# Deepanshu Srivastava v. Union of India Opp. Party

- **Citation:** (2024) 3 ILRA 1179
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-03-19
- **Case number:** Criminal Misc. Bail Application No. 2391 of 2024
- **Bench:** Mohd. Faiz Alam Khan
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/deepanshu-srivastava-v-union-of-india-opp-party-51539
- **Pages:** 17

## Headnote

Criminal Law - Central Goods and Services
Tax Act, 2017 - Sections 69, 70, 73, 74 &
132 - Code of Criminal Procedure, 1973 -
Sections 41 & 41A -Economic Offences -
Reasons to Believe - Arrest and Detention -
Input Tax Credit Fraud
1180 INDIAN LAW REPORTS ALLAHABAD SERIES
The applicant, Deepanshu Srivastava, sought
bail in Case Crime No. 316 of 2024 under
Section 132 of the CGST Act, 2017, for allegedly
creating 271 shell companies to fraudulently
avail and misappropriate input tax credit (ITC)
worth Rs. 122.99 crores without supplying
goods. Arrested on 02.02.2024, the applicant
argued illegal detention, lack of tax assessment
under Section 74, vague arrest memo, and no
necessity for further custody as no custodial
remand was sought. The Union of India
opposed, citing the applicant's confession,
recovery of incriminating documents, and the
serious nature of economic offences. Held: The
court, relying on Arnesh Kumar Vs St. of Bihar
((2014) 8 SCC 273), Satender Kumar Antil Vs
CBI ((2021) 10 SCC 773), and P.VS Ramana
Reddy Vs Union of India (MANU/TL/0064/2019),
found that the arrest order lacked specific
reasons beyond the offence's gravity, failing to
justify continued detention under Section 69
CGST Act. The court noted that prosecution and
tax assessment could proceed simultaneously,
but the absence of custodial remand, completed
investigation, and retracted St.ments supported
bail. The applicant was granted bail with
stringent conditions, considering the offence's
maximum five-year punishment and the need to
balance personal liberty with societal interests.

Case Law Cited:

## Text

_Characters 0–39,719 of 58,647. This is a partial read: ask again with offset=39719 for what follows._

3 All. Deepanshu Srivastava Vs. Union of India
1179
conditions dictated in bail orders shall be
followed by the trial courts unfailingly.

18. The disregard of the bail
conditions specified in the bail orders by
either party to the litigation or the trial
courts is detrimental to the criminal justice
system and requires scrutiny. Failure to
adhere to the terms of the bail order shall
be deemed deliberate and may amount to
(i) interference or attempted interference
with the due administration of justice; (ii)
evasion or attempted evasion of the due
process of justice, (iii) abuse of the
concession granted to the accused in any
manner; (iv) the possibility of the accused
absconding; (v) the likelihood of or actual
misuse of bail; (vi) the likelihood of the
accused tampering
with
evidence
or
threatening,
or
otherwise
influencing
witnesses. Hence, it is imperative for trial
courts to accord the utmost importance to
personal exemption applications. Such
applications should be adjudicated upon by
taking into account the conditions outlined
in the bail orders. Furthermore, the
aforementioned proposition shall be duly
considered and kept in mind while deciding
the personal exemption application.

19. If the complainant or prosecution
finds that the bail conditions are not being
adhered to, they may file an appropriate
application before the concerned court. The
court should decide on such applications
within a reasonable time, not exceeding 60
days from the date of filing, and proceed
with the trial, utilizing the provisions
outlined in Chapter VI of the Code of
Criminal Procedure, as well as any other
statutory provisions and relevant laws as
may be deemed fit and proper by the court
in the facts and circumstances of the case.

20.

With
the
aforementioned
observations, the instant application is
disposed of, granting the applicant the
liberty to seek redressal of their grievances
from the court of Additional Chief Judicial
Magistrate-III, Ghaziabad. The court is
directed to adjudicate upon the applicant's
application expeditiously in accordance
with this order.

21. The Registrar (Compliance) of
this Court shall disseminate a copy of this
judgment to all District Judges for
distribution among all Courts under their
jurisdiction
and,
additionally,
to
the
Director of the Judicial Training and
Research Institute, Lucknow, to promote
awareness and facilitate implementation
through training programmers.
----------
(2024) 3 ILRA 1179
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 19.03.2024

BEFORE

THE HON'BLE MOHD. FAIZ ALAM KHAN, J.

