Back
2019 Supreme(Raj) 2367
IN THE HIGH COURT OF RAJASTHAN
Pankaj Bhandari, J.
Bharat Raj Punj And Others - Appellant
Versus
Commissioner Of Central Goods And Service Tax Department, Jaipur And Others - Respondent
Criminal Writ No. 76 of 2019
Decided On : 12-03-2019
R.N. Mathur, Sr. Adv., Vijay Choudhary, Aseem Chaturvedi and Anant Priya Jain, Advocates, for the Appellant; Siddharth Ranka, Advocate, for the Respondents
In cases involving offenses under Section 132 of the GST Act, determination of tax under Sections 73 and 74 is not required, and the Department can proceed directly by issuing summons or arresting the offender.
Headnote:
GST - SUMMONS - SECTION 70 - ARREST - SECTION 69 - FRAUDULENT INPUT TAX CREDIT - SECTION 132 - DETERMINATION OF TAX - SECTIONS 73 & 74 - WRIT PETITION - DISMISSED WITH COST
Fact of the Case:
Petitioners challenged summons issued under Section 70 of the Goods and Services Tax Act, fearing arrest under Section 69 for alleged fraudulent input tax credit claimed by their company.
Finding of the Court:
The court found that the Petitioners had fraudulently claimed input tax credit on fake invoices, resulting in a loss of Rs. 40.53 crores to the government. The court also noted that the Petitioners had not disputed this fact.
Issues: 1. Whether the Petitioners could be arrested under Section 69 of the GST Act without following the procedure laid down in Sections 73 and 74 of the Act? 2. Whether the Petitioners were entitled to protection from arrest?
Ratio Decidendi: 1. The court held that in cases involving offenses under Section 132 of the GST Act, determination of tax under Sections 73 and 74 is not required, and the Department can proceed directly by issuing summons or arresting the offender. 2. The court found that the Petitioners had not disputed the fact of fraudulent availing of input tax on the basis of fake invoices, and therefore, the Department had the right to proceed under Sections 69 and 70 of the Act.
Final Decision: The court dismissed the Petitioners' writ petition with costs of Rs. 1,00,000/-.
JUDGMENT
Pankaj Bhandari, J. - Petitioners have preferred this Writ Petition seeking quashing and setting aside of summons issued by the Commissioner of Central Goods and Service Tax Department, Jaipur and Alwar and a further prayer that the authorities be directed not to take any coercive action against the Petitioners.
2. Succinctly stated facts of the case are that the Petitioner No. 1 is the Managing Director of M/s. Leel Electricals Limited, Petitioner No. 2. The Central Goods And Service Tax Department conducted a raid on 17.01.2019, at the premises of the Petitioners Company at Bhiwadi, Rajasthan. Senior Officials of the company, Shri Mukut Bihari Sharma, Director and Chief Financial Officer (CFO) and Shri Shobhan Singh Bhandari were asked to remain present at the premises of the Company. Summons under Section 70 of the Goods and Services Tax Act were served upon them. The raid continued till 19.01.2019. After recording of the statements of Officials of Company, they were arrested. As per the case of the Department, the Company had fraudulently availed input tax credit of Rs. 40.53 crores by issuance of fictitious sale invoices and sister concerns of company and Petitioner-Company had fraudulently availed input tax credit of Rs. 328 crores.
3. It is contended by counsel for the Petitioners that the Petitioner No. 1 was residing in United States of America. It was only after demise of his father that he returned to India in November, 2017. He was appointed as M.D. on 30.05.2018 after demise of his father-Shri Brij Raj Punj. He has all apprehension that if he appears, in pursuance of the notice issued under Section 70 of the Goods and Services Tax Act by the Department, he would be arrested, as has been the fate of Senior Officials of the Company.
4. It is contended that Petitioner has deposited GST to the tune of Rs. 7,15,06,124/- from 18.01.2019 till 02.02.2019, which goes to show that Petitioner is a law abiding citizen. If any coercive action is taken by the Department against the Petitioner, it would seriously hamper his reputation.
5. Counsel for the Petitioners has placed reliance on "Make My Trip (India) Pvt. Ltd. v. Union of India" 2016 SCC online Del. 4951 , wherein the Delhi High Court held that Section 70 of the Goods and Services Tax Act does not permit the Sale Tax Department to by pass procedure before going ahead with arrest of a person. Decision to arrest a person must not be taken on whimsical grounds, it must be based on credible material.
6. It is contended by counsel for the Petitioners that the judgment passed by the Delhi High Court was affirmed by the Apex Court in Civil Appeal No. 8080/2018 "Union of India & Ors. v. Make My Trip (India) Pvt. Ltd." decided on 23.01.2019, wherein the Apex Court has affirmed the judgment of the Delhi High Court and held that it is mandatory to follow the procedure contained in Section 73-A(3) & (4) of the Finance Act, 1994 before going ahead with the arrest of a person under Sections 90 & 91 of the Act.
7. Reliance has also been placed on "Meghraj Moolchand Burad v. Directorate General of GST (Intelligence), Pune and Anr." SLP (Criminal) No(s). 244/2019 dated 13.12.2018 of the Apex Court, wherein the Apex Court granted protection to the Petitioner from arrest and permitted the Petitioner to appear before the Directorate General of GST (Intelligence). Reliance has also been placed on "Rakesh Kumar Chaubey v. Union of India & Ors." wherein the Uttrakhand High Court permitted the Petitioner to appear before the concerned Authority and tender all support to the investigation. The Court restrained the authority from arresting the Petitioner except with the leave of the Court.
8. It is contended by counsel for the Petitioner that the tax has not been determined in accordance with Section 73 and 74 of the Act and till the tax is determined, Department has no right to summon the Petitioner or arrest the Petitioner under Section 69 of the Act. It is also contended that fake invoices
