Ashish Jain vs. Union Of INDIA And Ors.

Held

The Court held that it was not inclined to entertain the petition and dismissed it. The reasoning was primarily based on the binding order of the Apex Court dated May 29, 2019, which dismissed a Special Leave Petition (SLP) filed against a judgment of the Telangana High Court in a similar matter. The Apex Court had shown disinclination to interfere in such cases, observing that High Courts, while considering pre-arrest bail, should keep in mind the Apex Court's stance. The Bombay High Court found itself bound by this Apex Court order and therefore, was not inclined to grant any protection to the petitioner from arrest. The Court did not explicitly decide on the procedural arguments raised by the petitioner regarding FIR registration or Magistrate's permission but rather declined to entertain the petition based on the Supreme Court's precedent. No specific issue was left undecided; the petition was dismissed outright.

Facts

The petitioner, Ashish Jain, approached the Bombay High Court under Article 226 of the Constitution of India challenging a summons issued by Respondent No. 3 under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner contended that the respondent authority could not commence an investigation without following procedures under Sections 154 or 155 of the Code of Criminal Procedure, arguing that for cognizable offenses, an FIR should be registered first, and for non-cognizable offenses, permission from a Magistrate is required. The respondents, through an affidavit, alleged that the petitioner floated fictitious companies, defrauded the government by raising fake invoices, and availed Input Tax Credit without actual supply of goods. The petitioner was described as a key beneficiary and mastermind in a fraud involving non-existent goods worth approximately ₹150 crore and fraudulent credit of ₹27 crore. The investigation was stated to be at a preliminary stage.

Key Issues

1. Whether the respondent authority can commence an investigation under the CGST Act without first registering an FIR or obtaining Magistrate's permission, as required by Sections 154 and 155 of the Code of Criminal Procedure, for cognizable and non-cognizable offenses respectively? (Question of law) Petitioner's contention: The petitioner argued that the respondent authority must adhere to the procedural requirements of the Code of Criminal Procedure for initiating investigations into offenses, particularly by registering an FIR for cognizable offenses or seeking Magistrate's permission for non-cognizable ones before issuing summons. The petitioner sought relief from arrest based on this procedural challenge. Respondents' contention: The respondents contended that the offense under the CGST Act is cognizable and therefore, the summons was rightly issued. They relied on an order of the Apex Court dated May 27, 2019, in SLP (Cri) No. 4430 of 2019, and the judgment in Union of India vs. Sapna Jain. The respondents asserted that the petitioner's involvement in a significant fraud was established and the investigation was ongoing.