Anuj Mahesh Gupta vs Assistant Commissioner Of State ... on 9 March, 2021
Bombay High Court
Anuj Mahesh Gupta vs Assistant Commissioner Of State … on 9 March, 2021 Bench: Ujjal Bhuyan, Milind N. Jadhav
14. civil
R.M. AMBERKAR
(Private Secretary)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION (STAMP) NO. 4775 OF 2021
Anuj Mahesh Gupta
.. Petition
Versus
Assistant Commissioner of State Tax,
GST Bhawan, Mumbai & Anr. .. Responde
……………….
Mr. Pankaj Jain a/w Ms. Tejashree R. Kamble i/by P.D. Jain & Co for the Petitioner
Mr. Jitendra Mishra a/w Ms. S.D. Vyas – ‘B’ Panel Counsel for the
Respondents
……………….
CORAM : UJJAL BHUYAN &
MILIND N. JADHAV, JJ.
DATE : MARCH 9, 2021.
P.C.:
Heard Mr. Pankaj Jain, learned counsel
petitioner and Mr. Jitendra Mishra, learned counsel for the respondents.
2. Though in this petition filed under Article 226 of the Constitution of India, a number of prayers have been made, we have confined our present examination to the prayer for bail made by the petitioner. In fact by order dated 26.02.2021, this Court had issued notice for consideration of the bail prayer.
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3. Facts necessary for adjudication may be set out briefly as under:-
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Anuj Mahesh Gupta vs Assistant Commissioner Of State … on 9 March, 2021
3.1. Petitioner was arrested on 15.01.2021 by respondent No. 1 in exercise of powers under section 69 of the Maharashtra Goods and Services Tax Act, 2017 (briefly, “the MGST Act” hereinafter). As per the arrest memo dated 15.01.2021, an investigation visit was conducted on the business premises of the petitioner under section 67 of the MGST Act. Upon recovery of incriminating materials, it emerged that petitioner is the proprietor of M/s. Savvy Fabrics and partner of M/s. Shubhmangal Textile Industries LLP having place of businesses at the addresses mentioned therein. It is alleged that petitioner had actively participated in receiving tax invoices or bills without any actual supplies of goods or services or both and in claiming ineligible input tax credit (ITC) on such invoices, thus violating the provisions of MGST Act, Central Goods and Services Tax Act, 2017 (briefly “the CGST Act” hereinafter) and Integrated Goods and Services Tax Act, 2017. Therefore, petitioner has committed offences under section 132(1)(b) and (c) of the MGST Act by receiving fake invoices of value not less than Rs. 277 crores and by taking input tax credit of not less than Rs. 31 crores. Such offences are punishable under section 2 of 10
14. civil wp st 4775-21.doc 132(1)(i) of the MGST Act which are cognizable and non- bailable. The arrest memo further states that Mr. Milind Kumar V. Pawar, Assistant Commissioner of State Tax (Investigation-B) had reasons to believe that petitioner was liable to be punished under the aforesaid provisions and accordingly petitioner was arrested.
- 2. The remand application filed by the said officer before the Additional Chief Metropolitan Magistrate, 8th Court at Esplande, Mumbai upon arrest of the petitioner also made the same accusation. Prayer was made for 14 days judicial custody of the petitioner on the ground that investigation was in progress and that petitioner had received refund of Rs. 5,62,94,345.00 and Rs. 5,71,21,652.00 respectively thus causing huge loss to the government revenue. Further, to prevent tampering with evidence and commission of similar offences, judicial custody of the petitioner was sought.
