Pawan Kumar Bansal vs. Union Of INDIA

Held

The Court held that the petitioner is entitled to be released on bail. Relying on the Supreme Court's decision in C. Pradeep (supra) and noting that a final assessment had not been made under Section 74 of the CGST Act, the Court granted bail. The petitioner was directed to furnish bail bonds of Rs. 5 lakhs with five sureties of Rs. 1 lakh each. Additionally, as a condition for bail, the petitioner must deposit a sum of Rs. 91 lakhs with the appropriate officer within 15 days of his release. The Court also directed the petitioner to cooperate with the investigation and for both parties to sit together to determine the amount payable towards GST. The Court proposed to make an assessment of the dues payable by the petitioner towards GST at the time of hearing, and the PP-in-Charge filed a statement indicating Rs. 9.10 crores was due.

Facts

The petitioner, Pawan Kumar Bansal, a director of M/s M.L.U Metaliks Pvt. Ltd. and proprietor of M/s M.L Udyog, applied for bail under Section 439 of the Code of Criminal Procedure. The allegations against him are supplying goods/services without invoices to evade tax, and issuing invoices without supply to wrongfully avail input tax credit or refunds, in violation of the CGST Act, 2017. These offenses are punishable under Section 132(1)(a)(b) of the CGST Act. The petitioner was arrested after attending the prosecuting authority's office following a summons during the Covid period. He claims to have already paid Rs. 40 lakhs towards GST.

Key Issues

1. Whether the petitioner ought to have been served a notice under Section 41A of the Code of Criminal Procedure, following the decision in Arnesh Kumar vs. State of Bihar, given the maximum punishment for the alleged offenses is five years imprisonment? 2. Whether the arrest was justified when the determination of GST payable by the petitioner had not been made under Section 74 of the CGST Act, and the petitioner was summoned under Section 70 for evidence? 3. Whether the petitioner is entitled to be released on bail, considering the Supreme Court's decision in C. Pradeep vs. Commissioner of GST and Central Excise, Salem & Anr., which allowed release upon depositing a percentage of disputed liabilities? Petitioner's arguments: The petitioner argued that Section 41A of CrPC should have been followed. They contended that Section 74 of the CGST Act pertains to determination of tax, and subsection (5) allows payment of tax, interest, and a penalty of 15% before notice issuance. They also argued that Section 70, under which summons was issued, does not imply an intention to arrest, and arrest under Section 132(1)(a)(b) was premature as final assessment under Section 74 was not made. Reliance was placed on C. Pradeep (supra) for bail conditions. Revenue's arguments: The learned PP-in-Charge raised vehement objection against the prayer for bail.