Telangana High Court
Rajesh Gandhi, Director vs Union Of India on 28 June, 2024
THE HONOURABLE SMT. JUSTICE K. SUJANA
CRIMINAL PETITION No.6958 of 2024
ORDER:
This criminal petition is filed under Section 482 of
Code of Criminal Procedure, 1973 (for short 'Cr.P.C.') to
quash the proceedings in summons dated 15.06.2024
passed by the Office of the Commissioner, Secunderabad
CGST Commissionerate.
3. The brief facts of the cases are that petitioner No.2 is
a company and petitioner No.1 is the Director of petitioner
No.2-company in all the cases. On 07.06.2024, the
respondent issued notice to petitioner No.1 under Section
70 of CGST Act directing him to appear before the
respondent on 10.06.2024 to produce the details of invoices
pertaining to inward and outward supplies of petitioner No.2
companies. But the notice was not handed over to
petitioner No.1 as he was out of station. On the same day
i.e., 07.06.2024, without any prior notice, the respondent
and his staff visited petitioner No.2-Company, seized the
entire material. The same was informed to petitioner No.1 on
13.06.2024 and handed over the notice to him and directed
SKS,J
Crl.P.No.6958 2024
to furnish the invoices of inward and outward supplies and
receipt of payments pertaining to the supplies. Immediately
on the very same day i.e., on 13.06.2024, petitioner No.1
sent an email to the respondent and requested to provide a
backup of the documents and the computers seized from the
company to enable him and to give reply to the notice.
Further, petitioner No.1 also requested for extension of time
for his non-appearance on 10.06.2024 before the concerned
authority.
4. Subsequently, on 15.06.2024, the respondent issued
notice directing petitioner No.1 to appear on 19.06.2024 and
on the same day, petitioner No.1 sent email to the
respondent requesting to provide the documents and the
entire material and computers, which were seized on
07.06.2024. Challenging the said notices the petitioners
filed the present criminal petition.
5. Heard Sri K. S. Suneel, learned counsel appearing on
behalf of the petitioners as well as Sri Dominic Fernandes,
learned Senior Standing Counsel appearing on behalf of the
respondent.
SKS,J
Crl.P.No.6958 2024
6. Learned counsel for the petitioners submitted that the
notices issued under Section 70 of CGST Act, 2017 is vague,
incomplete and lack of necessary particulars with regard to
production of documents and evidence. Further, it is
pertinent to note that on 07.06.2024, the respondent has
inspected the premises of petitioner No.2-company and
seized the entire records, computer systems along with data
and cash amounting to Rs.83,85,860/- ( out of which it is
alleged that Rs.77,14,000/- were banned Rs.2,000/- notes).
As per the order of seizure in form GST-INS-02 exercising
powers under Section 67(2) of CGST Act, 2017, read with
Rule 139 (2) is illegal and not in accordance with the
provisions of the CGST Act, 2017. Further, the entire
records including the computer systems of all the companies
were seized under seizure panchanama and issued notices
under Section 70 of the CGST Act, which is not in
accordance with law.
7. Learned counsel for the petitioners further submitted
that earlier in the year 2019, the same situation was faced
by petitioner No.1 regarding the same company, wherein in
those matters, after receipt of the notices, petitioner No.1
SKS,J
Crl.P.No.6958 2024
sincerely appeared. Without looking into the provisions of
Section 132 of CGST Act and without considering the
applicability of 41-A Cr.P.C., petitioner No.1 was arrested
and remanded to judicial custody. Later, petitioner No.1
was enlarged on bail in all those cases by way of common
order in case No.F.No.INV/DGGI/HZU/GST/147/2018-19,
PF-2 (Legal) (RSGB). Despite the fact of the said case, no
further investigation has been done and no charge sheet is
filed in the present case.
8. Learned counsel for the petitioners further submitted
that under Section 70(1) of CGST Act, 2017, a person is
liable for punishment, if he/she gives or fabricates false
evidence. Therefore, the proceedings once initiated give
power to the officer for authorization of arrest under Section
69 of CGST Act, 2017, However, under Section 132 of CGST
Act, 2017, the maximum punishment prescribed is
imprisonment for five years. Hence, 41-A of Cr.P.C., notice
is mandatory before arrest. The petitioners, as happened
earlier, now are apprehending arrest by the respondent
under the guise of issuance of notices under Section 70 of
CGST Act, 2017 by invoking the powers under Section 69 of
SKS,J
Crl.P.No.6958 2024
the CGST Act, without issuing the mandatory notices under
Section 41-A cr.P.C., which is contrary to law and violation
of Article 20 (3) of the Constitution of India.
