Paresh Anubhai Mawani vs. Superitendent And Anr

Held

The Court held that no case for the grant of anticipatory bail was made out. The Court found that there was sufficient evidence on record showing the involvement of the applicants in the alleged fraudulent activities. The Court noted that the personal mobile numbers and email IDs of the applicants were used in the GST registration details and bank accounts of the dummy/non-genuine firms. The statement of a dummy proprietor, Mrs. Alpa Mehta, indicated that the actual persons behind these firms were Mr. Naitik Mawani and Mr. Paresh Mawani. The Court also considered the statement of the Chartered Accountant, who confirmed that the applicants had contacted him for GST-related work for these firms. The Court observed that the applicants and their family members had made substantial banking transactions with these dummy firms, despite having no genuine sale or purchase dealings. The Court further noted that the applicants had accepted managing business activities of some of these firms. The Court concluded that custodial interrogation of the applicants was necessary and that the decisions relied upon by the applicants' counsel were not applicable to the facts of the case. Therefore, the applications for anticipatory bail were rejected.

Facts

These applications for anticipatory bail were filed by Naitik Paresh Mawani and Paresh Anubhai Mawani, father and son, who apprehended arrest in connection with a summons issued by the Superintendent of CGST and Central Excise. The investigation, initiated based on intelligence, revealed that a firm trading in pharmaceutical products used fictitious/dummy suppliers. Evidence gathered indicated Naitik Paresh Mawani's active role in the business transactions of these fictitious firms. Summons were issued to him, but the applicants did not respond. Investigations revealed that a firm, M/s.Unique Pharma Chem, registered in the name of Harshil Atul Mehta, a person with mild mental retardation, was allegedly managed by Paresh Mawani and Naitik Mawani, who had used Harshil Mehta's personal documents. It was further revealed that 15 firms suspected to be non-genuine shared common mobile numbers or email IDs belonging to Naitik Paresh Mawani or his father, Paresh Mawani. The Chartered Accountant for these firms also stated that the applicants instructed him regarding CGST work for eight of these firms. The applicants denied knowledge of large financial transactions and the use of their personal email IDs.

Key Issues

1. Whether the applicants have made out a case for the grant of anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973, considering the allegations of involvement in the creation and operation of fictitious firms for GST evasion and the evidence collected by the CGST authorities. Petitioner's arguments: The applicants argued that the CGST Act, 2017, is a special act with a prescribed mechanism for demand and recovery of tax, involving principles of natural justice, show-cause notices, and adjudication. They contended that this procedure cannot be bypassed by pressuring them for deposits and that arrest is not warranted as the Act provides for recovery. They also argued that the respondents are not proper officers for initiating such proceedings and that Section 70 of the Act, regarding summoning, does not authorize arrest. They relied on Prasad Purshottam Mantri Vs. Union of India and Hanumanthappa Pathrera Lakshmana Vs. State. Revenue's arguments: The respondent argued that there is voluminous evidence of the applicants' involvement, including crores of rupees transacted in their accounts, evasion of Rs.13 crores, and the floating of 17 firms with fake invoices exceeding Rs.300 crores, involving over Rs.1500 crores of GST. They asserted that the applicants have not cooperated with the investigation, are influencing dummy persons and the Chartered Accountant, and that their personal mobile numbers and email IDs are linked to these dummy firms. They argued that the applicants were bound to honor the summons under Section 70 of the Act and that there were substantial reasons for competent authorities to believe that their inquiry was necessary, justifying the power to arrest.