Ritik Arora vs. Union Of INDIA Through Department Of GST
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The petitioner, Ritik Arora, sought anticipatory bail apprehending arrest in connection with a complaint filed under the Central Goods and Service Tax Act, 2017, and the Integrated Goods and Service Tax Act. The respondent, Union of India through the Department of GST, alleged that the petitioner, along with his father Anil Kumar Arora, evaded tax amounting to Rs. 7.97 crores. This evasion allegedly occurred through the dispatch of goods without e-way bills, using fake GST registration bills. The petitioner's father was the co-accused in clearing goods without e-way bills and GST payment. The petitioner was summoned multiple times but failed to appear. The petitioner argued he was a young student and implicated solely due to being the son of a co-accused, with no direct evidence against him. He also pointed out that Section 122 of the CGST Act provides for penalties for tax evasion, not necessarily immediate arrest.
Held
The Court allowed the anticipatory bail application. While acknowledging the allegations of tax evasion against the petitioner's father and the respondent's contention that the petitioner was an active accomplice, the Court found that no prima facie case was made out against the petitioner himself regarding tax evasion. The Court distinguished the cases relied upon by the respondent, noting that in those instances, the accused were directly involved in tax evasion. The Court reiterated the extraordinary nature of powers under Section 438 Cr.P.C., to be invoked when there are reasonable grounds that the accused will not abscond or misuse liberty. Considering the petitioner is a young man pursuing his studies and the lack of a clear prima facie case against him, the Court deemed it fit to grant anticipatory bail. The petitioner was directed to furnish a personal bond and sureties, and to cooperate with the investigation, not induce witnesses, and not leave India without prior court permission. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether a prima facie case is made out against the petitioner for tax evasion under the Central Goods and Service Tax Act, 2017, and the Integrated Goods and Service Tax Act, warranting denial of anticipatory bail? Petitioner's Arguments: The petitioner contended that he is a young student and there is no direct evidence connecting him to the alleged tax evasion. He argued that his implication is solely based on his relationship with his father, a co-accused. He further submitted that even if tax evasion occurred, Section 122 of the CGST Act provides for penalties and not necessarily arrest. He relied on several Supreme Court and High Court judgments, including Meghraj Moolchand Burad, Nitin Verma, Abdul Shaji, Directorate General of GST Intelligence v. Lupita Saluja, Tarun Jain, and Commissioner of Central Excise v. Sri Kumar Agencies. Respondent's Arguments: The respondent argued that the petitioner is an active accomplice to his father in evading tax amounting to Rs. 7.97 crores. They presented evidence of intercepted vehicles carrying goods without e-way bills, the use of fake bills, and the petitioner's failure to appear despite multiple summons. The respondent cited Section 69 of the GST Act, which empowers the Commissioner to authorize arrest if there are reasons to believe a person has committed offenses under Section 132. They also referred to previous orders of the same court in similar bail applications.
Sections Cited
Section 132, Section 122, Section 69
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Cause title — parties, addresses and appearances
Order Order Reserved on :
14/09/2022 Date of pronouncement: 20/09/2022 This anticipatory bail applications under Section 438 Cr.P.C. has been filed by the petitioner apprehending his arrest in connection with Complaint No. V(15)273/AE/UDR/2020-21 under Section 132(1)(a) (f)(h)(j) & (k) r/w Section 132 (1)(I)(i) of Central Goods and Service Tax Act, 2017 and Section 20 of Integrated Goods and Service Tax Act. Learned counsel for the petitioner submits that the present petitioner is being sought to be implicated in a false case only because he is son of the co-accused Anil Kumar and there is no (2 of 5) [CRLMB-5830/2022] other evidence against the petitioner to connect him with the alleged crime. Learned counsel further argued that petitioner is a young boy who is pursuing his studies and no prima facie case whatsoever is made out against him. It is submitted that neither any assessment order has been passed nor any demand has been raised against the petitioner. Learned counsel referred to Section 122 of the Central Goods and Service Tax Act and submits that even if there is any evasion of tax, the section provides for penalty as a consequence, apart from the requirement to pay the tax and applicable interest. It is further submitted by the counsel for the petitioner that the petitioner is ready and willing to cooperate in the investigation but despite that the department is harassing the petitioner with the sole objective of arresting him but no purpose would be served by sending the petitioner in custody. He relied upon decision of Hon’ble Apex Court in the case of Meghraj Moolchand Burad Vs. Directorate General of GST Intelligence, Pune & Anr. reported in 2019(1) TMI 1563, decision of Allahabad High Court in Nitin verma Vs. State of UP & Anr. reported in 2021 (1) TMI 217, 2021(4) TMI 979, decision of Hon’ble Apex Court in Directorate 2021(12) Tmi 135 and decision of Hon’ble Apex Court in the (Civil Appeal No. 4872/2000).
