Sanjay Kumar Bhuwalka, Neeraj Jain Versus Union of India
GST
2018 (7) TMI 589 – CALCUTTA HIGH COURT – 2018 (362) E.L.T. 568 (Cal.) , 2018 (19) G. S. T. L. 582 (Cal.)
CALCUTTA HIGH COURT – HC
Dated:- 9-7-2018
CRM 3327 of 2018, CRM 3328 of 2018
GST
Shivakant Prasad, J.
For the Petitioner : Mr. Sekhar Basu Mr. Debasish Roy Mr. Rajdeep Majumder Mr. Danish Haque Mr. Arindam Dey Mr. Mayukh Mukherjee Mr. K.L. Mukherjee Mrs. Aroshi Rathore Mrs. Kriti Mehorotra
For the Opposite Party : Mr. K.K. Maity
ORDER
Shivakant Prasad, J.
The above two cases under provision of Section 439 Cr.P.C. have been filed by two separate petitioners under the same Memo of Arrest by the opposite party, Union of India whereunder petitioners have prayed for enlarging them on bail, inter alia, on the grounds stated in the petitions. Both the cases were heard analogously as the legal issue and the factual aspects of the case are common. So they can be disposed of by a common judgment.
To speak
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Works, M/s. Amazonite Steel Pvt. Ltd., M/s. Corandum Impex Pvt. Ltd., M/s. Cuprite Marketing Pvt. Ltd. and M/s. Binky Exim Pvt. Ltd. were all part of a well thought out conspiracy aimed at duping the exchequer by way of creation of a complex web of inter-connected companies engaged in fraudulent issuance of tax invoices without supply of goods or services to enable the recipient companies to avail and utilize fake input tax credit leading to loss of Government revenue.
It is contended that the investigation revealed that all the above fake companies were being controlled and run by a group of persons including Shri Sanjay Kumar Bhuwalka and Shri Neeraj Jain being the petitioners herein.
Summons were issued to the petitioners under Section 70 of the CGST Act, 2017 read with Section 174(2) of the said Act and in their statements, they have admitted that they were looking after and controlling the business activities of the companies.
It was further revealed that various companies wer
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der :
“69. Power to Arrest –
(1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause
(i) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.
(2) Where a person is arrested under sub-section (1) for an offence specified under subsection (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours.
(3) Subject to the provisions of the Code of Criminal Procedure, 1973 (2 of 174),-
(a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;
(b) Commissioner
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d non-payment, whatever be the means applied for such non-payment confers right on the government, both Central and State, to realize the revenue whereas penal provision of arrest and detention is only when there is violation of the provision under the statute which is not the intention of the legislature to achieve the fiscal object regardless of the existence of a provision for the arrest of the offender in the Act.
It has been argued that it is trite law that a provision of law which seeks to apply will lead to deprivation of liberty of a citizen, ought to be construed strictly regard being had to the mandate of Article 21 of the Constitution of India, namely, the observance of “procedure established by law”.
Under Section 69 of the Act the functionary is the Commissioner as defined in Section 2(24) of the Act, “Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax
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f Arrest with the sentence “proposal at A approved”. It is further submitted that while interpreting penal law protection of liberty has to be accepted as the provision of the statute provides that the authority must have reasonable believe and relied on the expression “reason to believe” means jurisprudentially as observed by the Hon'ble Supreme Court in the case of Joti Parshad vs. State of Haryana reported in 1993 Supp(2) Supreme Court Cases 497 at paragraph 4 of extract of the observation in the cited judgment which reads thus-
“4. Under the Indian penal law, guilt in respect of almost all the offences is fastened either on the ground of “intention” or “knowledge” or “reason to believe”. We are now concerned with the expressions “knowledge” and “reason to believe”. “Knowledge” is an awareness on the part of the person concerned indicating his state of mind. “Reason to believe'” is another facet of the state of mind. “Reason to believe” is not the same thing as “suspicion”
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in of probable reasoning leading to the conclusion or inference about the nature of the thing. These two requirements i.e. “knowledge” and “reason to believe” have to be deduced from various circumstances in the case……”
Bearing in mind the principle laid in the said observation, it is suffice to say such “reasons to believe” has to be formed by the Commissioner after the records of such inspection and search are communicated to him under sub-section 10 of section 67 of the Act or in any other manner the materials are placed before him for the formation of his “reason to believe”. When the Commissioner or the delegatee has reason to believe that the person concerned has committed an offence which necessitates arrest, an order has to be passed and such order logically, reasonably and prudentially must be informed by reasons or must contain the reasons which have emanated from “reasons to believe” entertained by the authority concerned.
