Nikit Mittal vs. The State Of Jharkhand Through Shri Saday Kumar

Held

The Court granted anticipatory bail to both petitioners. Regarding the issue of whether prosecution under Section 132 can be initiated without prior adjudication under Sections 73 and 74, the Court, by relying on the cited High Court judgments and the Supreme Court's observation on similar provisions, implicitly agreed with the petitioners' contention that such procedures should ideally be followed. The Court found merit in the petitioners' argument that the prosecution might have been initiated prematurely and with potential procedural flaws. The willingness of both petitioners to reverse the input tax credit amounts was also a significant factor. For Smt. Renu Singh, provisional bail was granted upon surrender, subject to reversing an initial installment of Rs. 50,00,000/- and further installments to complete the total amount within six months, with confirmation of bail upon full reversal. For Nikit Mittal, bail was granted upon surrender, subject to reversing the entire ITC amount of Rs. 1,06,282/-. The ratio decidendi is that anticipatory bail may be granted in cases involving GST violations when there are arguable points regarding procedural compliance and a willingness to rectify the financial discrepancies.

Facts

The petitioners, Nikit Mittal and Smt. Renu Singh, sought anticipatory bail in connection with a case registered under Sections 409, 420, and 120-B of the Indian Penal Code, read with specific sections of the Goods and Services Tax Act, 2017. The allegations against Smt. Renu Singh, proprietor of Renu Raj Enterprises, were that she availed input tax credit (ITC) of Rs. 2,92,64,476.59 based on forged invoices without conducting any actual business, and that her business premises were fake. The allegation against Nikit Mittal, former director of Sri Ram Alloys and Ingot Private Limited, was that he availed ITC of Rs. 1,06,282/- based on forged invoices without any sell or purchase. The petitioners contended that the prosecution was initiated with mala fide intent and without following the prescribed procedures under Sections 73 and 74 of the GST Act.

Key Issues

1. Whether the prosecution under Section 132 of the Jharkhand Goods and Services Tax Act, 2017, can be initiated without first completing the adjudication proceedings under Sections 73 and 74 of the Act? 2. Whether the petitioners are entitled to anticipatory bail given the allegations of availing input tax credit on forged invoices and the alleged procedural irregularities in the prosecution? Arguments for the Petitioners: The petitioners argued that the prosecution was initiated with oblique and mala fide motives to harass them. They contended that proceedings under Sections 73 and 74 of the Jharkhand Goods and Services Tax Act, 2017, were not initiated prior to the prosecution. They relied on the judgments of the Madras High Court in M/s. Jayachandran Alloys (P) Ltd. Vs. The Superintendent of GST and Central Excise & Others and the Gujarat High Court in R/Special Civil Application No. 13679 of 2019 (Vimal Yashwantgiri Goswami Vs. State of Gujarat), which held that prosecution under Section 132 should normally be launched only after adjudication under Sections 73 and 74 is completed. They also cited a Supreme Court judgment regarding similar provisions in the Finance Act, 1994, emphasizing the mandatory nature of following procedural steps before arrest. Furthermore, both petitioners expressed willingness to reverse the alleged input tax credit amounts.