This Criminal Petition, under Section 438 of the Code of Criminal Procedure, 1973, is filed by the petitioner, for grant of anticipatory bail in connection with, File No. INV/DGGI/HZU/GST/127/2018-19 PF-4 (Legal), dated 01.02.2019, registered for the offences punishable under Section 132(1)(i) read with Section 132(1)(b)(c) of Goods and Services Tax Act, 2017 (for short, “GST Act”).

2. Heard Sri D. Prakash Reddy, learned senior counsel, appearing on behalf of Sri M.P. Kashyap, learned counsel for the petitioner, Sri Anil Prasad Tiwari, learned Special Public Prosecutor for Directorate General of GST Intelligence, Hyderabad Zonal Unit, Hyderabad, representing the respondents and perused the record.

3. The learned senior counsel appearing on behalf of the petitioner would submit that initially, the subject criminal case was registered against one Sangapu Raveendra, Chief Financial Officer of M/s. Adarsh Global Trades and Services Private Limited, having its office at Hyderabad. Search operations were conducted by the respondent No.2-Senior Intelligence Officer, O/o. Director General of Goods and Service Tax Intelligence, Hyderabad Zonal Unit, Hyderabad, and various documents relating to M/s. Adarsh Global Trades and Services Private Limited were seized. Subsequently, the respondent No.2 served summons to the Chief Financial Officer of M/s. Adarsh Global Trades and Services Private Limited under Section 70 of the GST Act. Thereafter, the Chief Financial Officer was arrested and after thorough investigation, he was granted regular bail by the Court concerned. In the course of recording of the statements of the Chief Financial Officer, it has come up that the petitioner is instrumental in establishing number of companies appointing his close relatives as Managing Directors, only for name sake and that he has got absolute control over the company’s affairs and that the petitioner is responsible for evading payment of Input Tax Credit to an extent of ₹ 36 crores, by creating fake invoices. It is also contended by the learned Senior Counsel appearing on behalf of the petitioner that the petitioner is no way connected with the affairs of M/s. Adarsh Global Trades and Services Private Limited. Except the statements made by the Chief Financial Officer in the course of his enquiry by the respondents, there is no oral and documentary evidence to substantiate that the petitioner is managing the affairs of M/s. Adarsh Global Trades and Services Private Limited or to establish his participation in managing the affairs of the said company. Since the name of the petitioner has come up in the statements made by the Chief Financial Officer in the course of his enquiry by the respondents, the petitioner is apprehending arrest in the subject crime. The offences alleged are compoundable, non-bailable and triable by the Special Court and further, the petitioner is ready to cooperate with the investigating agency and ultimately prayed to allow the application.

4. On the other hand, the learned Special Public Prosecutor representing the respondents would contend that the petitioner is responsible for tax evasion to an extent of ₹ 36 crores. No summons, as required under Section 70 of the GST Act, were served on the petitioner. Investigation is in progress. If the submissions made on behalf of the petitioner are acceded, it causes heavy loss to the State exchequer and ultimately prayed to dismiss the application. In support of his contentions, the learned Special Public Prosecutor had relied on a decision of the Apex Court in Union of India Vs. Padam Narain Aggarwal (2008) 13 SCC 305

5. In view df the above rival contentions, the point that arises for determination in this Criminal Petition is:

 “Whether the petitioner can be granted relief under Section 438 of Cr.P.C.?”

6. As per the submissions made by the learned Special Public Prosecutor representing the respondents, till date, no single document or any other oral evidence is collected against the petitioner herein to substantiate that the petitioner indulged in evasion of payment of Input Tax Credit to an extent of ₹ 36 Crores, except the statements made by the Chief Financial Officer in the course of his enquiry. The learned Special Public Prosecutor would contend that the petitioner established companies in four different states, made his close relatives as Managing Directors of the companies and evaded payment of huge amount of Goods and Services Tax. As per the records, no evidence has been collected by the investigating agency yet with regard to the petitioner indulging in evasion of Input Tax Credit based on fake invoices. The petitioner is apprehending arrest pursuant to the statements made by the Chief Financial Officer of M/s. Adarsh Global Trades and Services Private Limited given in the course of enquiry made by the respondents.

