Mohammad Abbas Shabbirali Savjani vs State of Gujarat

In this case, the court heard from Senior Advocate Mr. J.M. Panchal, along with Advocate Mr. Chetan K. Pandya, representing the applicant, and from Public Prosecutor Mr. Mitesh Amin, alongside Additional Public Prosecutor Mr. Ronak Raval, representing the respondent, the State.

The applicant has filed this application due to concerns about a possible arrest linked to File No. DCST/ENF-1/AC-4/SUMMONS/2021-22/B-597, which is under investigation by the office of the Deputy Commissioner of State Tax, Enforcement, Division (1), Ahmedabad.

Senior Advocate Mr. Panchal argued that the applicant, who owns M/s Lucky Steel, had been issued summons under Section 70 of the Gujarat Goods and Service Tax Act (GGST Act), 2017, and Section 70(1) of the Central Goods and Service Tax Act (CGST Act), 2017.

In this case, the court heard arguments from Senior Advocate Mr. J.M. Panchal along with Advocate Mr. Chetan K. Pandya representing the applicant and Public Prosecutor Mr. Mitesh Amin with Additional Public Prosecutor Mr. Ronak Raval representing the State

The applicant has filed the present application due to apprehension of arrest related to File No. DCST/ENF-1/AC-4/SUMMONS/2021-22/B-597, which is associated with an inquiry conducted by the Deputy Commissioner of State Tax, Enforcement, Division (1), Ahmedabad

The applicant, who is the proprietor of M/s Lucky Steel, had been issued summons under Section 70 of the Gujarat Goods and Service Tax (GGST) Act, 2017, and Section 70(1) of the Central Goods and Service Tax (CGST) Act, 2017

The summons dated 01.08.2021 required the applicant to be present and provide specific documents related to an inquiry against M/s Gurukrupa Traders and M/s Lucky Steel. However, the applicant could not attend the summons as he was out of town, and he responded on 02.08.2021 requesting a date after 15-20 days to submit the necessary documents

The department responded by setting a new date for 17.08.2021. On 16.08.2021, the applicant submitted documents related to M/s Lucky Steel and stated that he had no connection with M/s Gurukrupa Traders. Despite providing documents, the applicant did not appear in person, and his residential premises were searched on 01.08.2021

Due to the applicant’s failure to appear in person, the respondents filed a complaint against him under Sections 174 and 175 of the Indian Penal Code along with Section 70 of the GGST Act, 2017, and CGST Act, 2017

The case involves the applicant’s concern over potential arrest due to his non-compliance with the summons and the subsequent legal actions taken against him

The Learned Senior Advocate argues that Section 70(1) of the CGST Act empowers a proper officer to summon any person deemed necessary to give evidence or produce documents. This power, as per the statute, is equivalent to the powers given to a Civil Court under the Code of Civil Procedure, 1908. He further refers to Section 136 of the CGST Act, asserting that a statement made by a person in response to a summons under Section 70 during an inquiry or proceeding under the Act is of limited evidentiary value. Such a statement can only be relevant for proving the truth of the facts under specific conditions, such as if the person making the statement is dead, incapable, or unavailable, or if the person is later examined as a witness in court and the court deems the statement admissible.

The Learned Senior Advocate contends that because a statement under Section 70 of the CGST Act holds limited evidentiary weight, except under the circumstances outlined in Section 136, there is concern that the applicant may be unfairly arrested under the pretext of being summoned to respond to such a statement. The applicant has already provided all relevant details of his firm, M/s Lucky Steel, and asserts that he has no connection with the other entity named in the summons. The applicant’s name emerged during an inquiry, and the individuals who mentioned his name have now been listed as accused. The Senior Advocate argues that the applicant should not be at risk of arrest based solely on the statements of those who are now accused.

In the case under consideration, the Learned Senior Advocate presents arguments regarding the scope and implications of Section 70(1) of the Central Goods and Services Tax (CGST) Act. This section empowers a proper officer to summon any person necessary to provide evidence or produce documents. The Advocate highlights that the power to summon is equivalent to the authority granted to a Civil Court under the Code of Civil Procedure, 1908. He then refers to Section 136 of the CGST Act, which concerns the admissibility and evidentiary value of statements made in response to such summons. The Advocate argues that such statements have limited evidentiary value, particularly unless the person making the statement is deceased, incapable, or unavailable, or when the person is later examined as a witness in court, and the court deems the statement admissible.

