and it was found that no business was in fact being carried out at the given address. The additional place of business of his firm, as disclosed by the petitioner, was also checked and documents kept therein were taken into possession. Reports were sought from the jurisdictional authority of the State of Delhi, as per which, all the 29 firms shown as suppliers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 05 years and, therefore, the provisions of Sections 41 and 41-A of the Cr.P.C. were to be necessarily complied with, which have not been complied with the by the respondent and, hence, his arrest is illegal. In this regard, learned counsel for the petitioner has relied upon the authorities cited as Arnesh Kumar vs. State of Bihar : 2014 AIR (SC) 2756 and Dr. Rini Johar and another vs. State of M.P. & others : 2016 (3) RCR (Criminal) 300. 5. It is further argued by learned counsel for the petitioner that he was arrested in this case on 20.02.2024 without adjudication and assessment of tax liability of his firm under the provisions of HGST Act and CGST Act, which prescribe a specific procedure for assessment and unless such assessment or adjudication was conducted determining the liability of his firm, no offence was made out and even prosecution could not be launched against him. He has further argued that the petitioner was under a bonafide belief that the investigation stood culminated on cancellation of GST certificate of his firm, which stood cancelled w.e.f. 01.04.2020, vide order dated 10.10.2023 and he was given to believe that the proceedings under Sections 73 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gful claim of ITC for some transaction i.e. total sum of Rs. 7,62,04,508/-, as such, on reconciliation, these amounts would bring alleged determinable tax attributed to the firm of the petitioner to be below Rs. 5 crores, which makes offences alleged to be committed by him as bailable and non-cognizable in nature consequently making him entitled to be released on bail as the respondent in complete derogation to settled judicial precedents has initiated criminal steps by bypassing the scheme of HGST/CGST Acts merely on the basis of suspicion of evasion of tax and in the absence of any credible piece of information. It is further submitted that even otherwise since the maximum sentence for commission of offences punishable under Sections 132(1)(b) and (c) of the HGST Act/CGST Act is 05 years and he has remained in custody for about a period of 06 months, therefore, he deserves to be released on bail. To buttress his argument on this point, learned counsel for the petitioner has relied upon the authorities cited as Ashutosh Garg vs. Union of India, Special Leave to Appeal (Crl.) No. 8740 of 2024, decided on 26.07.2024 and Yash Goyal vs. Union of India : Criminal Appeal No. 2784 of 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(b) and (c) of the HGST Act, as per which, any person committing or causing to commit and retaining benefit by issuing any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax or avails input tax credit using such invoice or bill, shall be liable to punishment. As per this provision, in cases where the offence of tax evaded or the amount of ITC wrongfully availed or utilized or the amount of refund wrongfully taken exceeds Rs. 500 Lakhs, the concerned person shall be liable to undergo imprisonment for a term which may extend to 05 years with fine. 11. The provisions of Section 132 of HGST Act, which are pari materia with Section 132 of CGST Act are relevant for the purpose. As per Section 132 (1)(b) and (c), whoever issues an invoice or bill without supply of goods or service or both in violation of provisions of this Act, leading to wrongful availment or utilization of Input Tax Credit or refund of tax or avails Input Tax Credit using such invoice or bill 'commits' the offence under this Section and is liable for punis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case, the petitioner jointly with M/s Tata Steel Ltd., who is alleged to be the major recipient of ITC from the firm of the petitioner, is alleged to have submitted the documents/issued invoices in favour of M/s Tata Steels Ltd. Annexure P-18 is copy of show cause notice issued under Section 74(1) of HGST Act/CGST Act read with relevant provisions of IGST jointly against the petitioner and M/s Tata Steels Ltd alleging therein that M/s Tata Steels Ltd. had made wrongful claim of ITC for a sum of Rs. 3,81,02,254/- under CGST Act and Rs. 3,81,02,254/- under the HGST Act i.e. a total sum of Rs. 7,62,04,508/-. The said claim is yet to be determined by the competent authority of the respondent by making proper assessment/adjudication. As such, it is only after the adjudication/assessment that the liability of the firm of the petitioner with regard to exact amount of evasion of tax is to be determined and, therefore, the question as to the exact liability of the petitioner would be decided only after adjudication of the same under Section 74 of the HGST/CGST Acts. Hence, assuming that the petitioner is liable for punishment under Section 132(1)(b) and (c) of the HGST Act is yet to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence, for which the appellant was incarcerated, was 05 years. While considering the maximum sentence, which could be awarded, the period of incarceration suffered by the appellant and the fact that the trial was likely to take time, Hon'ble Supreme Court had directed the appellant to be released on bail. 15. In the instant case, the petitioner is in custody since 20.02.2024. He has no criminal antecedents. He has a permanent abode. As such, there is no likelihood of the petitioner's fleeing from the country. He is also ready to surrender his passport. The investigation has completed and a complaint under Section 132 of the HGST Act read with the provisions of IGST Act has been filed against him. The trial is likely to take time. Show cause notice issued under Section 74(1) of the HGST Act/CGST Act upon him is yet to be adjudicated upon and the exact liability of the petitioner/his firm is yet to be fixed. The sentence to be awarded in this case is directly linked with the quantum of evasion of tax and the prosecution of the petitioner is also linked with determination of evasion of tax because if there is no evasion of tax, there can be no criminal liability. The determination ..... X X X X Extracts X X X X X X X X Extracts X X X X
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