Hanumanthappa Pathrera Lakshmana VS State

This petition, filed by the petitioner under Section 438 of the Code of Criminal Procedure, 1973 (Cr.P.C.), seeks anticipatory bail in anticipation of arrest. Section 438 of the Cr.P.C. allows an individual to apply for anticipatory bail when they fear arrest for a non-bailable offense. In this case, the petitioner is concerned about a potential arrest stemming from an inquiry initiated under the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act).

The facts of the case are as follows: The respondent, who is the tax authority under the CGST Act, had issued a notice or summons to the petitioner under Section 70 of the CGST Act. Section 70 of the CGST Act empowers a tax officer to summon any person whose presence is necessary to give evidence or produce documents relevant to the investigation. In compliance with this provision, the petitioner was summoned to appear before the authorized officer on May 12, 2020. It appears that another summons was issued after the initial filing of this petition, further complicating the petitioner’s legal situation.

The petitioner’s core argument in seeking anticipatory bail revolves around the fact that he is the proprietor of M/s. Sri Om Traders, a registered dealer under both the CGST Act and the State Goods and Services Tax (SGST) Act. His business operates in Shivamogga, Karnataka, where he deals in ferrous and non-ferrous materials. The petitioner’s business activities have likely come under scrutiny as part of an investigation related to potential violations of the CGST or SGST Acts, which may involve allegations of tax evasion, false claims of input tax credit (ITC), or other regulatory breaches.

The summons issued by the tax authorities, as per Section 70, indicates that the petitioner’s presence is required in the investigation. However, the petitioner fears that complying with the summons could lead to his arrest, particularly if the authorities have already gathered evidence or believe that there has been a violation of tax laws. This apprehension of arrest has led the petitioner to seek the protection of the court through an anticipatory bail petition.

In the petition, the petitioner contends that the investigation and the summons are part of a routine inquiry into his business practices, and he asserts that he is fully cooperating with the tax authorities. Despite this, he fears that the authorities may take coercive actions, such as arresting him, during the investigation. The petition, therefore, requests the court to grant him anticipatory bail, ensuring that if an arrest is warranted, the petitioner will have the right to bail and avoid unnecessary detention.

The petitioner’s arguments also imply that the issuance of multiple summonses, both before and after the filing of this petition, has caused uncertainty and concern regarding his legal position. He argues that, as a legitimate business owner, he should be allowed to continue his operations without the threat of arbitrary arrest. Furthermore, the petitioner may claim that any allegations of wrongdoing are either unfounded or based on misunderstandings of his business transactions under the GST framework.

The respondent’s stance, which is not fully detailed in the petition, likely involves an investigation into the petitioner’s business practices to determine whether he has violated any provisions of the CGST Act. The issuance of summonses could be part of a broader tax enforcement action aimed at addressing irregularities in GST compliance, particularly in industries dealing with goods like ferrous and non-ferrous materials, which may be prone to misreporting or underreporting of taxes.

The court, in evaluating the petitioner’s request for anticipatory bail, will consider various factors, including the gravity of the alleged offense, the petitioner’s cooperation with the investigation, the possibility of tampering with evidence or influencing witnesses, and the overall fairness of granting bail in the circumstances of the case.

In sum, this anticipatory bail petition underscores the petitioner’s apprehension regarding arrest in connection with a tax investigation under the CGST Act. It reflects a tension between the need for tax authorities to enforce compliance and the petitioner’s desire for protection against potential coercive measures, such as arrest, which may disrupt his business and personal freedom. The court’s decision on this matter will hinge on balancing these competing interests while ensuring that justice is served both in terms of upholding tax laws and protecting the petitioner’s rights.

This petition has been filed under Section 438 of the Code of Criminal Procedure, 1973 (Cr.P.C.) by the petitioner seeking anticipatory bail. The petitioner’s primary concern arises from an ongoing investigation initiated by the respondent under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner contends that he has been issued multiple notices and summonses under Section 70 of the CGST Act, calling upon him to appear before an Authorized Officer. The petitioner was specifically summoned to appear on May 12, 2020, and additional summons were issued even after the filing of this petition.

The petitioner is the proprietor of M/s. Sri Om Traders, a business entity registered under the provisions of both the CGST and State Goods and Services Tax Act (SGST). M/s. Sri Om Traders is engaged in the business of dealing in ferrous and non-ferrous scrap materials. The petitioner maintains that during the regular course of business, he has purchased goods from a variety of registered and unregistered dealers, and he has duly issued tax invoices in compliance with the law. Additionally, he has collected taxes on these transactions and remitted them to the government in accordance with the statutory provisions of the CGST and SGST Acts.