The Advocate expresses concern that the respondents might misuse the power to summon the applicant under the guise of requiring his testimony, with the underlying intention of arresting him. He asserts that the applicant has already provided all necessary details about his firm, M/s Lucky Steel, and denies any connection with the other entity mentioned in the summons. The applicant’s name surfaced during an inquiry, but those who mentioned him have since been listed as accused. The Advocate contends that an attempt to arrest the applicant based solely on the statements of the accused is unjustified.

Further, the Advocate asserts that the applicant is willing to cooperate with the investigation and is prepared to appear before the authorities on any date directed by the court, provided he is granted anticipatory bail.

On the opposing side, the learned Public Prosecutor, Mr. Mitesh Amin, along with Additional Public Prosecutor Mr. Ronak Raval, strongly contests the application for anticipatory bail. They argue that the department uncovered significant material against M/s Madhav Copper Limited, revealing a substantial tax evasion scam. The company allegedly engaged in fake purchases amounting to Rs. 762.66 Crores from 36 fictitious entities, which led to an illicit input tax credit claim of Rs. 137.28 Crores. Mr. Amin explains that the scam involved the purchase of fake invoices without any actual physical transfer of goods. Payments were made through banking channels, and the money was subsequently rerouted to the company’s in-charge, Nileshbhai Natubhai Patel, through intermediary firms.

The Prosecutor also mentions that during a search of the residence of one Afzal Sadiq Ali Savjani, various electronic devices were seized, and details of WhatsApp chats were retrieved, which may be pertinent to the case. The argument by the prosecution suggests that the gravity and complexity of the case do not warrant the granting of anticipatory bail to the applicant.

In this case, the Learned Senior Advocate argues on behalf of the applicant, emphasizing several key points concerning the powers and procedures under the Central Goods and Services Tax (CGST) Act. The advocate notes that Section 70(1) of the CGST Act allows a proper officer to summon any person necessary to provide evidence or produce documents, equating this power to that of a Civil Court under the Code of Civil Procedure, 1908. The advocate further references Section 136 of the CGST Act, which stipulates that statements made under Section 70 during an inquiry have limited evidentiary value unless the person making the statement is deceased, incapacitated, or unavailable, or if the person is later examined as a witness in court. Given this limited evidentiary value, the advocate expresses concern that the applicant might be arrested merely under the guise of responding to a summons, despite having no connection with the other entity involved. The advocate also points out that the applicant’s name surfaced during an inquiry, where those who mentioned the applicant have since been listed as accused. It is argued that an arrest based solely on the statements of accused individuals would be unjust.

The advocate asserts that the applicant is willing to cooperate with the investigation and, subject to protection from the court, is ready to appear before the authorities as required. Therefore, the advocate requests that the court grant anticipatory bail to the applicant.

On the other hand, the application for bail is strongly opposed by the learned Public Prosecutor, who provides details of the alleged scam involving M/s Madhav Copper Limited. The prosecutor explains that an investigation revealed the company engaged in fraudulent activities, showing fake purchases amounting to Rs. 762.66 Crores from fictitious entities and availing input tax credit of Rs. 137.28 Crores. The main person behind the company was Nileshbhai Natubhai Patel, who allegedly used fake invoices without any actual physical movement of goods, paid through banking channels, and rerouted the money through other firms, eventually leading to the present applicant.

The prosecutor also reveals that evidence, including WhatsApp chats recovered from the digital devices of one Afzal Sadiq Ali Savjani during search operations, suggests the present applicant’s involvement as the mastermind and primary beneficiary of the scam. The prosecutor relies on a previous decision by a Co-ordinate Bench of the court, which had rejected anticipatory bail for Nilesh Patel, underscoring the need for custodial interrogation and noting that the maximum punishment could be five years. The prosecutor also mentions that this decision was upheld by the Hon’ble Apex Court, which declined to interfere.

In summary, the court is faced with deciding whether to grant anticipatory bail to the applicant, who claims limited involvement and a willingness to cooperate, or to deny bail based on the prosecution’s evidence and the severity of the alleged scam.

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