Criminal Misc. Bail Application No. 2391 of
2024

Deepanshu Srivastava ...Applicant
Versus
Union of India ...Opp. Party

Counsel for the Applicant:
Shivanshu
Goswami,
Mukesh
Kumar
Tewari, Purnendu Chakravarty

Counsel for the Opp. Party:
Digvijay Nath Dubey, Dipak Seth

Criminal Law - Central Goods and Services
Tax Act, 2017 - Sections 69, 70, 73, 74 &
132 - Code of Criminal Procedure, 1973 -
Sections 41 & 41A -Economic Offences -
Reasons to Believe - Arrest and Detention -
Input Tax Credit Fraud
1180 INDIAN LAW REPORTS ALLAHABAD SERIES
The applicant, Deepanshu Srivastava, sought
bail in Case Crime No. 316 of 2024 under
Section 132 of the CGST Act, 2017, for allegedly
creating 271 shell companies to fraudulently
avail and misappropriate input tax credit (ITC)
worth Rs. 122.99 crores without supplying
goods. Arrested on 02.02.2024, the applicant
argued illegal detention, lack of tax assessment
under Section 74, vague arrest memo, and no
necessity for further custody as no custodial
remand was sought. The Union of India
opposed, citing the applicant's confession,
recovery of incriminating documents, and the
serious nature of economic offences. Held: The
court, relying on Arnesh Kumar Vs St. of Bihar
((2014) 8 SCC 273), Satender Kumar Antil Vs
CBI ((2021) 10 SCC 773), and P.VS Ramana
Reddy Vs Union of India (MANU/TL/0064/2019),
found that the arrest order lacked specific
reasons beyond the offence's gravity, failing to
justify continued detention under Section 69
CGST Act. The court noted that prosecution and
tax assessment could proceed simultaneously,
but the absence of custodial remand, completed
investigation, and retracted St.ments supported
bail. The applicant was granted bail with
stringent conditions, considering the offence's
maximum five-year punishment and the need to
balance personal liberty with societal interests.

Case Law Cited:

1. Arnesh Kumar Vs St. of Bihar, (2014) 8 SCC
273

2. Satender Kumar Antil Vs CBI, (2021) 10 SCC
773

3. P.VS Ramana Reddy Vs Union of India,
MANU/TL/0064/2019

4.
The
St.
of
Guj.
Vs
Choodamani
Parmeshwaran Iyer, MANU/SC/0992/2023

5. Radheyshyam Kejriwal Vs St. of West Bengal,
2011 (266) E.L.T. 294 (SC)

6. Y.S. Jagan Mohan Reddy Vs CBI, (2013) 7
SCC 439

7. Nimmagadda Prasad Vs CBI, (2013) 7 SCC
466

8. Devchand Kalyan Tandel Vs St. of Guj.,
(1996) 6 SCC 255

9. The St. of Jharkhand Vs Dhananjay Gupta,
Criminal
Appeal
No.
Nil
of
2023
(SC,
07.11.2023)

10. Bijender Vs St. of Har., Criminal Appeal No.
Nil of 2024 (SC, 06.03.2024)

11. Ashish Kakkar Vs Union of India, Writ Tax
No. 834 of 2023 (All. HC, 13.07.2023)

12. Paras Jain @ Rohan Jain Vs Union of India
(All. HC, 29.07.2022)

13. Ravindra Nath Sharma @ Ravubder Sharma
Vs Union of India, Criminal Misc. Bail Application
No. 26376 of 2023 (All. HC, 10.07.2023)

14.
P.
Chidambaram
Vs
Directorate
of
Enforcement, (2020) 13 SCC 791

15. Sanjay Chandra Vs CBI, (2012) 1 SCC 40

(Delivered by Hon'ble Mohd. Faiz Alam
Khan, J.)

1. Heard Shri Satish Chandra Mishra,
learned Senior Counsel assisted by Shri
Purnendu Chakravarty and Shri Mukesh
Kumar Tewari, learned counsels for the
applicant and Shri Dipak Seth, learned
counsel appearing on behalf of Union of
India and perused the record.

2. This bail application has been
moved
by
the
accused-applicant-
Deepanshu Srivastava for grant of bail in
Case Crime No. 316 of 2024, under Section
132 of Central Goods and Services Tax
Act, 2017, Police Station DGGI, Lucknow
Zonal Unit, District Lucknow, during trial.

3.

Learned
Senior
Counsel
appearing for the accused-applicant while
pressing the bail application submits that
the applicant has been falsely implicated in
3 All. Deepanshu Srivastava Vs. Union of India
1181
this case and without any sufficient reasons
and basis and without assessing any tax
liability the applicant has been arrested and
detained in prison since 02.02.2024.

4. While drawing the attention of this
Court on Sections 69, 73, 74 and 79 as well
as Section 62 of the Central Goods and
Services Tax Act, it is vehemently
submitted that at first the department is
required to assess the tax liability to be paid
by an assesse and it is only thereafter any
proceeding under Section 69 of the Central
Goods and Services Tax Act with regard to
the arrest of the accused person or assesse
may be undertaken. It is vehemently
submitted that till date no tax liability is
shown to have been assessed by the
department and without there being any
sufficient or cogent reasons he has been
placed behind the bars.

