Arun Gupta vs. State Tax Officer, Office Of Assistant Commissioner State Tax

Held

The Court allowed the petition for regular bail. The primary reasoning for granting bail was that the investigation in the case was complete, and the challan had been presented. This distinguished the present case from the one relied upon by the State, where bail was denied due to incomplete investigation. The Court noted that the petitioner's custody would no longer be required. The Court also considered the orders passed by Coordinate Benches granting bail to similarly situated persons and the pending challenge to the vires of relevant sections. The Court explicitly stated that any observations made in the bail order would not be construed as an expression on the merits of the case. The petitioner was directed to be released on regular bail upon furnishing an adequate personal/surety bond of Rs. 10 lakhs, surrendering his passport, and not leaving India without prior court permission.

Facts

The petitioner, Arun Gupta, was arrested on November 10, 2020, by the State Tax Officer, Ludhiana, under Section 132(1)(c) of the Central GST Act, 2017, and Punjab GST Act, 2017. The arrest was in connection with the alleged wrong availment of Input Tax Credit (ITC). A liability of Rs. 6.30 crores was initially fastened upon him, though he claims to have reversed an entry of Rs. 1.12 crores, leaving a disputed liability of Rs. 5.18 crores. At the time of filing the petition, no FIR or complaint had been filed. The petitioner also challenges the vires of Sections 69 and 132 of the CGST Act, 2017, and the jurisdiction for arrest under Section 69 of the Punjab GST Act, 2017, citing a pending challenge in another writ petition. The challan (charge sheet) has since been presented.

Key Issues

1. Whether the petitioner is entitled to regular bail under Section 439 Cr.P.C. in a case registered under Section 132(1)(c) of the Central GST Act, 2017, and Punjab GST Act, 2017, for alleged wrong availment of Input Tax Credit, considering the disputed amount of liability and the presentation of the challan? Petitioner's arguments: The petitioner contends that a significant portion of the alleged liability is disputed, and he has already reversed a part of the ITC. He argues that the arrest under Section 69 of the Punjab GST Act, 2017, is without jurisdiction. Furthermore, he points to a pending challenge to the vires of Sections 69 and 132 of the CGST Act, 2017, in another case. He relies on various orders from Coordinate Benches granting bail to similarly placed individuals and an interim order from the Bombay High Court in a case involving a substantial ITC claim. Respondent's arguments: The respondent-State opposes the grant of regular bail, relying on an order from a Coordinate Bench that denied bail to a petitioner in a similar case where the investigation was stated to be incomplete. The State Tax Officer confirmed that a complaint has been filed against the petitioner.