Anticipatory Bail Not Maintainable for Mere Summons Under Section 70 CGST Act in Bailable Offence.

ORDER

1. Heard Mr. W. R. Medhi, learned counsel for the petitioner. Also heard Mr. S.C. Keyal, learned Standing Counsel, GST for the respondent.

2. This is an application under Section 482 of the BNSS, 2023 praying for grant of pre-arrest bail to the accused/petitioner, who is apprehending arrest in connection with GST Investigation vide DGGI File NO. DGGI/INV/FUP/18/2025-GrB-O/oADG-DGGI-ZU-GUWAHATI/349.

3. It is submitted by Mr. Medhi, learned counsel for the petitioner, that the present petitioner is a businessman by profession and is the proprietor of M/S MRN METAL & MINERALS (GSTIN 18ACKPM0634N1Z9), situated at FCI Road, Brakpur, Ramnagar, Tarapur Part 5, Cachar, Assam and it is duly registered under the relevant provision of Central Goods and Services Tax Act, 2017 (in short, ‘CGST Act, 2017’). He further submitted that after obtaining the order of interim pre-arrest bail on 27.03.2025, the petitioner appeared before the Investigating Agency and co-operated in the investigation of the case. He further submitted that initially the present petitioner was served with a Notice under Section 70 of the CGST Act, 2017 and accordingly he authorized his counsel to appear on his behalf before the GST Officer and to produce the relevant documents sought by the Senior Intelligence Officer, GST. At the time of service of Notice, the petitioner was undergoing medical treatment at Jharkhand and hence, he authorized his counsel to appear on his behalf and to submit the relevant documents. But the Office of the GST did not accept the appearance of his engaged counsel and also did not accept the relevant documents which were supposed to be produced before the GST Office. However, after his recovery and returning from Jharkhand, the petitioner approached this Court with a prayer for pre-arrest bail and this Court, vide order dated 27.03.2025, considering his prayer, granted the petitioner with the privilege of interim pre-arrest bail with a direction to appear before the Office of the GST and in pursuant to the said order, the petitioner has accordingly appeared before the Office of the GST and co-operated in the investigation.

4. Mr. Medhi, learned counsel for the petitioner, further submitted that as per paragraph No. 2 of the Bail Objection filed by the respondent, it is seen that after the preliminary investigation and on analysis of GST Returns etc., the petitioner’s firm had prima facie availed ineligible ITC amounting to approximately Rs. 3.42 Crores during the relevant financial period. It is also mentioned that the substantial ITC appeared to be predominantly based on invoices received from two entities, namely, M/S Nilima Hardware and M/S P.S Enterprise. Thus, it is seen that as per the assessment, the present petitioner had evaded tax of Rs. 3.42 Crores which is admittedly less than Rs. 5 Crores and thus, it can be considered as a bailable offence as per the provision of the CGST Act. Mr. Medhi further submitted that from the statement made by the respondent in paragraph No. 4.8 of the Bail Objection, it is also seen that the petitioner had co-operated in the investigation and his statement is also recorded by the Investigating Officer. He also submitted that in paragraph No. 13 of the Bail Objection filed by the respondent, it is seen that it was the concern of the department that the petitioner was avoiding personal appearance and did not appear before the Office of the GST in spite of receiving the Notice under Section 70 of the CGST Act. But, there is no dispute that the petitioner had already appeared before the Office of the GST and co-operated in the investigation after obtaining the order of interim pre-arrest bail from this Court. He is still ready and willing to co-operate the Investigating Officer in further investigation of the case if his prayer for pre-arrest bail is extended to him.

5. Mr. Medhi further submitted that the judgment which were relied by the respondent, i.e. the case of P. Chidambaram v. Directorate of Enforcement SCC 24 , is not applicable in this case and those are the judgments passed in connection with economic offences and the gravity of the offence has to be considered while dealing with a bail application.