5. While drawing the attention of this
Court towards the arrest-memo, a copy of
which has been placed at Page No.23 of the
paper book, it is vehemently submitted that
no grounds have been shown in this arrestmemo which may justify the arrest of the
applicant and a vague language has been
used in the arrest memo in order to show
that the provisions of the Central Goods
and Services Tax Act, 2017 have been
violated without specifying the alleged act
or omission of the applicant.

6. It is also submitted that the
applicant was detained in illegal custody
for three days from 30.01.2024 till
02.02.2024
by
the
department
and
thereafter he has been challaned.

7. It is further submitted that no notice
has either been given under Section 74 of
the G.S.T. Act and when the applicant was
presented before the remand court, the
offences were shown as bailable but
subsequently without there being any basis
many other companies have been shown to
be associated with the applicant as shell
companies with which the applicant is not
having any connection or concern.

8. While drawing the attention of this
Court towards the 'panchnama/recoverymemo', with regard to Shalimar Mannat,
Barabanki, it is stated that the recovery, as
shown by the department from this house is
not having any significance in the eye of
law as the same has not been made in
presence of the applicant and no signature
of applicant has been obtained on this
recovery-memo and, thus, the same is
barred by Section 100 of the Cr.P.C.

9. It is also submitted that no
incriminating article has been recovered
from the premises of applicant and
statement of some persons are shown to
have been recorded by the department
under duress with regard to the formation
of some shell companies by the applicant in
order to evade tax liability.

10. It is vehemently submitted that
applicant is languishing in jail in this case
since 02.02.2024 and while producing the
applicant before the Magistrate after his
illegal arrest, the department has requested
for judicial remand and no custody remand
was requested, which primafacie reflect
that further detention of the applicant is not
required by the investigating agency and
despite the investigation is complete, the
complaint is not being filed deliberately to
deny the facility of bail to the applicant.
The alleged offences against the applicant
are
punishable
with
maximum
imprisonment of five years and as the
investigation has almost completed, the
detention of the applicant is not required
anymore.
1182 INDIAN LAW REPORTS ALLAHABAD SERIES

11. It is further submitted that the
applicant
has
cooperated
in
the
investigation and has appeared before the
investigating officer as and when his
presence was required. However, at the
very first occasion available to him, he has
retracted his statement shown to have been
recorded before the investigating officer.
Applicant undertakes that he will cooperate
with the investigation as well as with the
trial.

12. Learned Senior Counsel has relied
on the law laid down by the Division
Bench of this Court of date 13.07.2023
passed in Writ Tax No. 834 of 2023
(Ashish Kakkar vs. Union of India and
another), a single Judge judgment of this
Court dated 29.07.2022 passed in 'Paras
Jain @ Rohan Jain vs. Union of India', a
single Judge judgment of this Court of date
10.07.2023 passed in Criminal Misc. Bail
Application No. 26376 of 2023 (Ravindra
Nath Sharma @ Ravubder Sharma vs.
Union of India).

13. Shri Dipak Seth, learned counsel
appearing on behalf of Union of India
vehemently opposes the prayer of bail of
the applicant on the ground that the
submission, which has been raised before
this Court with regard to the fact that in
absence of any tax liability, the criminal
prosecution is not permissible, is not an
argument which may have the support of
the law as in all tax matters prosecution and
adjudication are connected with each other
and may go on simultaneously. In this
regard reliance has been placed on the law
laid down by the Hon'ble Supreme Court in
'Radheyshyam Kejriwal vs. State of West
Bengal, 2011 (266) E.L.T. 294 (S.C.).

14. It is next submitted that the instant
is not a case of under payment of tax
liability or evasion of tax but it is a case of
fraud where without supplying any goods
the input tax has been received and
misappropriated.

15. Shri Dipak Seth has drawn the
attention of this Court towards the
statement of the applicant recorded under
Section 70 of the Goods and Services Tax
Act in order to show that the applicant has
admitted his involvement in the crime.

16. The attention of this Court has
also drawn by Shri Dipak Seth on the
statement of the applicant recorded on
26.02.2024 while he was confined in prison
in order to show that the applicant is not at
all cooperating with the investigation.

17. It is further submitted that on
30.01.2024 and 31.01.2024 statement of
many persons have been recorded, which
reveals that applicant has opened various
shell companies in order to receive input
tax illegally and none of these persons
whose statements have been recorded has
retracted his statement.

18. While drawing the attention of
this Court towards the C.A.-5 (Page
No.116) of the counter affidavit/objections
filed by the Union of India, it is submitted
that the reasons for arrest have been
recorded by the authority concerned before
causing the arrest of the applicant.

