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April 29, 2021

Person accused of non-payment of GST and non-filing of returns granted Anticipatory Bail

by Mahesh Mara in GST, Legal Court Judgement

Person accused of non-payment of GST & non-filing of returns granted Anticipatory Bail

What is section 69 of the CGST act?

Section 69 of the CGST Act permits the Commissioner GST to authorise arrests in certain cases, based on the seriousness and the amount involved, but in all other cases, arrests are to be conducted according to provisions of the Code of Criminal Procedure.

What is section 70 of the CGST act?

Section 70 provides power to summon persons to give evidence and produce documents. The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908. Every such inquiry referred to in this section shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code.

Fact and Issue of the case

The applicant apprehends arrest for an offence of alleged non payment of GST to the tune of Rs 17.53 Crores and non -filing of GSTR 3B returns for the period from October onwards. Initiated against M/s A.R. Agencies, Eyyal Thrissur in a proceedings initiated by the Head Quarters, Anti Evasion Unit of Cochin Commissionerate. The proprietor of the aforesaid agency, Shri. Rajoob P.A, and his primary colluder, Shri. Abdul Saleem of Ittonam, Palakkad were proceeded against and their business and residential premises searched. Both of them were arrested and remanded to judicial custody. When questioned, Abdul Saleem stated that he had shared the GST login credentials of M/s A.R. Agencies with the applicant, who is conducting ‘PSM Super Market’ at Karukaputhur in Palakkad District. It is also stated that it was the applicant who had filed the GSTR-I returns for A.R Agencies. It was also contended that the applicant had prepared GST invoices valued at Rs. 348.7 crores using the credentials of the Agency. Accordingly, search of the applicant’s residence was also conducted. Certain blank cheques and documents which were incriminating were recovered from his house. He was not present. But his father was present, and was informed. Consequent to that, a summons was sent to him under Section 70 of the CGST Act, directing him to appear before the Superintendent of Central Tax and Central Excise with the relevant documents.

The applicant states that he is innocent and has nothing to do with M/s A.R Agencies, and does not even know its proprietor Rajoob. He admits of having acquaintance with Abdul Saleem, who has visited PSM Super market, Karukaputhur, which is a partnership firm belonging to his wife and others. He used to do arecanut business sometime ago. It has since been wound up. The applicant states that he has no business at present, and is not having any GST registration. When Abdul Saleem came to his wife’s Supermarket, he had helped the applicant to procure stocks from his uncle’s shop at Vadakkencheri. That apart, he has no connection with him. The applicant denies of having received the login credentials of A R. Agencies or filing the GST returns for the proprietorship. The applicant had approached this court with consequent to the illegal search conducted by the respondents in his house during his absence, and on receipt of the notice under Section 70, to get that notice quashed. He was asked to produce documents pertaining to the A.R Agencies, which he is incapable of producing owing to the fact that he has nothing to do with that Agency. The respondents had appeared in the aforesaid Writ petition and admitted having conducted the search of his house in the objections filed by them. Even though the respondents state that they have discovered incriminating documents from the residence of the applicant, the nature of those documents are not detailed except by stating that those are some blank cheques. The applicant is willing to cooperate with the investigation, but apprehends that he may be incarcerated and subjected to torture to extract incriminating evidence. Hence, he seeks anticipatory bail.

Observation of the court

The Court observed that in the instant case, the applicant has not yet been made an accused. On the basis of the alleged statement given by Abdul Saleem, the applicant has allegedly dealt with the filing of returns of the Agency. Applicant had allegedly made false invoices. But as of now, no concrete evidence sufficient either to implicate him as an accused or proceed against him has been collected. Admittedly, A.R Agencies is a proprietorship belonging to Rajoob. Applicant alone is to answer for anything done by the agency. Applicant has nothing to do with the Agency and has not gained any income from that business. Taxpayers Bank accounts are available for scrutiny, and the applicant is willing to cooperate by producing those documents. His custodial interrogation may not be necessary under the circumstances. The CGST officials had sufficient power to implicate the applicant in case they had the required materials with them. The fact that they have not arraigned applicant as an accused indicates lack of material. The applicant’s apprehension of arrest is reasonable, because Abdul Saleem, who is also not a proprietor, has been arrested. In the objections filed by the respondents before this court in the Writ Petition also do not disclose any incriminating material against the applicant. Merely by stating that they recovered incriminating materials may not suffice. It is settled position that the applicant apprehending arrest need not be made an accused in a crime to seek the relief of anticipatory bail. Its is sufficient in case he succeeds in establishing that his apprehension of arrest is reasonable.

Conclusion

Under the circumstances, the applicant is entitled to the relief of anticipatory bail. In the result, the bail application is allowed and the applicant is directed to appear before the investigating officer within three weeks. He is directed to cooperate with the investigation and produce all documents called for. After interrogation, in the event of his arrest, he shall be released on bail on execution of a bond for Rs 5,00,000/- (Rupees five lakhs only) with two solvent sureties each for like sum to the satisfaction of the arresting officer, and on further conditions that he shall appear before for investigating officer as and when called for, and shall refrain from tampering with evidence or witnesses.

Read the full court order from below

Person-accused-of-non-payment-of-GST-non-filing-of-returns-granted-Anticipatory-Bail-1

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