6. He further submitted that the maximum punishment prescribed under the Act is 5 (five) years with fine and it is not an offence punishable with death or imprisonment for life and hence, while granting the anticipatory bail, the only consideration should be as to whether the petitioner’s presence can be secured for the purpose of investigation as well as at the time of trial. In that context, he also relied on a decision of Hon’ble Delhi High Court passed in Bail Appln. 3771/2021 in Crl. M.A. 16552/2021/Tarun Jain v. Directorate General of GST Intelligence (DGGI) 89 GST 380 (Delhi) and emphasized on paragraph No. 40 of the said judgment, wherein the Hon’ble Delhi High Court made the observation that “on close reading of the above said Sections, the maximum punishment provided under the Act is five years and fine and if that is taken into consideration, the magnitude of the alleged offence and it is not punishable with death or imprisonment for life. Even as per the said provision, the alleged offence is also compoundable with the Authority, who has initiated the said proceedings. The only consideration which the Court has to consider while releasing the petitioners on anticipatory bail is, that whether the petitioners can be secured for the purpose of investigation or for the purpose of trial. Under such circumstances, I feel that by imposing stringent conditions if the petitioners are ordered to be released on anticipatory bail, it would meet the ends ofjustice.”

7. In the above referred judgment, the Hon’ble Delhi High Court also expressed the view that though the economic offences are grave in nature, but the same does not mean that the bail needs to be denied in every cases. The Hon’ble Delhi High Court also discussed the judgment of Hon’ble Supreme Court in case of P. Chidambaram (supra).

8. Mr. Medhi also relied on a decision of Hon’ble Supreme Court passed in the case of Radhika Agarwal v. Union of India [2025 SCC OnLine SC 449] and emphasized on paragraph No. 70 of the judgment, which reads as under:

70. We also wish to clarify that the power to grant anticipatory bail arises when there is apprehension of arrest. This power, vested in the courts under the Code, affirms the right to life and liberty under Article 21 of the Constitution to protect persons from being arrested. Thus, in Gurbaksh Singh Sibbia (supra), this Court had held that when a person complains of apprehension of arrest and approaches for an order of protection, such application when based upon facts which are not vague or general allegations, should be considered by the court to evaluate the threat of apprehension and its gravity or seriousness. In appropriate cases, application for anticipatory bail can be allowed, which may also be conditional. It is not essential that the application for anticipatory bail should be moved only after an FIR is filed, as long as facts are clear and there is a reasonable basis for apprehending arrest. This principle was confirmed recently by a Constitution Bench of Five Judges of this Court in Sushila Aggarwal and others v. State (NCT of Delhi) and Another55 Some decisions56 of this Court in the context of GST Acts which are contrary to the aforesaid ratio should not be treated as binding.

9. Accordingly, Mr. Medhi, learned counsel for the petitioner, submitted that the petitioner is still in Assam and is ready to co-operate the Investigating Officer in further investigation of the case if he is extended with the privilege of pre-arrest bail.

10. Mr. Keyal, learned Standing Counsel, GST for the respondent, submitted in this regard that the case is still under investigation and it is a fact that after obtaining the order of interim pre-arrest bail, the petitioner appeared before the Investigating Agency and his statement is also recorded accordingly. He further submitted that the during the investigation, the Investigating Officer found large scale fraudulent availment of Input Tax Credit (ITC) by the petitioner’s proprietary concern M/S MRN METAL & MINERALS under the provisions of the Central Goods and Services Tax Act, 2017. The intelligence also suggested that such ITC was being availed based on invoices issued by certain non-existent or non-functional entities without any corresponding physical receipt of goods. Mr. Keyal also submitted that during the analysis of the GST returns from the available datas, it revealed that prima facie the petitioner’s firm availed ineligible ITC amounting to approximately Rs. 3.42 Crores for the relevant period and it was based on invoices receipt from two entities, namely, M/S Nilima Hardware and M/S P.S Enterprise. He further submitted that as per the preliminary report, the ineligible ITC amounts to approximately Rs. 3.42 Crores which is admittedly a bailable offence and hence, the apprehension of being arrest in connection with this case also does not arise and thus, the anticipatory bail application is also not maintainable in the said circumstances of this case.