19. The attention of this Court has
also been drawn towards the statement of
Shubham Singh, extract of which, has been
placed at Page No.71 of the paper book, in
order to show that the applicant has opened
many bogus firms and companies in order
to claim input tax illegally. The statement
of Gaurav Tripathi placed at Page No. 119
of the objections is also highlighted in
3 All. Deepanshu Srivastava Vs. Union of India
1183
order to show that the Flat No. B-2 situated
at Shalimar Mannat, Barabanki was taken
on rent by Shri Gaurav Tripathi on the
instigation of the applicant.

20. While drawing the attention of
this Court towards the law laid down by the
Hon'ble Supreme Court in Y.S. Jagan
Mohan Reddy vs. Central Bureau of
Investigation
(2013)
7
SCC
439,
Nimmagadda Prasad vs. C.B.I. (2013) 7
SCC 466 and Devchand Kalyan Tandel vs.
State of Gujarat and another (1996) 6
SCC 255, it is submitted that economic
offences are of a class of their own and
they have to be taken up at a different
pedestal as they are causing irreparable
injury to the economic health of the country
and are required to be dealt with iron
hands. In this regard, the law laid down by
the Hon'ble Supreme Court vide order
dated 07.11.2023 passed in Criminal
Appeal No. Nil of 2023, arising out of
S.L.P. (Crl.) No. 10810 of 2023, 'The State
of Jharkhand vs. Dhananjay Gupta @
Dhananjay Prasad Gupta' has been
highlighted, wherein it is opined that at any
rate
mere
claim
of
innocence
or
undertaking to participate in the trial or
absence of specific allegation cannot be
assigned as reasons for grant of bail in case
of offences of serious nature. It is requested
that having regard to the magnitude of the
crime wherein the State has been inflicted
loss of crores of rupees of input tax, the
applicant is not entitled to be released on
bail.

21. In rebuttal, learned Senior
Counsel appearing for the applicant has
drawn the attention of this Court towards
Section 69 of the Central Goods and
Services Act and submits that custody
remand of the applicant has not been
sought at the time of remand of accused by
the
department
and
also
that
the
cooperation in the investigation doesn't
mean that applicant should confess his guilt
as proposed by the department and it
should be taken as enough cooperation if
the applicant had appeared before the
investigating officer in response to the
summons issued to him and the applicant in
this case has remained present before the
investigating officer as and when he was
summoned and ultimately arrested illegally.
It is again reiterated that the offences is
punishable
with
upto
05
years'
of
imprisonment and keeping in view the fact
that still no assessment of tax has been
calculated and no formal complaint or
F.I.R. has been lodged, applicant is entitled
for bail.

22. Having heard learned counsel
for the parties and having perused the
record, the case of the prosecution, as is
emerging from the record is to the tune that
the Director General of G.S.T. Intelligence,
Lucknow Zonal Unit is investigating a case
of fraudulent availment and passing of
input tax credit of G.S.T, by preparing fake
invoices without any actual supply of
goods by several firms created, managed
and run by the applicant and it is found that
the applicant has created a number of bogus
firms for the purpose of issuing fake
invoices to facilitate their clients in availing
and utilizing fake input tax credit and
allegations are to the tune that applicant is
the master mind of the entire racket and
input tax credit of high magnitude has been
obtained without supplying of any goods.

23. The counter affidavit filed by the
Department would further reveal that
initially the input tax credit illegally taken
by applicant was found to be of Rs. 90
crores and the number of fake firms were
about 53 as on 17.02.2024 and on further
1184 INDIAN LAW REPORTS ALLAHABAD SERIES
investigation till 29.02.2024 the number of
fake firms created, managed and run by the
applicant
has
reached
271
and
the
investigation is still going on. The
allegations are that without paying a single
penny to the government as tax huge
amount of input tax credit has been availed.
It is also alleged that 09 places belonging to
the applicant were searched on 30.01.2024
and consequent to these searches huge
number of incriminating documents and
electronic devices showing creation of fake
firms were found from the premises
including the residence of the applicant and
his offices.

24. It is further alleged that 18
Laptops, 14 Pen drives, 24 SIM Cards, 44
mobile phones, 74 credit/debit cards, six
hard disk drives, 251 stamps of various
fake firms, 26 cheque books of various fake
firms and more than 500 files, record books
of fake firms, bilty books and other fake
documents have also been found. The
statement of the applicant was recorded
under Section 70 of the CGST Act on
30.01.2024, 01.02.2024 and 02.02.2024,
wherein he alleged to have confessed his
guilt and by creating false/shell companies
and without paying any tax, input tax credit
to the magnitude of Rs. 14.87 crores is
confessed to have been earned and utilized.
It is also alleged that during the course of
investigation, the statement of one Mohit
Singh and Shubham Singh, proprietors of
shell firms were recorded, wherein they
admitted that these shell firms were
established and managed by the applicant.
During physical verification, 14 major
suppliers and 06 transporters were also
found to be non-existent and various
Dharmkanta's also accepted that the
weighing slips found during preliminary
investigation were not issued by them. It is
stated in para no.9 of the counter affidavit
that till now the amount of fraud found by
the investigation has reached Rs. 122.99
crores.

