Bombay High Court
Amit Kumar Shukla vs Union Of India Thr. Secretary Ministry ... on 6 May, 2021
Author: Abhay Ahuja
Bench: Sunil P. Deshmukh, Abhay Ahuja
wpst-9335-2021
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
APPELLATE SIDE CIVIL JURISDICTION
WRIT PETITION (ST.) NO. 9335 OF 2021
Amit Kumar Shukla .. Petitioner.
v/s.
Union of India & Others .. Respondents.
Mr. Ganesh Gole i/b. Ritesh Ratnam, for the Petitioner.
Mr. Jitendra Mishra with Mr. D. B. Deshmukh, for Respondent No.3.
CORAM: SUNIL P. DESHMUKH &
ABHAY AHUJA, JJ.
DATE : 6th MAY, 2021.
(THROUGH VIDEO CONFERENCING) P.C:-
Petitioner has approached this Court, seeking following reliefs:-
"(a) Issue a writ under Article 226 of the Constitution of India thereby declaring and striking down section 132 (1)(b) of the Central Goods and Services Act, 2017 for being unconstitutional on the vice of Article 14 of the Constitution of India, and/or
(b) Issue a writ under Article 226 of the Constitution of India that power of arrest under Section 69 of the Central Goods and Services Act, 2017 can be exercised only after the proper assessment/ determination of liability, and/or
(c) Pending the hearing and final disposal of the instant writ petition, the petitioner may kindly be enlarged on interim/ ad-
interim bail in connection with V/PI/RGD/Gr-II/19-29/DGARM/19- 21, pending before the Court No.4, Judicial Magistrate First Class, Panvel, Raigad, and/or
(d) Direct the respondents to take necessary action in connection with V/PI/RGD/Gr-II/19-29./DGARM/19-21, so as to de-attach the bank account of the petitioner maintained by the petitioner with the Saraswat Co-operative Bank Ltd. and/or
(e) Restrain the respondents to take any further coercive action S.R.JOSHI 1 of 10 ::: Uploaded on - 07/05/2021 ::: Downloaded on - 10/09/2021 12:55:26 ::: wpst-9335-2021 or criminal prosecution in connection with V/PI/RGD/Gr-II./19-29/ DGARM/19-21 qua the petitioner, and/or
(f) Dispense the affidavit of the petitioner in as much as the petitioner is in judicial custody
(g) Pass any other or further orders that this Hon'ble Court may deems fit in the facts and circumstances of the present case."
2 Petitioner is proprietor of M/s. Vijay Ispat and one of the Director of M/s. Sushimita Mercantile Pvt. Ltd. along with his wife, who is a nominal Director. On the basis of specific intelligence, Respondents initiated investigation and inspected the offices and places of business of the aforesaid firms on 11th March, 2021.
3 Petitioner was summoned under Section 70 of the CGST Act and, inter alia, statement in terms of the following was recorded on 23 rd March, 2021:
"(i) admitted that he is the proprietor in M/s. Vijay Ispat, and one of the Director in M/s. Susmita Mercantile Pvt. Ltd.;
(ii) admitted that although his wife was the other Director in M/s. Susmita Mercantile Pvt. Ltd. she had no role in the business activities in this firm as she was only a signing authority;
(iii) admitted that no goods were received or stored in "Phase II, Shop No.4, Plot No.51, of Navade, Maharashtra 410 208 which had been declared as an additional place of business of M/s. Shushmita Mercantile Pvt. Ltd.
