No Documentary Evidence From Department To Support Allegations; Supreme Court Grants Bail To Assessee Arrested Under Section 69 of CGST Act

The Bench of Justices J.K. Maheshwari and Rajesh Bindal granted bail on the basis that the department failed to file any documentary evidence against the assessee/accused to substantiate the allegations made in the case, despite the court's direction.

Section 69 of CGST Act, 2017 empowers the Commissioner of CGST or SGST to arrest any person where he has reasons to believe that such person has committed an offence under Section 132(1)(a, b, c, d) and punishable under Section 132(1)(i, ii) or 131 (2).

Section 132 (1)(b) of CGST Act, 2017 deals with the punishment for issuing invoices or bills without actual supply of goods or services.

Section 132(1)(f) of CGST Act, 2017 outlines punishments for falsifying financial records or providing false information to evade tax.

Section 132(1)(i) of CGST Act, 2017 provides punishments for offenses related to the supply of services that violate the provisions of the Act. It states that anyone who commits, facilitates, or benefits from such violations including knowingly receiving or dealing with such supplies shall face penalties.

In this case, it was alleged that the assessee/accused (petitioner) created a firm in another person's name and issued fake bills and invoices to various recipients without actual supply of goods. It was further alleged that the assessee evaded GST amounting to approximately Rs. 8.9 crore, whereas the counterclaim stated the amount as Rs. 94.52 crore. The Directorate General of GST Intelligence, Regional Unit, Indore, Madhya Pradesh (respondent), arrested the assessee for offenses under Sections 132(1)(b), 132(1)(f), and 132(1)(i) of the Central Goods and Services Tax Act, 2017.

The assessee filed a bail application before the Additional District & Sessions Judge, which was rejected. Aggrieved, the assessee approached the Madhya Pradesh High Court, challenging the order of the Additional District & Sessions Judge. The Madhya Pradesh High Court dismissed the bail application filed by the assessee. The assessee has challenged the High Court's order before the Supreme Court.

The assessee/accused submitted that the assessee is in custody since 18.10.2023 and investigation has been completed and charge sheet has been filed on 19.12.2020. The maximum punishment is five years and the CGST Act, 2017 is compoundable in nature. The assessee has been arrested without any basis and without any reasoning. The respondent, in the counter affidavit, has arbitrarily increased the amount from Rs. 8.9 crore to Rs. 94.52 crore.

The department submitted that one of the main grounds to arrest the assessee were 'influencing of witness', 'tampering of evidence' and 'Flight Risk'. During the investigation the assessee had absconded from his residential premises and was constantly changing his residence making it difficult to track him. Further, the assessee also destroyed his mobile phone which was potential evidence in the case.

The bench considered the period of incarceration and the allegations, which were based on documentary evidence. The bench also noted that the investigation had been completed, the charges had been filed, and that the trial might take some time.

The Court, without addressing the matter on its merits, allowed the SLP and granted bail to the assessee.

Counsel for Petitioner/ Assessee: Adv. R. P. Singh

Counsel for Respondent/ Department: Adv. Sarthak Karol and Gurmeet Singh Makker, AOR

Case Title: Saurabh Kumar v. The State of Madhya Pradesh

Case Number: Petition(s) for Special Leave to Appeal (Crl.) No(s). 5844/2024

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