25. Learned Senior counsel appearing
for applicant vehemently submits that
without
adopting
the
procedure,
as
provided under Section 74 of the CGST
Act, no further proceedings including the
arrest of the applicant may be undertaken
and also that the alleged offences are
punishable
with
upto
05
years
of
imprisonment.

Reliance has also been placed on the
law laid down by the Hon'ble Supreme
Court in Satender Kumar Antil Vs. Central
Bureau of Investigation and others :
(2021) 10 SCC 773, while learned counsel
appearing for the Department has placed
reliance on the law laid down by the
Hon'ble Supreme Court in Radheyshyam
Kejriwal (supra) in order to show that the
proceedings
of
prosecution
and
adjudication may go on simultaneously, it
is vehemently submitted by learned counsel
appearing for Union of India that it is not a
case of paying less tax or any discrepancy
in the payment of tax rather it is a case
where without supplying any goods the
input tax credit has been illegally taken and
misappropriated.

26. Learned Senior counsel appearing
for the applicant has drawn the attention of
this Court towards the memo of arrest of
the applicant in order to show that no
ground of arrest has been mentioned
therein while learned counsel appearing for
the Department has drawn the attention of
this Court towards C.A.-5 (Page No.116) of
their counter affidavit in order to show that
the reasons for arrest has been recorded by
the appropriate authority and the law
provides only of recording of reasons and
3 All. Deepanshu Srivastava Vs. Union of India
1185
not of communicating the same. It is also
highlighted on behalf of Department that
applicant is
not
cooperating
in
the
investigation and when he was interrogated
in jail, he did not cooperate in the
investigation and has not given replies.

27. Learned Senior counsel appearing
for applicant on the other hand while
relying on the law laid down by the
Division Bench of this Court of date
13.07.2023 passed in Writ Tax No. 834 of
2023 (Ashish Kakkar vs. Union of India
and another), 'Paras Jain @ Rohan Jain
vs. Union of India' and in Ravindra Nath
Sharma @ Ravubder Sharma (supra),
submits that the law leans in favour of bail
and when the offence is punishable with
upto five years' of imprisonment, the
further detention of the applicant would be
a futile exercise.

28. Learned counsel appearing for
Union of India, however, relied on Y.S.
Jagan
Mohan
Reddy
(supra)
and
Nimmagadda Prasad (supra) in order to
show that the economic offences are of a
class of their own and, therefore, are to be
dealt with differently and applicant is not
entitled for bail.

29. Perusal of the provisions
contained under Section 73 and 74 of the
CGST Act would reveal that a mechanism
has been provided therein with regard to
the determination of tax not paid or short
paid or erroneously refunded or input tax
credit wrongly availed or utilized by reason
of fraud or any wilfull mis-statement or
suppression of facts. Section 74 of the
CGST Act provides for assessment of tax
by the proper officer by issuing a notice to
the assesee, however, sub-section 11 of
Section 74 of the CGST Act would suggest
that if the tax, which has been calculated
along with the interest payable or the
penalty is deposited, all proceedings in
respect of the said notice shall be deemed
to be concluded. However, perusal of
explanation one attached with Sub-section
11 of Section 74 of the 'Act' would reveal
that the expression 'all proceedings' in
respect of the said notice emerging under
Sub-section
11
shall
not
include
proceedings under Section 132 of the 'Act'.
Thus, it may be inferred that even if all the
tax liability including penalty, etc. has been
deposited, it would be only the 'notice'
which would be discharged and the
proceedings with regard to Section 132 of
the CGST Act shall remain alive. Thus,
there seems force in the submissions made
by learned counsel for the Department that
the process of prosecution and assessment
may go on simultaneously.

30. In P.V. Ramana Reddy and Ors.
vs.
Union
of
India
and
Ors.,
MANU/TL/0064/2019, which has also been
approved by the Hon'ble Supreme Court
vide order dated 27.05.2019 passed in
Special Leave Petition (Crl.) No. 4430 of
2019 and also in The State of Gujarat Vs.
Choodamani Parmeshwaran Iyer and
Ors., MANU/SC/0992/2023, a Division
Bench of Telangana High Court repelled
the similar contention raised by an accused
in following words;-

"50.
The
contention
of
the
petitioners is that the CGST Act, 2017
prescribes a procedure for assessment even
in cases where the information furnished in
the returns is found to have discrepancies
and that unless a summary assessment or
special audit is conducted determining the
liability, no offence can be made out under
the Act. Therefore, it is their contention
that even a prosecution cannot be launched
without an assessment and that therefore,
there is no question of any arrest.
1186 INDIAN LAW REPORTS ALLAHABAD SERIES

51. It is true that CGST Act, 2017
provides for (i) self assessment, under
Section 59, (ii) provisional assessment,
under Section 60, (iii) scrutiny of returns,
under Section 61, (iv) assessment of
persons who do not file returns, under
Section 62, (v) assessment of unregistered
persons, under Section 63, (vi) summary
assessment in special cases, under Section
64 and (vii) audit under Sections 65 and
66.