The learned Special Public Prosecutor would also submit that Section 70 of the GST Act mandates issuance of summons to a person and after issuance of such summons only, he/she can be arrested. It is relevant to state that as per Section 69 of the GST Act, an investigating officer, in the course of investigation, if he has a reason to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 which is punishable under clause (i) dr (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person, without resorting to Section 70 of the GST Act and, therefore, it is not mandatory on the part of the investigating officer to first issue summons under Section 70 of the GST Act and then arrest that person.

7. In Padam Narain Aggarwal’s case (supra) which was relied upon by the learned Special Public Prosecutor representing the respondents, the Apex Court held as follows:-

63. In the case on hand, the respondents were only summoned under Section 108 of the Act for recording of their statements. The High Court was conscious and mindful of that fact. It, therefore, held that applications for anticipatory bail, in the circumstances, were pre-mature. They were, accordingly, disposed of by directing the respondents to appear before the Custom Authorities. The Court, however, did not stop there. It stated that even if the Custom Authorities find any non- bailable offence against the applicants (respondents herein), they shall not be arrested “without ten days prior notice to them.

64. In our judgment, on the facts and in the circumstances of the present case, neither of the above directions can be said to be legal, valid or in consonance with law. Firstly, the order passed by the High Court is a blanket one as held by the Constitution Bench of this Court in Gurbaksh Singh and seeks to grant protection to respondents in respect of any non-bailable offence. Secondly, it illegally obstructs, interferes and curtails the authority of Custom Officers from exercising statutory power of arrest a person said to have committed a non-bailable offence by imposing a condition of giving ten days prior notice, a condition not warranted by law. The order passed by the High Court to the extent of directions issued to the Custom Authorities is, therefore, liable to be set aside and is hereby set aside.

8. In the above decision, the Hon’ble High Court imposed condition which was not in consonance with Section 438 Cr.P.C and the said condition was curtailing the powers of the investigating authority i.e, custom officers from exercising the statutory power of arrest. Therefore, the Hon’ble Apex Court was pleased to set aside the order of bail granted in favour of the accused therein.

9. In the instant case, as per the submissions made by learned Special Public Prosecutor, there is no prima facie case against this petitioner yet directly indulging in evasion of tax to the tune of ₹ 36 crores. The Special Public Prosecutor submits that in the course of investigation if it is found that this petitioner is guilty of evasion of tax, on compliance of Section 70 of the GST Act, the petitioner would be arrested and the release of the petitioner under Section 438 Cr.P.C would hinder the investigation. It is evident from the record and the submissions made by both sides that there is apprehension of arrest of the petitioner for the non-bailable offences alleged in the subject crime. The main accused in this case is a corporate body. The financial matters are being dealt with by the Chief Financial Officer.

Furthermore, the petitioner is not directly or indirectly liable for, the taxes imposed by the Government from time to time. There is no record to substantiate the prima facie involvement of the petitioner in the subject criminal case. The arrest and detention of the petitioner would damage his reputation. The allegations are not grave and the gravity of the offences is not so high to deny bail to the petitioner under Section 438 Cr.P.C. Furthermore, it cannot be said that the petitioner would abscond and flee from justice. There are no circumstances to hold that the petitioner would indulge in tampering the records and influence the witnesses. The Chief Financial Officer of the said company was arrested and detained for about 30 days in judicial custody. In the course of investigation so far incriminating material is also collected. So the petitioner is not required for custodial investigation. Therefore, the petitioner •is entitled for relief under Section 438 Cr.P.C as mentioned hereunder.

10. Under these circumstances, the respondents are directed to release the petitioner on bail in the event of his arrest, on petitioner executing a personal bond for a sum of ₹ 10,00,000/- (Rupees ten lakhs only) with two sureties in a like sum each to the satisfaction of the respondent No. 2, i.e., Senior Intelligence Officer, O/o. Director General of Goods and Services Tax Intelligence, Hyderabad Zonal Unit, Hyderabad.

11. The Criminal Petition is, accordingly, allowed.

Pending Miscellaneous Petitions, if any, shall stand closed.