Detention cannot exceed 60 days when read with section 167 of Code of Criminal Procedure: High Court

Bail granted in a GST evasion case of Rs. 9.9 crores subject to certain conditions. 

Petitioner

Petitioner is before this court challenging validity of section 132(1)(b) and (c) of CGST Act and seeking his enlargement on bail.

Petitioner states that search and seizure had been carried out on its premises in October, 2020. Summons had been issued to petitioner to attend office of respondent no. 2 – Superintendent (Anti Evasion), CGST on 19.10.2020. Since the petitioner had been out of town, accountant of petitioner had been to respondent no. 2. He had furnished solicited information about it’s Directors, office location etc.. Two emails had also been issued providing details viz. tally and ledgers etc.

The petitioner had been summoned on various dates thereafter on 09.03.2021, 12.03.2021, 17.03.2021, 19.03.2021, 22.03.2021 and 23.03.2021. The petitioner had attended all the dates except one while he had undergone angioplasty. On 23.03.2021, he was arrested. On the next date, he was produced before the Magistrate, Belapur seeking remand. On the very day, the petitioner had filed an application for bail.

Mr. Ponda, learned senior advocate contends, despite cooperation and payment, the petitioner has been put under arrest for alleged non-payment of GST and alleged illegal availment of ITC. It has been contended that the government has no authority to take extra-legal steps to collect tax and cannot resort to coercion for payment of amount not legally payable and such resort is deprecated and exactly the government is doing the same thing by putting petitioner under arrest using the power as a tool to coerce the petitioner to pay the amount not legally due. It is submitted that the allegations and statements in the remand application and reply to the bail application about conduct of the petitioner are with a view to create prejudice against the petitioner. It is contended that mere allegation that the accused is not cooperating or he may tamper with evidence or he may influence witnesses, is not sufficient to arrest a person.

Revenue

In the remand application by respondents before the Magistrate, several allegations had been made against petitioner, inter alia, that he had not deposited with the government tax collected to the tune of ₹ 6,30,00,000/- referring to its corroboration from the representative of Axis Bank. It has been found that M/s. VRD Retails is a bogus company which had no dealings with GSTL and the transactions had been on paper based on bogus invoices, gift boxes, food and beverages. Input Tax Credit (‘ITC’) had been availed of to the tune of ₹ 2 Crores without receipt of goods and services. There have been transactions and supplies by petitioner suppressing the same from the department. Vehicle registration numbers declared in purchase invoices and e-way bills pertaining to supplies to certain concerns were found to be fictitious and non-existent and the petitioner had been dodgy and evasive and had been giving false information. There is a tax evasion to the tune of ₹ 9.90 Crores and the petitioner being aware of the same, has pleaded ignorance despite him being sole decision maker.

High Court

The court, thus, having regard to factual position that the petitioners therein had responded to the summons and attended the dates, in the circumstances found that there could not have been justification to arrest the petitioner. Apart from that the court also found that there had not been any evidence about petitioner’s tampering with the documents or trying to influence the witnesses, observing that mere allegation is not sufficient. The court also went on to consider section 167 and had considered that under said provision a person cannot be kept in detention beyond a total period of 60 days where investigation relates to offence punishable with imprisonment for a term not less than 10 years and that the Magistrate is authorized to detain beyond 15 days period if satisfied that the grounds are made out. However, he would not be able to authorize detention for a total period exceeding 60 days.

In the present matter, petitioner has filed an affidavit dated 28.04.2021 that he has already paid an amount of ₹ 45,00,000/- and that he would deposit ₹ 5,00,00,000/- under protest towards the alleged amount of tax evasion to demonstrate bona fides and that it would be subject to, adjudication of the amounts alleged and rights and remedies of the petitioner. Another additional affidavit is filed on 06/05/2021 stating that in addition to aforesaid amount aggregating to ₹ 5.45 Crore, further amount of ₹ 55 Lakh will be deposited. Entire aggregate amount of ₹ 6 Crore would be deposited within a period of fortnight which would be under protest and subject to adjudication.

Bail application accepted subject to certain conditions.

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