- Mr. Jain, learned counsel for the petitioner submits that petitioner was arrested on 15.01.2021. Today, he has completed 54 days in custody. Referring to the rejoinder affidavit filed by the petitioner, he submits that petitioner has paid a total of Rs. 4,68,66,408.00 to the respondents 3 of 10
14. civil wp st 4775-21.doc including Rs. 1,90,25,000.00 after arrest and under protest. Referring to section 69 of the MGST Act, he submits that legislature has conferred power upon the Commissioner to record reasons to believe that a person has committed any offence punishable under section 132 and on that basis, he may by order authorize any officer to arrest such person. Though respondents have claimed that Commissioner had delegated his powers under section 69, referring to page numbers 119 and 120 of the reply affidavit of the respondents, he submits that even as per these two documents, Commissioner of State Tax, Maharashtra has delegated his power under section 69 to Joint Commissioner of State Tax. Therefore, action of Assistant Commissioner i.e. respondent No.1 in recording his reasons to believe and thereafter affecting arrest of the petitioner is blatantly illegal violating the fundamental rights of the petitioner under Article 21 of the Constitution of India. He submits that though he has other grounds to urge, he would confine his submissions presently to the above ground in support of his prayer for bail. Therefore, petitioner
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Anuj Mahesh Gupta vs Assistant Commissioner Of State … on 9 March, 2021
should be enlarged on bail.
5. Mr. Mishra, learned counsel for the respondents at the outset has taken us through the averments made in 4 of 10
14. civil wp st 4775-21.doc paragraphs 7.1 to 7.7 of the reply affidavit to highlight the seriousness of the allegations against the petitioner. His submission is that petitioner is involved in serious malpractices thereby committing economic offences which are detrimental to government revenue. For such type of offences, no leniency is required to be shown. Regarding contention of the petitioner that the Assistant Commissioner could not have formed and recorded his reasons to believe and arrested the petitioner, Mr. Mishra has taken us to the remand application of the respondents seeking judicial custody of the petitioner and submits that authorization for arrest was given to the Assistant Commissioner by the Joint Commissioner of State Tax (Investigation – B), Mumbai by order dated 14.01.2021 which is recorded in the remand application. His submission is that the reasons to believe was recorded by the Joint Commissioner whereafter authorization was given to the Assistant Commissioner to effect the arrest. Mere mentioning in the arrest memo by the Assistant Commissioner that he had reasons to believe that petitioner had committed the offences and therefore required to be arrested would not mean that the said power was exercised independently by the Assistant Commissioner.
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14. civil wp st 4775-21.doc 5.1. Mr. Mishra has referred to the judgment of the Telangana High Court in P.V. Ramana Reddy Vs. Union of India1 as well as to an order passed by this Court in the case of Ashish Jain Vs. Union of India 2. He has also brought to our notice order passed by the Aurangabad Bench of this Court in Tejas Pravin Dugad Vs. Union of India3 and a decision dated 08.02.2021 passed by this Court in Yogesh Jagdish Kanodia Vs. State of Maharashtra4. Therefore, prayer for bail of the petitioner may be rejected.
- Submissions made by learned counsel for the parties have been duly considered. We have also perused the materials on record. Judgments cited at the bar have been duly considered.
- In this case petitioner was arrested under section 69(1) of the MGST Act on 15.01.2021 for alleged commission of offences under section 132(1)(b) and (c) of the said Act. Punishment for committing offences under section 132(1)(b) and (c) is provided in clauses (i) to (iv) of sub-section (1) of section 132. As per clause (i), in cases where the amount of tax evaded or the amount of input tax credit wrongly availed of 1 2019(25) G.S.T.L. 185 (Telangana) 2 Order dated 31.07.2019 passed Cri. W.P. NO. 3804 of 2019 3 Order dated 15.01.2021 passed in Cri. WP No. 1715 of 2020 and connected Petitions 4 Cri. Writ Petition No. 93 of 2021 6 of 10
14. civil wp st 4775-21.doc or utilized or the amount of refund wrongly taken exceeds Rs. five hundred lacs, then the punishment would be imprisonment for a term which may extend to five years and with fine. Other penalties provided in clauses (ii) to (iv) are less than five years. Since penalties in India are ordinarily imposed concurrently, the maximum penalty that can be imposed
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Anuj Mahesh Gupta vs Assistant Commissioner Of State … on 9 March, 2021
upon conviction for an offence under section 132(i) would be 5 years and with fine.