9. Learned counsel for the petitioners further submitted
that the offences specified in clauses (a) to (d) of Sub-Section
(1) of Section 132 of CGST Act, 2017 are made cognizable
and non-bailable under Section 132 (5) of CGST Act, 2017.
The notices are silent and not specific as to the offences
though Section 132 (1) of CGST Act, lists out 12 different
types of offences from clauses (a) to (1). However, in fact,
the duty imposed upon a police officer under Section 41-A
Cr.P.C is to summon a person for enquiry in relation to a
cognizable offence, which is substantially ingrained in
Section 70(1) of the CGST Act. Though Section 69(1) of the
CGST Act, 2017 confers powers upon the commissioner to
order the arrest of a person does not contain the safe guards
that are incorporated in Section 41 and 41-A or Cr.P.C,
Section 70(1) of CGST Act 2017 takes care of the
contingency.
10. Learned counsel for the petitioners further submitted
that petitioner No.2-company was registered with State
SKS,J
Crl.P.No.6958 2024
Goods and Service Tax Department and having the State
GST number and the Central Goods and Service Tax has no
jurisdiction to entertain any complaint against the
petitioners. Therefore, prayed the Court to quash the
proceedings against the petitioners.
11. In support of his submissions, learned counsel for the
petitioners relied on the judgment of the Division Bench of
this Court in P.V. Ramana Reddy vs. Union of India and
others 1, wherein in paragraph No.61, it is held as under:
"61. In view of the above, despite our finding
that the writ petitions are maintainable and
despite our finding that the protection under
Sections 41 and 41-a of Cr.P.C., may be available
to persons said to have committed cognizable and
non-bailable offences under this Act and despite
our finding that there are incongruities within
Section 69 and between Sections 69 and 132 of
the CGST Act, 2017, we do not wish to grant relief
to the petitioners against arrest, in view of the
special circumstances which we have indicated
above."
12. On the other hand, learned Senior Standing Counsel
appearing for the respondent submitted that Section 41-A of
Cr.P.C is not applicable to the present case and the same
2019 (4) ALD 534 (TS) (DB)
SKS,J
Crl.P.No.6958 2024
was also observed by the Hon'ble Supreme Court and
various High Courts. Therefore, he prayed the Court to
dismiss the criminal petition.
13. In support of his submissions, learned Senior
Standing Counsel relied upon the judgment of the Hon'ble
Supreme Court in State of Gujarat vs. Choodamani
Parmeshwaran Iyer and another 2, wherein in paragraph
Nos.43 and 44, it is held as under:
"43. But, it may be remembered that
Section 41(3) of Cr.P.C., does not provide an
absolute irrevocable guarantee against arrest.
Despite the compliance with the notices of
appearance, a police officer himself is entitled
under Section 41(3) of Cr.P.C., for reasons to be
recorded, arrest a person. At this stage, we may
notice the difference in language between Section
41A(3) of Cr.P.C and Section 69(1) of CGST Act,
2017. Under Section 41A(3) of Cr.P.C., "reasons
are to be recorded", once the police officer is of
the opinion that the persons concerned ought to
be arrested. In contrast, Section 69(1) uses the
phrase "reasons to believe". There is a vast
difference between "reasons to be recorded" and
"reasons to be believe."
44. We are still inclined to give one more
opportunity to both the respondents to appear
before the authorities for the purpose of recording
2023 SCC OnLine SC 1043
SKS,J
Crl.P.No.6958 2024
their statements. If the respondents fail to
appear, then it shall be open for the authority
concerned to proceed further in accordance with
law."
