 to the tune of Rs 88 crores.){kind=link}
The Allahabad High Court has granted bail to Ashish Kakkar allegedly mastermind involving creation of 92 fake GST Forms and passing of fake Input Tax Credit (ITC) to the tune of Rs 88 crores.
The Division Bench of Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastava passed this order while hearing a petition filed by Ashish Kakkar.
The main grievance in the petition is to declare Section 69 of the Central Goods and Service Tax Act, 2017 as unconstitutional.
The challenge, in this regard, is mainly on the ground that the said provision is arbitrary and ultra vires of Articles 14 and 21 of the Constitution of India. Alternatively, it has been prayed that the impugned Section 69 of the Act, 2017 be construed in the manner suggested in the writ petition or in such manner as the Court may deem fit.
The petitioner has also prayed for summoning of records and for setting aside his illegal arrest made purportedly under the impugned Section 69 of the Act, 2017. It has also been prayed that the arrest of the petitioner dated 27.6.2023 be declared illegal.
The facts of the case necessary for consideration of the application for interim relief are that on 26.6.2023 at 6:30 am, the officers of DGGI came to the petitioner’s residence at Greater Kailash, New Delhi and after interrogation and conclusion of search, the petitioner was taken from his residence to the office at Rajendra Nagar, New Delhi and thereafter, to the office of his Chartered Accountants.
Further, according to the petitioner, after the search/enquiry, he was taken to the DGGI Office in Kaushambi, Ghaziabad.
It has also been submitted by the petitioner that forcibly his confession was recorded and he was compelled to sign the same. On 27.6.2023, based on the proposal of the Investigating Team, an order was passed by the Principal Commissioner/Commissioner on 27.6.2023, agreeing with the proposal and arriving at reason to believe that the petitioner has committed offences specified under clause (b), clause (c), clause (d), clause (l) of Section 132 (1) of CGST Act and then the petitioner was arrested. On 27.6.2023, a formal arrest memo was served upon the petitioner by the Investigating Officer authorized by the Principal Commissioner.
On 28.6.2023, the petitioner was produced before the Special Chief Judicial Magistrate, Meerut, to obtain judicial custody for a period of fourteen days. As his confession was already recorded, no custodial interrogation was sought by the Department.
The ground taken by the petitioner is that the sanction order dated 27.6.2023 is silent regarding the requirement specified in Section 41 (1) of Cr PC or the Arrest Memo does not record any satisfaction and opinion regarding the ‘necessity to arrest’ and whatever reason recorded is regarding the commission of offence besides they are silent and the same ought to have been followed in the light of the general directions issued by the Supreme Court.
The petitioner states that there is complete violation of the law laid down by the Apex Court in the cases of Arnesh Kumar vs State of Bihar, (2014) 8 SCC 273 and Satendra Kumar Antil vs CBI, (2022) 10 SCC 51.
Counsel for the petitioner submitted that even the remand application which narrates the allegation for forming reasons to believe the commission of offence under clause (a) or clause (b) or clause (c) or clause (d) or clause (l) of sub section (1) of Section 132 of the Act, 2017, is silent about the ‘necessity to arrest’ and compliance of Section 41 (1) Cr PC. It has also been pleaded by the petitioner that he was neither served with any show cause notice nor adjudicated to ascertain any tax evasion before such arrest.
Counsel for the petitioner has also argued that probably after recording the alleged confession of the petitioner, the Department is not keen to carry further investigation and that is why, only judicial remand has been requested. It has been argued that after fifteen days of the expiry of judicial remand, now the Department appears to be not keen to interrogate the petitioner.
According to the petitioner, even the Department is not sure as to what offence is to be registered. The petitioner has also made an attempt to satisfy the Court on the ground that he was taken into custody on 26.6.2023, but his arrest has been shown on 27.6.2023 and was produced before the Magistrate on 28.6.2023.
Opposing the prayer for interim relief, counsel for the respondents submitted that the petitioner is the mastermind involving creation of 92 fake GST Forms and passing of fake Input Tax Credit (ITC) to the tune of Rs 88 crores. Searches of the premises of 16 such firms have confirmed that they are unoperational. Statement of the petitioner was recorded on 26.6.2023 and 27.6.2023 and on the basis of incriminating evidence, the petitioner has been arrested. The petitioner can always apply for regular Bail before the Court below and is not entitled to any indulgence by this Court. The case laws relied upon by the petitioner are distinguishable in as much as they predominantly do not pertain to GST Act. He, thus, apprehends that the petitioner may not cooperate in the investigation and will tamper the evidence and influence the witnesses.
“In view of the aforesaid, we are of the view that there is no force in the argument raised by the Department that the release of the petitioner by this Court may hamper the investigation. Undisputedly, the Department has merely asked for judicial custody of the petitioner and it appears that they were satisfied with the interrogation held by them till seeking of such judicial remand and till date, no request has been made by the Department before the Court that they need the petitioner for any interrogation. Prima facie, the conduct of the Department shows that they are satisfied with the interrogation made by them and they may not be interested to further interrogate the petitioner. Moreover, assurance has been given by the petitioner that he will cooperate in the investigation and will not, in any manner, hamper the same.
Yet another important aspect of the case is that even in the arrest memo, the Department is not sure as to what offence has been committed by the petitioner and they have used the words ‘clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 of the Act, 2017’.
In view of above, we are satisfied that the petitioner has made out a case for proper construction of Section 69 of the Act, 2017 and the issues concerning violation of statutory and constitutional procedural safeguards in the matter of arrest, do merit consideration and in the meantime, a case for bail is also made out”, the Court observed while allowing the interim relief.
The Court directed that petitioner, Ashish Kakkar, be released on bail in DGGI MeZU Case pending before the Court of Special Chief Judicial Magistrate, Meerut, on furnishing a personal bond in the sum of Rs 1.00 crore and two sureties each in the like amount to the satisfaction of the Court concerned, with the following conditions, which are being imposed in the interest of justice:
(i) The petitioner shall cooperate in the investigation in all possible manner and will produce himself before the Investigating Team as and when required except in unavoidable circumstances.
(ii) The petitioner shall not make any effort or attempt to influence any witness or tamper with any documents.
(iii) The petitioner shall deposit his Passport before the Court concerned after his release on bail, within one week, and shall not leave the Country without leave of the Court.
(iv) The petitioner shall file an undertaking to the effect that he shall not seek any adjournment on the date fixed for evidence when the witnesses are present in court. In case of default of this condition, it shall be open for the trial court to treat it as abuse of liberty of bail and pass orders in accordance with law.
(v) The petitioner shall remain present before the trial court on each date fixed, either personally or through his counsel. In case of his absence, without sufficient cause, the trial court may proceed against him under section 229-A IPC.
(vi) In case, the petitioner misuses the liberty of bail during trial and in order to secure his presence proclamation under section 82 Cr.P.C, may be issued and if the petitioner fails to appear before the court on the date fixed in such proclamation, then, the trial court shall initiate proceedings against him, in accordance with law, under section 174-A IPC.
(vii) The petitioner shall remain present, in person, before the trial court on dates fixed for (1) opening of the case, (2) framing of charge and (3) recording of statement under section 313 Cr.P.C. If in the opinion of the trial court absence of the petitioner is deliberate or without sufficient cause, then it shall be open for the trial court to treat such default as abuse of liberty of bail and proceed against him in accordance with law.
(viii) All endeavour would be made by the Investigating Agency to conclude the investigation expeditiously.
(ix) The trial court may also make all possible effort/endeavour and try to conclude the trial within a period of one year after the release of the petitioner.