(3 of 5) [CRLMB-5830/2022] Per contra, counsel for the UOI vehemently opposed the bail application and submits that the Anti Evasion Wing of respondent intercepted two vehicles carrying iron scrap. On interception, the drivers of the vehicles were asked to produce the documents. The drivers produced the invoices but did not produce any e-way bill for movement of goods. The goods were dispatched on the order of co-accused Anil Kumar Arora and petitioner Ritik Arora. Upon search of the premises, the bill uploaded during registration on GST portal was found to be fake. It is submitted that during course of investigation, it has been revealed that petitioner is active accomplice to his father and both evaded tax to the tune of Rs. 7.97 crores. It is further argued that the petitioner was called by the Superintendent, CGST Commissionerate, Udaipur by series of summons dated 26.07.21, 10.08.21, 22.11.21, 13.12.21, 03.01.22 and 25.03.22 but failed to turn up and thus not co-operating with the investigation. It is further submitted that as per Section 69 of the GST Act, where the Commissioner has reasons to believe that a person has committed any offence 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 officer of central tax to arrest such person, therefore, the bail application may be rejected. Learned counsel for the respondent relied upon decision of co-ordinate bench of this Court in S.B. Crl. Misc. Bail application No. 13042/21 decided on 07.09.21, S.B. Crl. Misc. Bail application No. 15193/21 decided on 28.10.21, S.B. Crl. Misc. II Bail application
(4 of 5) [CRLMB-5830/2022] No. 15140/21 decided on 27.10.21, S.B. Crl. Misc. Bail application No. 18243/21 decided on 07.12. 21. Heard learned counsel for the parties and perused the material available on record. On perusal of the complaint, it is revealed that the main allegation with regard to tax evasion is against the father of the petitioner i.e. Anil Kumar Arora who allegedly cleared goods without issuance of e-way bill and payment of GST and evaded crores of tax. The only allegation against the present petitioner is that he is an active accomplice to his father accused Anil Kumar Arora, however no prima facie case is made out against the present petitioner with regard to tax evasion. So far as the orders passed by co-ordinate Bench of this Court relied upon by counsel for the respondent are concerned, the accused were directly involved in tax evasion. It is well settled that the power exercisable under Section 438 Cr.P.C. is somewhat extraordinary in character and it can be invoked in cases where there are reasonable grounds for holding that a person accused of an offence is not likely to abscond, or otherwise misuse his liberty while on bail. Having regard to the facts and circumstances of the case and upon a consideration of the arguments advanced at the bar so also considering the fact the petitioner is a young man pursuing his studies, this Court is of the opinion that it is a fit case for grant of anticipatory bail to the petitioner under Section 438 Cr.P.C. However, it is expected from him to observe and follow the fundamental duties of a good citizen as enshrined in Article 51-A of the Constitution of India.
(5 of 5) [CRLMB-5830/2022] Accordingly, the bail application is allowed and it is directed that in the event of arrest of petitioner Ritik Arora S/o Anil Kumar
Arora in connection with Complaint No. V(15)273/AE/UDR/2020-21, the petitioner shall be released on bail; provided he furnishes a personal bond in the sum of Rs.2,00,000/- along with two sureties of Rs. 1,00,000/- each to the satisfaction of the concerned Investigating Officer on the following conditions :- (i). that the petitioner shall make himself available for interrogation by the officer as and when required; (ii). that the petitioner shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the court or any police officer; and (iii). that the petitioner shall not leave India without previous permission of the court. (MANOJ KUMAR GARG),J 80-BJSH/-
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.