Naitik Paresh Mawani vs. Superitendent And Anr

Held

The Court held that no case for granting anticipatory bail was made out for the applicants. The Court found sufficient evidence on record demonstrating the involvement of the applicants in floating 17 non-genuine firms, which involved fake invoices valued at approximately Rs. 300 crores and GST of over Rs. 1,500 crores. The Court noted that the applicants' personal mobile numbers and email IDs were used in the GST registration details and bank account details of these dummy firms. The statement of a dummy proprietor, Mrs. Alpa Mehta, indicated that the applicants, Mr. Naitik Mawani and Mr. Paresh Mawani, were the actual persons behind these firms. Furthermore, the Chartered Accountant confirmed that the applicants had contacted him for GST-related work for these firms. The applicants and their family members engaged in significant banking transactions with these dummy firms, despite having no direct sale or purchase activities with them. The Court also considered that the applicants had accepted managing business activities and maintaining four firms, two of which were dummy proprietorship firms. The Court found that the applicants were duty-bound to honor the summons issued under Section 70 of the CGST Act. Consequently, the Court rejected both anticipatory bail applications, deeming custodial interrogation necessary.

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 CGST and Central Excise authorities. The investigation focused on firms involved in pharmaceutical trading, revealing fictitious and non-genuine entities. Evidence suggested Naitik Paresh Mawani played an active role in the business transactions of these fictitious firms. The authorities found 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 the applicants. Personal documents of Harshil Mehta were reportedly used to open firms and bank accounts. Further investigation indicated that 15 firms suspected to be non-genuine shared common mobile numbers or email IDs belonging to the applicants. The Chartered Accountant for some of these firms also stated that the applicants instructed him for CGST-related work. Despite summons, the applicants did not cooperate, and their previous anticipatory bail application was rejected by the Sessions Court.

Key Issues

1. Whether the applicants are entitled to anticipatory bail in light of the evidence suggesting their involvement in floating 17 non-genuine firms, involving fake invoices of approximately Rs. 300 crores and GST of over Rs. 1,500 crores, and their alleged non-cooperation with the investigation under the CGST Act, 2017? (Mixed question of law and fact, concerning Sections 70, 73, 74, and 132 of the CGST Act, 2017). Petitioner's Arguments: - The applicants are willing to cooperate with the investigation and attend the authorities' office. - They are falsely implicated, and the CGST Act, 2017, provides a specific mechanism for demand of tax through quasi-judicial proceedings, which cannot be bypassed by pressuring for deposits. - Goods received and supplied were against GST-paid invoices, and payments were made through proper banking channels. - Transactions are duly accounted for, and they cannot be subjected to arrest. - The respondents are not proper officers to initiate proceedings without a show cause notice, and any allegations without such notice are conjectural. - Reliance was placed on *Prasad Purshottam Mantri Vs. Union of India* and *Hanumanthappa Pathrera Lakshmana Vs. State, Senior Intelligence Officer, D.G. of GST Intelligence, Bengaluru*. Revenue's Arguments: - There is voluminous evidence of the applicants' involvement and non-cooperation. - Crores of rupees have entered the applicant's accounts, with transactions totaling Rs. 300 crores and tax evasion of Rs. 13 crores. - The applicants floated 17 firms with fake invoices exceeding Rs. 300 crores, involving over Rs. 1,500 crores of GST. - Naitik Mawani is the proprietor of Global Pharma Chem and a director in Avion Pharma Chem. - The applicants were bound to honor summons under Section 70 of the Act. - There are substantial reasons to believe their custodial interrogation is necessary, as they are influencing dummy persons and the Chartered Accountant. - Personal mobile numbers and email IDs of the applicants are linked to dummy firms' GST registrations and bank accounts.