- Section 167 of the Code of Criminal Procedure, 1973 lays down the procedure where investigation cannot be completed in twenty-four hours. As per section 167(2)(a)(ii), the magistrate can authorize detention of an accused upto a maximum period of sixty days where the investigation relates to an offence other then those which are punishable with death, imprisonment for life or imprisonment for a term not less than ten years and on expiry of the aforesaid period of sixty days, the accused person shall be released on bail if he is prepared to and does furnish bail.
- As noted at the outset, petitioner was arrested on 15.01.2021. As on today, he has completed 54 days in custody. Further, as on today no charge sheet has been filed by the respondents before the competent court. Considering 7 of 10
14. civil wp st 4775-21.doc the fact that offences in the present case are punishable for a term upto 5 years, provisions of section 167 (2)(a)(ii) would be applicable. That apart, we find from the rejoinder affidavit of the petitioner that petitioner has made payment of Rs.4,68,66,408.00 including Rs. 1,90,25,000.00 after arrest and under protest. In these circumstances and taking an overall view, we are of the opinion that petitioner should be released on bail subject to certain conditions.
10. The rival contentions particularly those relating to delegation of power by the Commissioner regarding recording of reasons to believe for affecting arrest under section 69 of the MGST Act or under the CGST Act may require a deeper analysis by the Court. While we defer examination of the same to subsequent hearing, the same however should not prevent us from dealing with the bail prayer of the petitioner. In this connection, we may also usefully refer to a decision of this Court in Daulat Samirmal Mehta Vs. Union of India5. Relevant portion of the said judgment reads as under:-
“38. Bail jurisprudence which has evolved over the years stands on a different footing altogether. This is more so in the present case when admittedly respondents have not lodged any first information before the police under section 154 Cr.P.C. Respondents have also not filed any complaint before the competent magistrate under section 200 Cr.P.C. In fact there was no formal accusation against the petitioner prior to arrest.
5 Order dated 15.02.2021 in Civil Writ Petition No. 471 of 2021.
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14. civil wp st 4775-21.doc The first time such accusation has been placed on record was after arrest that too in the form of remand application. A remand application by its very nature cannot be construed to be a first information or a complaint as is understood in law. If the remand application is excluded, then till today after 26 days of custody of the petitioner, there is still no formal accusation against the petitioner.
39. Reverting back to Arnab Manoranjan Goswami (supra), Supreme Court has once again reminded us that the basic rule of our criminal justice system is ‘bail not jail’. In cases at the
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Anuj Mahesh Gupta vs Assistant Commissioner Of State … on 9 March, 2021
under-trial stage not involving heinous offences like rape, murder, terrorism etc., it is bail and not jail which is the norm. In so far the present case is concerned, notwithstanding the allegation of serious financial impropriety against the petitioner, the case against him is not even at the under-trial stage; it is at the pre-trial stage i.e., at a stage where even formal accusation in the form of a first information or a complaint has not been made.
40. In such circumstances, we feel that continuing the detention of the petitioner may not at all be justified. In a case of this nature, it is the duty of the constitutional court to strike a fine balance between the need for custodial interrogation and the right of an accused to personal liberty.”
11. Thus, having regard to the above, we issue the following directions:-
(i) Petitioner – Anuj Mahesh Gupta shall be released on bail on furnishing cash surety
of Rs. 5,00,000.00 (Rupees Five Lacs) in Remand Application No. 211 of 2021
(Investigation File No. : 29/2020-21 dated 09.11.2020) before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai and within two weeks of his release, to furnish one solvent surety of the like amount before the said authority;
(ii) Petitioner shall cooperate in th
investigation and shall not make an
attempt to interfere with the ongoing
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investigation;
(iii) Petitioner shall not tamper with
evidence or try to influence or intimidate any witness;
(iv) Petitioner shall deposit his passport before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai.
12. Stand over to 20th April, 2021.
[ MILIND N. JADHAV, J. ] [ UJJAL BHUYAN, J. ] Digitally signed by Ravindra M. Ravindra Amberkar M. Date:
2021.03.09 Amberkar 17:28:25 +0530 10 of 10
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