14. Learned Senior Standing Counsel further relied upon
the judgment of the Hon'ble Supreme Court in Subair T.B,
vs. State of Kerala and others 3, wherein in paragraph
Nos.5 and 6, it is held as under:
"5. The Supreme Court itself has held that
there is vast difference between the phrase
"reasons to be believe" when placing reliance
under Section 69(1) of the CGST Act, 2017 and
the phrase "reasons are to be recorded" under
Section 41A(3) of Cr.P.C. The said judgment does
not laid down that Section 41A notice has to be
issued to an offender who hs allegedly committed
an offence under Section 69(1) of the CGST Act,
2017. From reading of the extracted paragraphs,
it would be evident that only safeguards that are
provided under Section 41A of the Cr.P.C. are to
be kept in mind, if a person is sought to be
arrested for offences under Section 69(1) of the
CGST Act, 2017.
6. Therefore, I do not find any substance
in the submission made by the learned counsel
for the petitioner that the provisions of Section
41A of the Cr.P.C. are to be complied with in case
of an offender for violation of Section69(1) of the
CGST Act, 2017. However, considering the facts
2023 SCC OnLine Ker 7888
SKS,J
Crl.P.No.6958 2024
and circumstances of the case, this Court finds
that one opportunity to the petitioner to appear
before the authorities for the purpose of recording
his statement is to be given and, therefore, the
petitioner is directed to appear before the
authority concerned on 13.09.2023 (Wednesday).
It is made clear that this Court has not prohibited
for the exercise of discretion vested in the
authority in respect of arrest of the petitioner.
However, if the arrest is necessitated, the relevant
parameters as per the judgment in P.P. Ramana
Reddy 9supra) may be kept in mind."
15. Learned Senior Standing Counsel further relied upon
the Judgment of this Court in Vemula Yougander vs.
Union of India 4, wherein it is observed that the Hon'ble
Supreme Court held that at the stage of summons the
person summoned cannot invoke Section 438 of the Code of
Criminal Procedure.
16. Having regard to the rival submissions made by both
the learned counsel and perusal of the material available on
record, the main contention of the learned counsel for the
petitioners is that under Section 132 of the CGST Act, 2017,
the maximum punishment prescribed is imprisonment for a
Criminal Petition No.10430 of 2023 decided on 14.11.2023
SKS,J
Crl.P.No.6958 2024
period of five (05) years, therefore, Section 41-A of Cr.P.C
notice is mandatory before arrest.
17. In view of the law laid down by the Hon'ble Supreme
Court Choodamani Parmeshwaran Iyer (Supra), as
mentioned above, it was clearly observed that while placing
reliance under Section 69 (1) of the CGST Act, 2017 there is
vast difference between the phrases "reasons to believe" and
the "reasons are to be recorded' under Section 41A(3) of
Cr.P.C. It is nowhere held in the above said judgments that
Section 41-A of Cr.P.C notice has to be issued to an offender
who has allegedly committed an offence under Section 132
of the CGST Act, 2017. Therefore, the person is entitled for
the safeguards that are provided under Section 41-A of
Cr.P.C. are to be kept in mind if a person is arrested under
Section 69 of the CGST Act, 2017.
18. Further, though the learned counsel for the
petitioners relied upon the judgment of the Hon'ble Supreme
Court in Radhika Agarwal vs. Union of India and Ors5,
wherein it is observed that while reserving the judgment on
the question of validity and interpretation of the provisions
Writ Petition (s) (Criminal) No(s).336 of 2018
SKS,J
Crl.P.No.6958 2024
of the Customs Act and Central Goods and Service Tax
Act/State Goods and Service Tax Act, protected the
petitioners therein from arrest whoever directed by the
Court till the pronouncement of Judgment, as such, it is
applicable to the persons who got protection in the said
case. Therefore, this Court does not find any substance in
the submission made by the learned counsel for the
petitioners that the provisions of Section 41-A Cr.P.C are to
be complied within the case of an offender in the CGST Act,
2017.
19. In the given factual backdrop of the cases and the
judicial pronouncements referred to in the preceding
paragraphs, this Court is inclined to give one more
opportunity to the petitioners to appear before the
concerned authority for the purpose of recording
statements.
20. Accordingly, the Criminal Petitions is disposed of
directing the petitioners to appear before the concerned
authority on or before 31.07.2024 for the purpose of
recording statements. Further, the respondent is directed to
SKS,J
Crl.P.No.6958 2024
provide necessary material to the petitioners to enable them
to submit reply.
Miscellaneous applications, if any pending, shall also
stand closed.
_______________
K. SUJANA, J
Date: 28.06.2024
gms
Note:
Issue CC forthwith.