52. But, to say that a prosecution
can be launched only after the completion
of the assessment, goes contrary to Section
132 of the CGST Act, 2017. The list of
offences included in sub-Section (1) of
Section 132 of CGST Act, 2017 have no corelation to assessment. Issue of invoices or
bills without supply of goods and the
availing of ITC by using such invoices or
bills, are made offences under clauses (b)
and (c) of sub-Section (1) of Section 132 of
the CGST Act. The prosecutions for these
offences
do
not
depend
upon
the
completion of assessment. Therefore, the
argument that there cannot be an arrest
even before adjudication or assessment,
does not appeal to us."

Thus, there appears no substance in
the submissions raised by learned senior
counsel appearing for the applicant that
before proceeding under 74 of the Act the
applicant should not have been arrested or
prosecuted.

31. Chapter XIV of the CGST Act
deals with inspection, search, seizure and
arrest. It comprises of sections 67 to 72.
Section 70 deals with power to summon
persons to give evidence and produce
documents. As per sub-section (1), the
proper officer under the CGST Act shall
have the power to summon any person
whose attendance he considers necessary
either to give evidence or to produce a
document or any other thing in any enquiry
in the same manner as provided in the case
of a civil court under the provisions of the
Civil Procedure Code, 1908. Thus what
sub-section (1) of section 70 provides is the
conferment of power on the proper officer
to summon any person whose attendance
he considers necessary to either tender
evidence or to produce documents etc. in
any enquiry. Exercise of such a power is
akin to power exercised by a civil court
under the Civil Procedure Code, 1908. Subsection (2) clarifies that every enquiry in
which summons is issued for tendering
evidence or for production of documents is
to be deemed to be a judicial proceeding
within the meaning of sections 193 and 228
of the Indian Penal Code, 1860.

The power to arrest has been provided
in section 69 of the Act. As per sub-section
(1), where the Commissioner has reasons to
believe that the person has committed any
offence specified in clause (a) or clause (b)
or clause (c) or clause (d) of sub-section (1)
of section 132, which is punishable under
clause (i) or (ii) of sub-section (1) or subsection (2) of the said section, he may by
order authorize any officer of central tax to
arrest such person. Therefore, what subsection (1) provides is that Commissioner
may by order authorize any officer of the
department to arrest a person if he has
reasons to believe that the said person has
committed any offence under clauses (a) or
(b) or (c) or (d) of sub-section (1) of section
132. The expression 'reasons to believe' as
appearing in subsection (1) of section 69 is
of crucial importance because the same is
the sine qua non for exercise of power to
arrest by the Commissioner. It is also to be
highlighted that under sub-section (3) of
section 69, arrest under sub-section (1) has
been made subject to the provisions of
3 All. Deepanshu Srivastava Vs. Union of India
1187
Cr.P.C., which would include section 41
and 41-A thereof.

Chapter XIX of the CGST Act deals
with offences and penalties. Section 132 is
part of Chapter XIX. It provides for
punishment
for
committing
certain
offences. As per sub-section (1), whoever
commits any of the twelve offences
mentioned therein shall be punished in the
manner provided in clauses (i) to (iv) of
sub-section (1). In the instant case, we are
concerned with offences under clauses (b)
and (c) of sub-section (1). As per clause
(c), the offence is availing input tax credit
using invoice or bill without the supply of
goods or services or both in violation of the
CGST Act; and as per clause (b), a person
who issues any invoice or bill without
supply of goods or services or both in
violation of the provisions of the CGST Act
or the rules made thereunder leading to
wrongful availment or utilization of input
tax credit or refund of tax. If a person
commits the above two offences as per
clauses (c) and (b), he shall be punishable
under clause (i) if the amount of tax evaded
or the amount of input tax credit wrongly
availed of or utilized or the amount of
refund wrongly taken exceeds five hundred
lakh rupees with imprisonment for a term
which may extend to five years and with
fine. All other penalties are below five
years. Therefore, the maximum penalty that
can be imposed for committing offences
under clauses (c) and (b) of sub-section (1)
of section 132 is imprisonment for a term
which may extend to five years and with
fine.As per sub-section (5), the offences
specified in clause (a) or (b) or (c) or (d) of
sub-section (1) are punishable under clause
(i) of that section are cognizable and nonbailable.