(iv) admitted that no goods were received or stored at the premises of "Godown No.236-C, KWC, Steel Market, Road No.2, Kalamboli,, Navi Mumbai 410 218" which had been declared as an additional place of business of M/s. Vijay Ispat;
(v) On being asked as to how the E-Way bills issued by M/s. Pan Asia were showing the address as "Gut No.220/2, Kambare Wada, Palghar, Maharashtra 421 303", which was just an open plot of land without having any protective enclosure or building and thus not suitable for handling goods, he declined to offer any comment;
(vi) He failed to explain to why no records/ registers/ documents were found on inspection of his principal place of business;
(vii) He used to offer salary of Rs.10,000 per month to Shri Rahul S.R.JOSHI 2 of 10 ::: Uploaded on - 07/05/2021 ::: Downloaded on - 10/09/2021 12:55:26 ::: wpst-9335-2021 Rajbhar for assisting Shri Amit Lohia, who also played a crucial role in the conspiracy of fraudulent availment of ITC;
(viii) He admitted that he switched off his mobile phones so as to escape from the authorities in the recent case of investigation by DRI into the affairs of one of the Group company , viz. M/s. Jy Jagdamba Ltd.,
(ix) He admitted to receiving an amount of Rs.70,000/- per month from one Shri Ramprakash Malpani, the chief conspirant, for following the latter's instructions in the conspiracy of fraudulent availment of ITC in both of his firms;
(x) He admitted that Shri Amit Lohia, under the control of Shri Ramprakash Malpani, used to prepare/issue GST Invoices/ E-Way bills, file returns in M/s. Vijay Ispat & M/s. Sushmita Mercantile and that in fact, Shri Amit Lohia had the log-in ID and password of these firms, and also used to oversee the banking transactions.
admitted that both the aforesaid firms being never received or supply any goods. On the very same day, Petitioner was arrested for offences punishable under Section 132(1)(b) of the CGST Act and was produced before the concerned Court on 24 th March, 2021 and is since then being remanded to judicial custody. Petitioner prefer an application for bail before the concerned Magistrate Court which came to be rejected vide order dated 31st March, 2021." 4 On the very same day i.e. on 23 rd March, 2021, Petitioner was arrested for offences punishable under Section 132(1)(b), (c) of the CGST Act and was produced before the concerned Court on 24th March, 2021 for remand and since then is stated to be in judicial custody. Petitioner preferred an application for bail before the concerned Magistrate Court which came to be rejected vide order dated 31 st March, 2021. Thereafter , vide communication dated 4th April, 2021, the bank account in respect of M/s. Vijay Ispat with Saraswat Co-operative Bank Ltd., was attached. Petitioner is aggrieved by all these actions but Petitioner is pressing for interim relief in terms of prayer clause (c) at this stage.
5 Learned Counsel for the Petitioner submits that Petitioner is a law abiding citizen, regularly filing returns with the concerned authority, S.R.JOSHI 3 of 10 ::: Uploaded on - 07/05/2021 ::: Downloaded on - 10/09/2021 12:55:26 ::: wpst-9335-2021 showing payment of tax and availment of ITC which is generated automatically in common portal. He submits that Petitioner's concerns are duly registered, since 2018 the ledger accounts can be correlated, bank statements are verifiable. Since the business is of scrap, the materials cannot always remain in the compound. The Revenue has given no details. He submits that Petitioner has submitted all the relevant documents to Respondent No.3. Petitioner has established his bonafides. According to the Counsel, Petitioner was called by Respondent No.3- Authority by a summons to record his statement on 23 rd March, 2021 but without any notice or opportunity of hearing, was arrested on the very same day and then remanded on the next day to judicial custody and continues to be so till date. He submits that this is a question of personal liberty and neither has there been any offence registered nor any show cause notice given to Petitioner. He submits that this is a case of illegal detention and Petitioner needs to be forthwith released from the illegal arrest. He submits that he is only receiving an amount of Rs.70,000/- per month and has no other means. It is also urged on behalf of Petitioner that there is no reason to believe and therefore the investigation as well as the arrest is bad in law.
6 Petitioner heavily relies upon the decision of this Court in Writ Petition No.471 of 2021 dated 15 th February, 2021 in the case of Daulat S. Mehta v/s. Union of India & Others, stating that in almost similar circumstances, this Court has enlarged the Petitioner therein on bail, subject to the conditions mentioned in paragraph 41 thereof. He would submit that while the decision on the Constitutional Validity of Section 132 (1)(b) of the CGST Act as well as the issue with respect to the power of arrest under Section 69 of the said Act can be decided in due S.R.JOSHI 4 of 10 ::: Uploaded on - 07/05/2021 ::: Downloaded on - 10/09/2021 12:55:26 ::: wpst-9335-2021 course, however, considering that the offence punishable under Section 132(1)(b) of the CGST Act, is compoundable in terms of Section 138 of the said Act. Considering that ultimately, the object of the CGST Act is to collect revenue as observed in the above decision, no useful purpose would be served by keeping the Petitioner in judicial custody which has been for more than 42 days in the instant case.
