Shamim Akhtar vs. Directorate General Of GST Intelligence, Gurugram

Held

The Court held that the offences under the CGST Act for which the petitioner is accused are triable by a Magistrate, and the maximum prescribed punishment is up to 5 years, contingent on the quantum of tax evasion. The trial was at the pre-charge evidence stage, indicating no immediate likelihood of conclusion. Consequently, the Court found no purpose in the petitioner's continued incarceration. The petition was allowed, and the petitioner was admitted to bail. The Court explicitly stated that its observations should not be construed as an opinion on the merits of the case. No specific issue was left undecided, as the decision was based on the stage of the trial and the nature of the offences.

Facts

The petitioner, Shamim Akhtar, is seeking regular bail in a complaint filed under Sections 132(1)(A) & (I) of the Central Goods and Services Tax Act, 2017. The complaint was registered by the Directorate General of GST Intelligence, Gurugram. The petitioner contends that no cash or Agriculture Grade Urea was recovered from her, and her arrest on April 26, 2022, was in contravention of the CGST Act as tax liability adjudication had not commenced. The case hinges on the statement of Manoj Kumar, who allegedly supplied Agriculture Grade Urea to M/s Saba Chemicals Wood Products. The respondent-Department inferred that 1 kg of Urea was used to manufacture 60.33 kg of Resin, leading to an alleged GST evasion of Rs. 22,30,51,232/-. Manoj Kumar has already been granted bail.

Key Issues

1. Whether the arrest of the petitioner was in contravention of the statutory provisions of the Central Goods and Services Tax Act, 2017, given that the adjudication and assessment of tax liability had not yet commenced? 2. Whether the statement of Manoj Kumar, who was not cited as a witness by the respondent-Department, carries sufficient evidentiary value to array the petitioner as an accused? 3. Whether the petitioner, having been in custody since April 26, 2022, for offences triable by a Magistrate with a maximum punishment of five years, should be granted bail? Petitioner's Arguments: The petitioner argued that her arrest was illegal as adjudication had not begun. She also contended that the case relied on Manoj Kumar's statement, who was not a cited witness, thus lacking evidentiary value. The petitioner highlighted that the alleged offences are triable by a Magistrate and the maximum punishment is five years, making her eligible for bail, especially since Manoj Kumar has already been granted bail. Respondent's Arguments: The respondent argued that the petitioner used Agriculture Grade Urea to produce Resin, which was sold without tax invoices, causing a loss of Rs. 22,30,51,232/- to the State Exchequer. The respondent did not dispute that the maximum punishment for the alleged offences under the CGST Act is five years.