The petitioner claims that on February 8, 2020, the respondent issued a summon for him to appear before an officer named D. Bhaskar at 3:15 p.m. However, prior to the issuance of this summon, on the same day, the respondent conducted an inspection of the petitioner’s business premises and drew up a mahazar (a legal document recording evidence). Following this, the petitioner was issued another notice to appear before another officer, K. Venumadhava Reddy, on February 10, 2020.

In response to these summonses, the petitioner has expressed his willingness to cooperate fully with the investigation and appear before the authorities as required. However, the petitioner asserts that the respondent has already collected all necessary documents and has completed their investigation. Despite this, the petitioner harbors concerns regarding his potential arrest by the authorities in connection with alleged offenses under Section 132(5) of the CGST Act, which deals with serious tax evasion offenses.

The petitioner is apprehensive that if he is arrested and subsequently remanded to judicial custody, it will cause significant harm to his personal and professional life. He argues that, given his cooperation with the investigation and the completion of document collection by the authorities, his arrest would serve no legitimate purpose and would only result in undue hardship for him. Consequently, he seeks the court’s intervention to grant him anticipatory bail to prevent his potential arrest and detention during the ongoing investigation.

In conclusion, the petitioner argues that his actions have been in compliance with tax laws, and he has made all necessary tax remittances as per the CGST and SGST Acts. He requests that the court grant him anticipatory bail under Section 438 of the Cr.P.C. to avoid arrest, contending that he poses no risk of fleeing from the investigation or obstructing justice. The petitioner asserts that his cooperation with the authorities is evident, and the continuation of his liberty is essential for the smooth operation of his business affairs.

This petition has been filed by the petitioner under Section 438 of the Code of Criminal Procedure, 1973 (Cr.P.C.), seeking anticipatory bail. The petitioner’s concern stems from the issuance of summons by the respondent, in accordance with Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act), which requires the petitioner to appear before an Authorized Officer on multiple occasions, the most recent one being on 12.05.2020, before the petition was filed. The petitioner anticipates potential arrest due to these summons.

The petitioner, the proprietor of M/s. Sri Om Traders, is a registered dealer under the CGST and SGST Acts, operating in Shivamogga, Karnataka, and dealing in ferrous and non-ferrous scrap. The petitioner contends that all transactions have been conducted in accordance with the law, with tax invoices issued, taxes collected, and remitted to the government as per the CGST and SGST requirements. The petitioner asserts that during the normal course of business, goods were purchased from both registered and unregistered dealers.

On 08.02.2020, the respondent issued a summon requiring the petitioner to appear before an Officer named D. Bhaskar at 3:15 p.m. Additionally, on the same day, an inspection of the petitioner’s business premises was conducted, and a mahazar (a formal record of the inspection) was drawn. Following this, the petitioner received another notice to appear before an officer named K. Venumadhava Reddy on 10.02.2020. The petitioner claims to be willing to cooperate fully with the investigation and to appear before the respondent. However, the petitioner is concerned that the investigation has already been completed and that there is an imminent risk of arrest under Section 132(5) of the CGST Act, which deals with offenses related to tax evasion and fraudulent tax claims. If arrested and sent to judicial custody, the petitioner fears significant personal and professional hardship, as he has an elderly mother and a daughter to care for. Additionally, the petitioner cites health concerns due to the ongoing COVID-19 pandemic.

The petitioner argues that he has not committed any offense and is willing to comply with any conditions imposed by the court in exchange for bail. He asserts that the offenses under the CGST Act are non-bailable, but they are not punishable by death or life imprisonment. Furthermore, the petitioner is prepared to offer any surety required by the court and has asked for anticipatory bail to avoid unnecessary hardship and loss.

On the other hand, Sri Jeevan Neeralgi, the learned Special Public Prosecutor, has submitted written objections. The prosecutor contends that the petitioner is an assessee under the CGST Act and that intelligence gathered by officers of the respondent indicates that the petitioner has engaged in fraudulent activities. Specifically, the allegation is that the petitioner has availed of fake input tax credits—credit claimed on invoices for goods that were never actually supplied. Summons were issued to the petitioner under Section 70 of the CGST Act based on this information, with the authorization provided by the competent authority.

The Special Public Prosecutor emphasizes the seriousness of the allegations and the ongoing investigation into the petitioner’s activities, which involve suspected large-scale fraud in tax credits. These offenses under the CGST Act could result in stringent penalties, including imprisonment. Hence, the prosecution is likely to argue that anticipatory bail should not be granted due to the gravity of the offense and the need for the petitioner to remain available for further investigation.

In summary, the petitioner seeks protection from arrest via anticipatory bail, citing personal hardship, cooperation with the investigation, and the non-bailable but non-capital nature of the alleged offense. Meanwhile, the prosecution counters with allegations of tax fraud, stressing the importance of continued investigation and questioning the appropriateness of granting anticipatory bail under such circumstances. The court will have to weigh these competing claims in its decision on whether or not to grant the petitioner anticipatory bail.

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