7 On the other hand, Revenue has submitted that the Petitioner is one of the key conspirator. Learned Counsel for the Revenue submitted that on the basis of specific intelligence, the investigation against M/s. Sushimita Mercantile Pvt. Ltd., and Vijay Ispat was initiated. The principal place of business at Office No. 736, DISMA Warehousing Complex, Plot No. 750, Road No.06, Kalamboli, Navi Mumbai, Raigad, Maharashtra 410 218 was inspected on 11th March, 2021 but the said premises was found to be empty and no statutory records/ documents of either of the two firms could be found in the said office premises.
8 It is submitted that the additional place of business of M/s. Sushimita Mercantile Pvt. Ltd., as declared by M/s. Sushimita Mercantile Pvt. Ltd., at Phase-II, Shop No.4, Plot No.51, Navade, Maharashtra 410 208 ad-measuring around 300 sq. ft was found to be occupied by a vegetable vendor and upon enquiry from the owner, it was informed that the premises were vacant for last three to four months and that no rent had been received from M/s. Sushimita Mercantile Pvt. Ltd., though invoices were being issued from the said address. Even the additional place of business of M/s. Vijay Ispat at Go-down No.236-C, KWC, Steel Market, Road No.2, Kalamboli, Navi Mumbai 410 218 was found to be non-existent.
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9 Scrutiny by the authorities of returns filed by M/s. Vijay Ispat
revealed that it has passed on total credit of Rs.19.41 Crores. Recipients include Jay Jagdamba Limited, Wada Ingots Pvt. Ltd., 10 M/s. Sushimita Mercantile Pvt. Ltd. was found to have availed ITC of Rs.45.34 Crores for the period from 1st July, 2017 from suppliers/ recipients, including PAN Asia Steels Pvt. Ltd., Jay Jagdamba Ltd. In order to ascertain the authenticity of the underlying supplies, the principal place of business of PAN ASIA Steels Pvt. Ltd. situated at Gut No.220/2, Kambaren Wada, Palghar, Maharashtra 421 303 was inspected and it was found to be an open piece of land without any building/ canopy and did not appear to carry out any business activities nor was their any sign board of the companies or demarcation on the said plot. In the Petitioner's statement, which was recorded on 23 rd March, 2021, Petitioner has made admission with respect to the aforesaid facts as also set out in paragraph 16 of the Affidavit in reply. Learned Counsel for the Revenue, submits that in view of the aforesaid, Petitioner is involved in the following offences:-
"(a) for availing input tax credit of Rs.66 Crores on the basis of fake invoices which were issued without supply of goods which is punishable under clause (c) of sub-section (1) of the Section 132 of the CGST Act, 2017; and also
(b) for the issuance of the invoices without actual sale of goods involving tax amounting to Rs.66 Crores, punishable under clause
(b) of sub-section (1) of the Section 132 of the CGST Act, 2017."
11 Based on the above, it is urged by the Revenue that M/s. Sushimita Mercantile Pvt. Ltd., has fraudulently availed ITC of Rs.46 Crores and M/s. Vijay Ispat has fraudulently availed ITC of Rs.20 Crores only on the basis of mere documents i.e. Invoices/ E-way Bills, without S.R.JOSHI 6 of 10 ::: Uploaded on - 07/05/2021 ::: Downloaded on - 10/09/2021 12:55:26 ::: wpst-9335-2021 receipt of any goods in contravention of provisions of Section 16(2) of the CGST Act, 2017 and Petitioner appears to have played a prominent role in the fraudulent availment of and passing of of ITC of amount of Rs.66 Crores without supply of goods, attracting punishment under the provisions of Section 132(1)(c) and 132(1)(b) of the CGST Act, 2017.
