Hon’ble Delhi High Court in a bail application filed before it by Sh. Raghav Agarwal (hereinafter referred to as “Applicant”) has granted interim bail to the Applicant in a case where arrest was made by CGST officers. The arrest was made on the ground that M/s Dreamz International had availed of fraudulent/ inadmissible ITC.
It was the conceded position as stated in the interim order, that no Show cause notice has been issued to the Applicant and no proceedings for assessing the exact amount has been initiated. It was inter-alia the contention of the counsel for Applicant that arrest memo indicates that Department have not been able to specify the offence committed by the Applicant.
- We have seen Department resorting to exercise the power to arrest even in cases where investigation is in infancy and no material evidence is available with the Department.
- It is pertinent to note that the arrest memo that is issued at the time of arrest must state the grounds on which arrest is being made. In this regard, it is pertinent to refer to Section 69(2) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), which inter-alia states that here a person is arrested under sub-section (1) for an offence specified under sub-section (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest. In the case of Yashwantgiri Goswami v. State of Gujarat, R/SCA No. 13679 of 2019, Hon’ble Gujarat High Court has held that if the Magistrate finds that the arrest memo is absent or improperly filled or bereft of necessary particulars, then the Magistrate should decline the production of the arrested person. The Hon’ble High Court held that the guidelines as laid down by Supreme Court in D.K. Basu v. State of West Bengal 1997 (1) SCC 416shall apply even to officers of the GST Department.
- Furthermore, the prosecution of any person is directly linked with determination of evasion of tax because if there is no evasion of tax, there cannot be criminal liability. In the absence of adjudication mechanism being initiated, the criminal liability cannot stand. The Hon’ble Delhi High Court has in Makemytrip v. Union of India, 2016 (44) STR 481 (Del) categorically held that there cannot be no prosecution unless the authorities are satisfied in that regard.
- It is settled principle of law that power to arrest is required to be exercised in exceptionable circumstances and only after arriving at a reasonable satisfaction that the arrest is necessary in order to prevent the accused to commit any other offence or to prevent tampering of evidence or to prevent him to flee from justice.
- It is unfortunate that Department officials exercise power to arrest in gross neglect of settled principles of law pertaining to arrest and clear statutory provisions.
- While considering the application for grant of bail, the nature of alleged offence, nature of accusation and severity of punishment, are relevant. In this regard, the law has been recently enunciated by Hon’ble Supreme Court in the case of Arnab Manoranjan Goswami v. State of Maharashtra, Crl Appeal No. 742 of 2020, SC. To quote:
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 or the State and other similar considerations.
- The Hon’ble High Court in Raghav Agarwal (supra) took a prima facie view that since the matter requires examination on the legal issues raised, case for interim bail is made out.
Copy of interim order in Raghav Agarwal v. Commissioner of Central Tax and GST, 2020 (12) TMI 940- Delhi High Court may be accessed here: Raghav Agarwal Interim Bail Delhi High Court
Gaurav is an advocate by profession and has done his B.Com(H) from Hansraj College and LL.B(H) from Faculty of Law, Banaras Hindu University. He has represented clients from Diverse sectors, providing services in Litigation involving Indirect Taxes, IBC, Commercial laws, Direct Taxes, RBI matters. He is active beforewrit Courts, Tribunals and Quasi-Judicial Authorities.