Adverting to the Memo of Arrest and the order
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e Additional Director General Goods and Service Tax Intelligence to consider all the materials available with regard to the accusations of commission of the offences mentioned in section 69 of the Act and come to his own conclusion for effecting arrest unhindered, unaffected by interference from any quarter.
It is further contended that the entire exercise by the officers sub-ordinate to the Additional Director General Goods and Service Tax Intelligence and the ultimate signature on the document by the Additional Director General Goods and Service Tax Intelligence are merely topsy-turvy, deplorable administrative exercise of power and a threat to the Constitutional observance of “procedure established by law”. It is further submitted that despite delegation of powers of the Commissioner on officers sub-ordinate to him, the structural edifice of the statute presents the Commissioner to be at the helm of affairs.
To buttress such contention, the attention of this Court has been drawn t
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and Customs appointed the officers in the Directorate General of Goods and Services Tax Intelligence as Central Tax officers and invested them with all the powers under the said Act and the Rules made thereunder. In terms of the said Notification, the post of Additional Director General, Goods and Services Tax Intelligence, is equivalent to the post of Commissioner. Accordingly, the said Additional Director General, Directorate General of Goods and Services Tax Intelligence, has been empowered under section 69 of the Act to exercise all the powers invested in the Commissioner of Central Tax. Therefore, he was well within his jurisdiction while directing the concerned officers to arrest the said persons.
In response to the interpretation as to reasonable belive Mr. Maity submitted that the office note reveals that the said Additional Director General, based on the facts brought out from the investigation conducted by the DGGI, had reasons to believe that the petitioners have committed
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T 618 Calcutta wherein the Hon'ble Division Bench held that whether the seizure under Section 110 of the Customs Act, 1962 was under a reasonable belief or not is a justiceable one, but once it is held that there was material, relevant and germen the sufficiency of the material is not open to judicial review.
Having regard to rival contentions I am of the considered opinion that 'reasonable belief' or reason to believe as a standard to arrest requires that arresting officer subjectively believe that the suspect has committed the offence and that objectively reasonable person would reach the same conclusion. Reasonable grounds do not require as much evidence as a prima facie case but do require that thing believed to be more likely than not.
Therefore, in the light of the aforesaid contentions, the submission of the petitioners that no reason has been assigned for arrest has no legs to stand upon, particularly in view of the fact that the said office note itself clearly provides t
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have been arrested and further investigation is required to reveal whom the petitioners have supplied all these fake invoices.
It is also submitted that they are either labourer of jute mill or tea seller or unemployed aged between 20 to 30. In their statement, they stated that through agent of the accused Shri Sanjay Bhuwalka they met the accused and submitted copies of their personal documents like PAN Card, Voter Id Card etc. and signed many other documents. In exchange, the accused promised to pay them Rs. 4,000/- per month. Further, the Department has recorded statement of Bank Manager of Laxmivilas Bank on 11.05.2018, where he categorically mentioned that Bank accounts relating to the fake/shell companies were operated either by the accused themselves or by their employee and in the event petitioners are enlarged on bail, there is every probability of tampering the documents and the recipient who have received the fake tax invoices from them and wrongfully availed the input tax
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e considering the question of grant of bail to an accused it should be seen whether it is desirable in National interest or not.
In the case of Rajesh Goyal -Vs- Union of India reported in 2012 (284) E.L.T. 164 Raj it has been observed that the accused petitioner has evaded the excise duty causing a great loss to the public exchequer. Hence, the offence being of grave nature, the petitioner should not be allowed bail. The Hon'ble Court also held that the act of the petitioners may be termed as `Royal Thievery' which is opposed to both democracy and society.
In the case of Subhas Chandra Bal Chandra Badjata -Vs DGCE (Intelligence) Mumbai reported in 2015(324) E.L.T 307-Born the Hon'ble Court has observed that the material collected shows that false record was created for evasion of excise duty. Thus it is case of forgery and fraud.
In the case of Directorate of revenue Intelligence -Vs- Chander Prakash Verma reported in 2016 (332) E.L.T 693 Del. the Hon'ble Court has
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and 138 of the Act the object and reason of this Act is obviously to realise the revenue to the Government Exchequer and bearing in mind the provision of compounding nature of the offence under Section 138 of the Act.
I am fully aware of the observation of the Hon'ble Supreme Court that economic offences constitute a class apart and need to be visited with a different approach in the mater of a bail. The economic offence having deep rooted conspiracy and involving huge loss of public funds needs to be viewed seriously and considerd as grave offences affecting the economy of the country as a whole and thereby posing a serious threat to the financial health of the country. While granting bail, the Court has to keep in mind the nature of the accusations, the nature of evidence in support thereof the severity of the punishment which conviction will entail, the character of the accused, reasonable apprehension of the witnesses being tampered with, the larger interest of the public/ State
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