32. Reverting to the facts of the
present case, it appears to be not disputed
that summons were issued to the petitioner
under section 70 of the CGST Act and
responding to the summons, applicant had
appeared before the investigating officer
where after his statements were recorded
on
31.01.2024,01.02.2024
and
on
02.02.2024. I have perused the statements
of the applicant which have been produced
with the counter affidavit filed by Union Of
India. It may also be noticed that on
02.02.2024 the applicant was arrested and
produced
before
the
Magistrate
on
03.02.2024 and no custody remand was
requested by union of India and the
applicant was remanded to judicial custody
for 14 days. It is admitted in para no. 17 of
the counter affidavit filed by the respondent
that the custody remand of the applicant
was not sought as the same was not
required. It is also evident that thereafter
permission was taken by the department for
further interrogation of the applicant in jail
on 23.02.2024 and the applicant was
further interrogated in jail on 26.02.2024. It
is not evident as to why the applicant was
not interrogated prior to 26.02.2024 when
his statements have already been recorded
on three days when he had appeared before
the department and when according to the
department he was not cooperating why his
custody remand was not sought. This
primafacie suggests that perhaps the
department was not requiring the further
interrogation of the applicant as his
statements have already been recorded. It is
alleged
by the
department that
On
26.02.2024 applicant has not cooperated
and when his statement was recorded in Jail
he stated that he will not tender his
statement without consulting his counsel.

33. Recently, Hon'ble Supreme Court
in order dated March 06, 2024 passed in
Bijender Vs State Of Haryana passed in
Criminal Appeal No. Nil OF 2024,
1188 INDIAN LAW REPORTS ALLAHABAD SERIES
(Arising from SLP(Crl.)No(s). 1079/2024),
while considering the plea of prosecution
pertaining to the non cooperation of
accused
applicant
who
was
granted
Anticipatory Bail subject to the condition
of cooperation in the investigation, has
opined as under :-

"The learned counsel for the State
opposed his plea for pre-arrest bail by filing
a counter affidavit. In our order passed on
05.02.2024 giving the appellant interim
protection, it was directed that the said
protection was subject to the appellant's
cooperation with the investigating agency.
It is not in dispute that the appellant has
joined the investigation but the main reason
for opposing the prayer of the appellant for
pre-arrest bail has been disclosed in
paragraph 13 of the counter affidavit,
which we quote below:-
 "13. That the petitioner/accused
had though joined investigation on dated
10.02.2024, as per order passed by this
Hon'ble Court but the petitioner did not
cooperate with the police nor got recovered
the amount of bribe received by him nor
disclosed the other facts of this case
properly.
Therefore,
the
custodial
interrogation
of
petitioner/accused
is
required in the present case for thorough
investigation."

34. We cannot treat the behavior
attributed to the appellant to be instances of
non-cooperation justifying dismissal of his
appeal for pre-arrest bail. An accused,
while joining investigation as a condition
for remaining enlarged on bail, is not
expected
to
make
self-incriminating
statements under the threat that the State
shall seek withdrawal of such interim
protection."

35. Thus the cooperation in the
investigation may not be taken that accused
applicant while under interrogation must
make
statements
in
favour
of
the
department or make statements which are
self incriminatory.

36. In order to canvass the necessity
of the further detention of the applicant in
prison the Department has relied on the
statements of the applicant in order to show
that there is clear admission on the part of
the applicant to the wrong doing and thus
committing
offences
under
section
132(1)(c) and (b) of the CGST Act and,
therefore, his arrest has been justified.
Though section 25 of the Indian Evidence
Act, 1872 is not attracted to recording of
statements by revenue officers under the
CGST Act, nonetheless at this stage section
136 of the CGST Act may be recalled
which , in the considered opinion of this
Court may have a bearing on this aspect.
Section 136 of the CGST Act says that a
statement made and signed by a person on
appearance in response to any summons
issued under section 70 of the CGST Act
shall be relevant for the purpose of proving
in any prosecution, an offence under the
CGST Act, the truth of the facts which it
contains when a person who made the
statement is examined as a witness in the
case before the court and the court is of the
opinion
that
having
regard
to
the
circumstances of the case, the statement
should be admitted in evidence in the
interest of justice. Section 136 of the CGST
Act will only come into play at the time
where the trial commences and thus the
admission made by a person before the
revenue officials under the CGST Act
would not be per se admissible in evidence
unless it receives the approval of the Court.
3 All. Deepanshu Srivastava Vs. Union of India
1189

