The main legal point established in the judgment is the need for a determination of tax liability before arrest and prosecution, and the importance of assessing the nature and gravity of the accusation, the antecedents of the accused, and the possibility of the accused fleeing from justice before making an arrest.

JUDGMENT

Rajnish Bhatnagar, J. - The present application U/s 438 of Cr.P.C has been preferred by the petitioners challenging the order dated 04.02.2021 passed by the Ld. A.S.J., Patiala House Court, New Delhi by virtue of which anticipatory bail application of the petitioners had been rejected.

2. It is submitted by the Ld. counsel for the petitioners that the investigation against the company M/s KMG Industrial Traders Pvt. Ltd. in which the applicants are directors by GST department started in June 2018 and since then the investigation is still continuing. It is further submitted that the investigation in the present case pertains to availment of wrongful ITC to the tune of Rs. 22.42 Crores on the strength of certain invoices received from companies namely Galux International, M/s Shriram Overseas, M/s Delta Agrotech Pvt. Ltd. which were controlled by brothers Sanjay Dhingra and Gulshan Dhingra. It is further submitted that it is alleged against M/s KMG Ltd. that the company did not receive goods and only received invoices against which ITC was wrongly availed and the said invoices were not genuine. Rather, it has been argued that it is the case of the petitioners that they are not the creators of the said alleged documents but are bonafide recipients/purchaser of the said goods as all the payments against the said purchases were made through bank transfers which are duly reflected in the books of accounts. It is further submitted that there is sufficient evidence like Dharamkata slips, stocks in hand of over 7 crores on the business premises of the petitioners which primafacie establishes that during the search of GST department on 28.06.2018 no discrepancy in the stock was found by the officers of GST.

3. It is further submitted that the value of the goods at the time of search was around 7 crores as per the petitioner's books of accounts. It is further submitted that the petitioners were issued summonses U/s 70 of GST Act to appear before the GST department on 06.08.2018. It is further submitted that on the said date Mr. Pawan Goel who was looking after the business of the company, tendered his statement U/s 70 of GST Act and further submitted documents like balance sheets, bank ledger statements etc. to the respondent (department). It is further contended that the summonses were duly attended by Sr. accountant, who also submitted more documents which could not be submitted earlier. It is further submitted that the department resorted to coercive measures by blocking the bank account of the petitioners vide order dated 07.08.2020 in terms of Section 83 of CGST Act. It is further submitted that the pending ITC credit of Rs. 1.25 Crores was also blocked with the department which lead to the losses to the petitioners. It is further submitted that the steps were taken by the petitioners to get the bank account defreezed in order to discharge liabilities such as salaries, EMIs, TDS, GST etc. It is further submitted that it was agreed with the respondent (GST Department) that account will only be defreezed on the condition of depositing Rs. 2.5 crores and also credit will be opened.

4. It is further submitted that the said amount was deposited on 08.09.2020. However, bank debit was partially allowed to discharge liabilities towards salary of 70% and also no credit was allowed to be used. It is further submitted by the counsel for the petitioners that the petitioners have co-operated in the investigation and even deposited the amount as agreed but despite that the department is harassing the petitioners with the sole objective of arresting them but no purpose would be served by keeping the petitioners in custody.

5. It is further submitted that other co-accused persons who are the creators of the alleged documents namely Sanjay Dhingra and Gulshan Dhingra are on regular bail and now the investigation has been completed and show cause notice have been issued to them, wherein the amount alleged to be wrongly availed by M/s KMG is alrea