12 It is also submitted that Petitioner, despite arrest, is not co- operating with the investigation and so far has not produced the required documents such as invoices, E-way Bills, Transport documents, detail of persons of respective firms with whom its transactions have been carried out and has also not revealed the names of other conspirators. It is submitted on behalf of the Revenue that the co-conspirators are absconding and not joining investigation. Investigations for ascertaining role of other firms involved in the fraudulent availment of ITC are going on and it is submitted that there is possibility that Petitioner would tamper with evidence, influence the witnesses, may abscond and not co-operate if released on bail.
13 During the course of hearing, we have called for original file notings of the Revenue. A perusal of the same, indicates that the concerned officer has on the basis of the information given so far by the Petitioner is in the process of identifying other key conspirators/ master mind in the fraudulent availment of ITC, the concerned officer has recorded her reasons to believe that Petitioner has floated the two firms with the core objective to defraud the Government Ex-chequer; that Petitioner is only doing paper transactions involving 66 Crores of revenue which is huge by any standards and, has authorized his arrest under Section 69 of the CGST Act. It is observed from the file notings that in S.R.JOSHI 7 of 10 ::: Uploaded on - 07/05/2021 ::: Downloaded on - 10/09/2021 12:55:26 ::: wpst-9335-2021 furtherance of the on going investigation, the Revenue authorities are in the process of issuing summons to them and other key persons and co- accused to interrogate and record statements.
14 Section 69 of the CGST Act with respect to power of officers to effect arrest is quoted as under:-
"69:- Power to arrest:- (1) Where the Commissioner has reasons to believe that a person has committed any office 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 office of central tax to arrest such person. (2) Where a person is arrested under sub-section (1) for an offence specified under sub-section (5) of section 132, the officer authorized 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 1974)-
(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) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station."
15 Section 132 (1) (b) and (c) are quoted as under:
"132:-Punishment for certain offences:-(1) Whoever commits any of the following offences, namely:-
(a) .....
(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax;
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(c) avails input tax credit using such invoice or bill referred to in clause (b)".
16 Having noted the aforesaid and the scale of the alleged scam as well as the involvement of Petitioner, we are not inclined to interfere with the investigation at this stage,as that may tantamount to foreclosing the out-come to the investigation and would rather hamper the same.
17 The decision of this Court in the case of Daulat Mehta (supra) in our view is completely different on the emergent facts of this case. From the decision of the Supreme Court in the case of Arnab M. Goswami v/s. State of Maharashtra (AIR 2021 SC-1) referred to in the above decision, the principles laid down therein, were culled out by this Court as under:-
"57:- While considering an application for the grant of bail under Article 226 in a suitable case, the High Court must consider the settled factors which emerge from the precedents of this Court. These factors can be summarized as follows:-
(i) The nature of the alleged offence, the nature of the accusation and the severity of the punishment in the case of a conviction;
(ii) Whether there exists a reasonable apprehension of the accused tampering with the witnesses or being a threat to the complainant or the witnesses;
(iii) The possibility of securing the presence of the accused at the trial or the likelihood of the accused fleeing from justice;
(iv) The antecedents of and circumstances which are peculiar to the accused;
(v) Whether prima facie the ingredients of the offence are made out, on the basis of the allegations as they stand, in the FIR; and
(vi) The significant interests of the public of the State and other similar considerations."
18 Looking at point (vi) above and considering the magnitude and the scale of the alleged fraud involving public money and the critical S.R.JOSHI 9 of 10 ::: Uploaded on - 07/05/2021 ::: Downloaded on - 10/09/2021 12:55:26 ::: wpst-9335-2021 stage, when investigation to get hold of the mastermind/ king pin and other key conspirators as well as the modus operandi is underway in which Petitioner through his sole proprietary concern, as well as through the Pvt. Limited Company, is alleged to be an active participant, at this stage, we are not inclined to indulge into the request for grant of bail under Article 226 of the Constitution of India.
19 In the circumstances, the Petitioner's prayer for bail in this Petition is hereby rejected at this stage. We, however, leave it open for Petitioner to pursue other remedies that may be available in law.
20 The original file is returned herewith.
21 List the matter on 21st June, 2021 for further consideration.
(ABHAY AHUJA,J.) (SUNIL P. DESHMUKH,J.)
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