37. Section 69 of the CGST Act
provides that the Commissioner may
authorize arrest of a person only if he has
reasons to believe that such a person has
committed any offence under the clauses
mentioned therein. The expression 'reasons
to believe' is an expression of considerable
import and in the context of the CGST Act,
confers jurisdiction upon the Commissioner
to authorize any officer to arrest a person,
thus the expression 'reasons to belief'
postulates belief and the existence of
reasons for that belief. The belief must be
held in good faith and it cannot be merely a
assumption and the same must be based on
reasons. It contemplates existence of
reasons on which the belief is founded and
such belief must not be based on mere
suspicion rather the same must be founded
upon information and sound reasons. Such
reasons to believe can be formed on the
basis of material/evidence but not on mere
suspicion or rumour. It is open for a court
to examine whether the reasons for the
formation of such belief have a rational
connection with the arrest. There must be a
direct connection or nexus or live link
between the material coming to the notice
of the officer and the formation of his
belief.

35. In this regard the law laid down
by the Supreme Court in Arnesh Kumar
Vs. State of Bihar, MANU/SC/0559/2014 :
(2014) 8 SCC 273, is also important where
the Supreme Court having referred to
section 41 Cr.P.C. held that a person
accused of an offence punishable with
imprisonment for a term which may be less
than seven years or which may extend to
seven years, with or without fine, cannot be
arrested by a police officer only on his
satisfaction that such person has committed
the offence punishable as aforesaid. A
police officer before arrest in such cases
has to be further satisfied that such arrest is
necessary to prevent such person from
committing any further offence or for
proper investigation of the case or to
prevent the accused from causing the
evidence of the offence to disappear or
tampering with such evidence in any
manner or to prevent such person from
making any inducement, threat or promise
to a witness so as to dissuade him from
disclosing such facts to the court or to the
police officer or unless such accused
person is arrested, his presence in the court
whenever required cannot be ensured.
These are the conclusions, which one may
reach based on facts. In this context,
Supreme Court also referred to section 41A Cr.P.C. particularly sub-section (3)
thereof which says that where such person
complies and continues to comply with the
notice, he shall not be arrested in respect of
the offence referred to in the notice unless
for reasons to be recorded, the police
officer is of the opinion that he ought to be
arrested. Supreme Court emphasized that
the practice of mechanically reproducing in
the case diary all or most of the reasons
contained in Section 41 Cr.P.C. for
effecting
arrest
be
discouraged
and
discontinued.Relevant
portion
of
the
judgment of the Supreme Court in Arnesh
Kumar (supra) is extracted hereunder:-

"5. Arrest brings humiliation,
curtails freedom and cast scars forever.
Law makers know it so also the police.
There is a battle between the law makers
and the police and it seems that police has
not learnt its lesson; the lesson implicit and
embodied in the Cr.P.C. It has not come
out of its colonial image despite six
decades of independence, it is largely
considered as a tool of harassment,
oppression and surely not considered a
friend of public. The need for caution in
1190 INDIAN LAW REPORTS ALLAHABAD SERIES
exercising the drastic power of arrest has
been emphasized time and again by Courts
but has not yielded desired result. Power to
arrest greatly contributes to its arrogance
so also the failure of the Magistracy to
check it. Not only this, the power of arrest
is one of the lucrative sources of police
corruption. The attitude to arrest first and
then proceed with the rest is despicable. It
has become a handy tool to the police
officers who lack sensitivity or act with
oblique motive."

39. Honble Supreme Court in The
State
of
Gujarat
Vs.
Choodamani
Parmeshwaran
Iyer
and
Ors.,
MANU/SC/0992/2023 observed as under:-

"18. In the aforesaid context, we
may refer to a Division Bench decision of
the High Court of Telangana which
ultimately came to be affirmed by this
Court in the Special Leave Petition (Crl.)
No. 4430 of 2019 order dated 27.05.2019.
We are referring to a decision in the case
of P.V. Ramana Reddy v. Union of India
Writ Petition Nos. 4764 of 2019 and allied
petitions decided on 18th April, 2019.
There are few important observations made
by the High Court and we are in complete
agreement with the said observations. The
observations of the High Court fell in the
context of certain incongruities noticed in
Section 69(1) and Section 132 reply of the
CGST Act, 2017. We quote the relevant
observations hereunder:

39. It is important to note that
Under Sub-section (4) of Section 132 of the
CGST Act, 2017, all offences under the Act
except those under Clauses (a) to (d) of
Section 132(1), are made non-cognizable
and bailable, not-withstanding anything
contained in Code of Criminal Procedure
In addition, Section 67(10) of the CGST
Act, 2017 makes the provisions of Code of
Criminal Procedure relating to search and
seizure, apply to searches and seizures
under this Act, subject to the modification
that the word "Commissioner" shall
substitute the word "Magistrate" appearing
in Section 165(5) of Code of Criminal
Procedure, in its application to CGST Act,
2017.

40.