The Bombay High Court has accepted the GST Officer’s apology for arbitrarily arresting alleged tax evaders even before recording statements.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has observed that accepted the apology tendered by the two officers and discharged the Show Cause Notice issued to them, however cautioned the officers that in future they should be careful before any arrest is made and to follow the letter of the law before any arrest memos are issued.
It was alleged by the department that the accused/businessman was indulged in fraudulent activities of wrongfully availing or utilising input tax credit using invoices from GSTIN cancelled suppliers who have issued invoices or bills without supply of goods or services.
The taxpayer has affected inward supplies of Rs. 53.02 crores without actual movement of goods or services in violation of provisions of MGST Act, 2017 leading to wrongful availment or utilisation of non genuine input tax credit at Rs. 9.54 crores.
The department has filed an application before Additional Chief Judicial Magistrate, Mumbai seeking judicial custody of the accused till completion of pending investigation by the complainant.
Dr. Sujay Kantawala, the Counsel for the accused submitted that the summons was issued to the accused calling for recording his statement on 30.12.2024. The writ petition was pending in the Bombay High Court challenging the bank account freezing. Accused has been co-operating and attended the officers in his office on 28.11.2024 and 29.11.2024 when officers conducted inspection of premises. Hence, no reason to believe existed for arresting illegally and hasty manner.
The bench of Justice M.S. Sonak and Justice Jitendra Jain has observed that as per the Arrest Memo the authorisation for this arrest was obtained on 20 December 2024 itself and the Petitioner Mishal J Shah was arrested at 7.55 am on 20 December 2024 itself, amounts to interference with the administration of justice, and consequently, might amount to a Contempt of Court.
The conduct of the GST Authorities in arresting Mr.Mishal J. Shah who is the Karta of the Petitioner HUF. Looking at the manner in which Mr.Mishal J. Shah was arrested, the Court was prima facie of the view that the same amounts to interference with the administration of justice and consequently, might amount to Contempt of Court.
Accordingly, this Court issued a Show Cause Notice to Mr.Chandar Kamble, Assistant Commissioner of State Tax as well as Ms.Prerna Deshbhratar, Joint Commissioner of State Tax to show cause why proceedings for Contempt should not be initiated against them.
In answer to this, both the officers, namely, Mr.Chandar Tipanna Kamble, Assistant Commissioner of State Tax Investigation-A, Mumbai as well as Ms.Prerna Himmatrao Deshbhratar, Joint Commissioner of State Tax Investigation-A, Mumbai have filed their Affidavits. In the Affidavits, they have unconditionally apologized to the Court and they have stated under what circumstances they proceeded to arrest Mr.Mishal J. Shah.
The court disposed of the petition and accepted the apology that has been tendered by the two officers and discharge the Show Cause Notice issued to them.
Case Details
Case Title: Mishal J. Shah HUF (Keeyan Enterprises) Versus State of Maharashtra & Others
Case No.: Writ Petition (L) No.38480 Of 2024 With Show Cause Notice No.16 Of 2024
Date: 7/01/2025
Counsel For Petitioner: Mr.Prasanna Namboodiri, Adv.Pratibha Namboodiri, Adv.Tejal Darekar, Adv. Rishabh Sinha, Adv. Pallavi Dabak, Adv.P.S.Patkar
Counsel For Respondent: Jyoti Chavan