Dev Adania vs. The State Of Maharashtra And Anr

Held

The Court rejected the application for anticipatory bail. The Court found that the respondents had presented sufficient material to deny pre-arrest bail. This material included information from CGST Jodhpur and Belgavi CGST Commissionerates indicating that M/s. Gajmukhi Bullion was a non-existent firm and had availed ineligible ITC. Searches were conducted, and the applicant was summoned. The respondents' case was that the applicant fraudulently passed ITC to M/s. Gajmukhi Bullion and availed ITC without genuine transactions. Statements recorded under Section 70 of the CGST Act, including those from the applicant and his ex-employee, indicated fraudulent availment of ITC from non-existent companies. The Court noted that the applicant's employee admitted to opening firms based on arranged documents. While the applicant claimed retraction of statements, the Court observed that some statements were not retracted and that GSTR-2A showed significant ITC availed by the applicant from the firms in question. The Court concluded that custodial interrogation was necessary and that the applicant had not made out a case for relief under Section 438 of the Cr.P.C. The Court also noted that the applicant had not offered to compound the offence as per Section 138 of the CGST Act. The interim protection granted was extended by two weeks to allow the applicant to approach the Apex Court.

Facts

The applicant, Dev Adania, proprietor of Gajmukhi Bullion, sought anticipatory bail apprehending arrest in connection with an investigation by the Commissioner of Central GST (Mumbai South) under Section 70 of the CGST Act. Information received indicated that M/s. Gajmukhi Bullion was found non-existent at its registered address in Rajasthan and was a supplier of Input Tax Credit (ITC) to the applicant. Further information suggested the applicant had passed ITC worth Rs. 2.54 Crores to M/s. Gajmukhi Bullion and received approximately Rs. 15.22 Crores in ITC from Karnataka Jewellers. Searches were conducted, documents seized, and the applicant was summoned. His anticipatory bail application was rejected by the Sessions Court, which noted allegations of fraudulent transactions and availment of ITC from non-existent entities. The applicant had previously been granted bail by the Rajasthan High Court in a related matter.

Key Issues

1. Whether the applicant is entitled to anticipatory bail under Section 438 of the Cr.P.C. in light of the ongoing investigation by the CGST authorities regarding alleged fraudulent availment and passing of Input Tax Credit (ITC)? (Mixed question of law and fact, turning on Section 438 Cr.P.C., Section 70 and Section 132 of the CGST Act). Petitioner's arguments: The applicant argued that he had already been arrested and released on bail by the Rajasthan High Court for the same transaction and therefore should not be subjected to custodial interrogation again. He contended that the respondents lacked material to support their claim of ITC availment and that his statements were retracted. He also submitted that he had provided all necessary documents to prove genuine transactions and that E-way bills were exempted for bullion/jewellery business. Revenue's arguments: The respondents contended that the applicant had fraudulently passed ITC to M/s. Gajmukhi Bullion, a non-existent firm, without actual receipt of goods, and had also availed ITC. They relied on statements recorded under Section 70 of the CGST Act, which they claimed were not retracted, and asserted that custodial interrogation was necessary due to the magnitude of the alleged fraud and the ongoing investigation to identify conspirators. They also pointed to the applicant's employee's statement indicating the firms were opened based on arranged documents.