11. Mr. Keyal further submitted that the petitioner is not co-operating with the investigating agency and he did not appear before the Office of the GST in spite of receiving the Notice under Section 70 of CGST Act. However, only after obtaining the order of interim pre-arrest bail, the petitioner appeared before the Investigating Agency, but did not co-operated as required for the purpose of investigation. In that context, Mr. Keyal also produced the Case Diary showing that the petitioner is not co-operating with the Investigating Officer and not disclosed many facts and even the documents in relation to the present case. However, it is submitted by Mr. Keyal that the anticipatory bail application was filed only after issuance of Notice under Section 70 of the CGST Act and that cannot be the only ground for apprehension of arrest as the arrest under the said Act can be made only after observing all necessary formalities as required under Section 69 of the CGST Act.

12. Mr. Keyal further emphasized on paragraph No. 69 of the judgment of Hon’ble Supreme Court passed in Radhika Agarwal (supra), which reads as under:

“69. However, we may clarify that a person summoned under Section 70 of the GST Acts is not per se an accused protected under Article 20(3) of the Constitution, as has been held in the case of Deepak Mahajan (supra). This is because the prohibitive sweep of Article 20(3) of the Constitution does not go back to the stage of interrogation. Reference in this regard has been placed on Poolpandi and Others v. Superintendent, Central Excise and Others and Dukhishyam Benupani, Asst. Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria. It is obvious that the investigation must be allowed to proceed in accordance with law and there should not be any attempt to dictate the investigator and at the same time, there should not be any misuse of power and authority.”

13. Accordingly, Mr. Keyal submitted that there cannot be any apprehension of arrest at this stage and the present anticipatory bail application is also filed only after the issuance of Notice under Section 70 of CGST Act and thus, the present anticipatory bail application is not maintainable and liable to be dismissed.

14. After hearing the submissions made by the learned counsels for both sides, I have also perused the case record and the annexures filed along with the petitione, viz-a-viz the Case Diary produced by the respondent. It is an admitted position that the petitioner appeared before the Investigating Officer after obtaining the order of interim pre-arrest bail, though initially he tried to appear through his engaged counsel after receiving the Notice under Section 70 of the CGST Act. Further it is seen that after the preliminary investigation and analysis of the GST Returns from the available data, it was found that prima facie the petitioner filed ineligible ITC amounting to approximately Rs. 3.42 Crores during the relevant financial period which were predominantly based on invoices received from mainly two entities, namely, M/S Nilima Hardware and M/S P.S Enterprise. The ineligible ITC amounts to only Rs. 3.42 Crores which is admittedly less than Rs. 5 Crores and prima facie it is seen that the case is of bailable offence. More so, the Office of the GST had only issued Notice under Section 70 of the CGST Act to obtain some relevant documents which are necessary for the purpose of investigation and there is no other circumstances brought by the present petitioner for apprehending arrest in connection with this case. It is also an admitted fact that after obtaining the order of interim pre-arrest bail, the petitioner appeared before the Investigating Officer and extended his co-operation in further investigation of this case. However, as submitted by the learned Standing Counsel, GST, it is seen from the Case Diary that the petitioner did not extend his full co-operation in the preliminary investigation made by the Office of the GST. But, presently, there cannot be any situation or circumstances to hold that there is any apprehension of arrest of the present petitioner when admittedly the case falls under the bailable offence and the ineligible ITC amounts to approximately Rs. 3.42 Crores which is less than Rs. 5 Crores.

15. In view of above, I find that the present anticipatory bail application is not maintainable in the present form and accordingly, the same stands rejected at this stage with a direction to the present petitioner to extend his full cooperation in the further investigation of the case.

16. Consequently, the interim order passed earlier on 27.03.2025 stand vacated.

17. In terms of above, this anticipatory bail application stands disposed of.