Bhupendra Majethia S/O Hargovind Majethia vs. Superitendent(A.E), Investigation-A Mumbai And Anr

Held

The Court held that there was sufficient evidence against the applicant to satisfy the 'reason to believe' requirement for arrest. The applicant was allegedly engaged in availing fraudulent tax credit, supported by his statement recorded under Section 70 of the CGST Act and the discovery of 12 non-existent suppliers. The Court found that the respondents have the power to arrest in such circumstances. The decisions relied upon by the applicant's counsel were deemed not applicable to the facts of the case. Consequently, the Court concluded that no case was made out for granting relief to the applicant. The Court explicitly rejected the anticipatory bail application.

Facts

The applicant, Bhupendra Majethia, is seeking anticipatory bail in apprehension of arrest for an offence under Section 132 of the Central Goods and Services Tax Act, 2017. The Directorate General of GST Intelligence (DGGI) gathered intelligence indicating the applicant availed fraudulent input tax credit (ITC) using fake invoices without the movement of goods. Investigations revealed that 12 suppliers were non-existent, from whom the applicant allegedly availed approximately Rs. 13 crores in ITC. The applicant did not comply with summons, and his statement was recorded under Section 70 of the CGST Act, wherein he allegedly admitted to taking invoices from three suppliers without receiving goods and without making payments. The applicant's prior anticipatory bail application before the Sessions Court was rejected on September 16, 2021.

Key Issues

1. Whether the applicant has made out a case for granting anticipatory bail, considering the allegations of fraudulent availment of Input Tax Credit (ITC) and the evidence gathered by the revenue authorities under the Central Goods and Services Tax Act, 2017? The applicant argued that he was falsely implicated, his statement was recorded under coercion, and he was forced to make a deposit and prepare post-dated cheques. He contended that the CGST Act provides a mechanism for tax demand and recovery, and a show cause notice was required before initiating criminal proceedings. He also asserted that the transactions were genuine, goods were received, and all transactions were accounted for. The applicant relied on the decisions in Prasad Purshottam Mantri Vs. Union of India and Hanumanthappa Pathrera Lakshmana Vs. State, Senior Intelligence Officer, D.G. of GST Intelligence, Bengaluru. The respondents argued that there was sufficient material against the applicant, including the admission of taking invoices and the existence of 12 non-existent suppliers. They contended that the investigation was in progress, custodial interrogation was necessary, and the applicant's claims were false. They highlighted that Section 132 of the Act deals with punishment for certain offences.