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2025 Supreme(Raj) 1779
HIGH COURT OF JUDICATURE FOR RAJASTHAN, BENCH AT JAIPUR
PRAVEER BHATNAGAR, J.
Vineet Jain, S/o Late Shri Ashok Kumar Jain - Petitioner
Versus
Union Of India, Through The Standing Counsel (Public Prosecutor) Central Goods And Service Tax Department – Respondent
S.B. Criminal Miscellaneous Bail Application No. 14999 of 2024
Decided On : 24-01-2025
For the Petitioners: Mr. Pankaj Ghiya, Adv., Mr. Mayank Vyas, Adv., Mr. Nikhil Sharma, Adv., Ms. Paridhi Jain, Adv.
For the Respondents: Mr. Chandra Shekhar Sinha, Sr. GST Counsel, Mr. Mayank Kanwar, Adv.
The court ruled that written reasons for arrest are not required under Section 69(2) of the Central Goods and Services Tax Act, 2017, and substantial evidence of fraud justified the dismissal of the bail application.
Headnote:
(A) Central Goods and Services Tax Act, 2017 - Sections 132(1)
(C), (f), (H) and 69(2) - Bail application - Accused arrested for availing fake Input Tax Credit of Rs.10.87 crores - Court held that written reasons for arrest were not mandatory under Section 69(2) - The petitioner’s culpability was established through evidence of fraudulent activities. (Paras 1, 6, 8)
(B) Arrest - Legal requirements - The court emphasized that the absence of written reasons for arrest does not invalidate the arrest under the Act of 2017, as the provisions differ from those under the Prevention of Money Laundering Act. (Paras 2, 7)
Facts of the case:
The petitioner was arrested for allegedly causing a loss of Rs.10.87 crores to the Department by falsely availing Input Tax Credit through non-existent firms and forged documents. (Paras 1, 4)
Findings of Court:
The court found substantial evidence against the petitioner, including fake rubber stamps and statements confirming fraudulent activities. (Paras 6, 8)
Issues: The main issues included the legality of the arrest without written reasons and the sufficiency of evidence against the petitioner. (Paras 2, 7)
Ratio Decidendi: The court ruled that the absence of written reasons for arrest does not invalidate the arrest under the Act, and emphasized the need for stringent action against economic offences. (Paras 7, 8)
Result: Bail application dismissed.
Order :
(PRAVEER BHATNAGAR, J.)
1. The instant bail application has been filed under Section 483 BNSS on behalf of the accused-petitioner. The petitioner has been arrested in connection with FIR No. DGGI/INV/GST/3844/2023-Gr D-O/o ADG-DGGI-JZU-JAIPUR for the offence(s) under Section 132(1)(C) ,(f)&(H), Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the Act of 2017’).
2. It is contended by learned counsel for the petitioner that the petitioner was arrested on 28.09.2024 under Section 132(1)(C), (f)& (H) of the Act of 2017. The matter is exclusively triable by the Magistrate, and the maximum punishment prescribed under Section 132 of the Act of 2017 is 5 years. There is no chance of interfering or tampering with the evidence as most witnesses are public servants. It is also submitted that the charge sheet against the petitioner has already been produced, and the trial of the case may take considerable time. It is vehemently argued that the petitioner was arrested without complying with the mandate declared by the Apex Court in Prabir Purkayastha Vs. State (NCT of Delhi), 2024 INSC 414 and Pankaj Bansal Vs. Union of India, (2024) 7 SCC 576. It is argued that the Authority needed to provide the petitioner with written reasons for the arrest. The arrest memo shows that no written reasons were furnished to the petitioner before the arrest memo.
3. Learned counsel for the petitioner places his reliance upon the judgment of Kshitij Ghildiyal Vs. Director General of GST Intelligence, Delhi, (2024) SCC OnLine Del 8949, wherein the Delhi High Court, after relying upon the decisions of Prabir Purkayastha Vs. State (NCT of Delhi) (supra) and Pankaj Bansal Vs. Union of India (supra) held the arrest memo of the petitioner illegal and set aside the remand order passed under Section 132 of the Act of 2017. It is vehemently argued that provisions of Section 69(2) of the Act of 2017 are pari materia with the provisions enshrined under Section 19 of the Prevention of Money Laundering Act (hereinafter referred to as ‘the PMLA’) and the Hon’ble Apex Court in Pankaj Bansal Vs. Union of India (supra) and Prabir Purkayastha Vs. State NCT Delhi (supra) has categorically held that the Agency must furnish written reasons before the person's arrest under the PMLA provisions.
4. It is further contended that the arrest memo shows that written reasons were not furnished to the petitioner in the present matter. It is also argued that it is alleged against the petitioner that he falsely availed Input Tax Credit to Rs.10.87 crores. In contrast, the CGST Portal itself shows that firms from which the petitioner received the scrap were registered on the CGST Portal. It is also argued that the respondents have not filed any complaints against these firms. It is also vehemently argued that the statement of the petitioner recorded under Section 70 of the Act of 2017 is also under coercion and cannot be read against the petitioner as, at the time of recording of the statement of the petitioner, the petitioner was under arrest. It is also contended that the petitioner's statement further shows that they were not recorded at the petitioner's house but in the Department's office. The version of the Department is contradictory; therefore, considering the above facts, the bail application of the accused petitioner deserves to be allowed.
5. Learned Counsel appearing for the CGST has vehemently opposed the bail application. It is contended that the petitioner has caused the Department a loss of Rs.10.87 crores by availing of fake Input Tax Credit without receiving any scrap or goods. On investigation, all the firms were found to be non-existent, and the petitioner had received scrap from the fake non-existent firms. It is also contended that upon investigation, it was found that the petitioner, to avail of the fake Input Tax Credit, also forged the E- way Bill of the so-called Transport Company. The E-way bill submitted by the petitioner for availing the In
