1. Heard learned Senior Advocate Mr. J.M. Panchal with learned Advocate Mr. Chetan K. Pandya on behalf of the applicant and learned Public Prosecutor Mr. Mitesh Amin with learned Additional Public Prosecutor Mr. Ronak Raval on behalf of the respondent- State

2. The present application has been preferred by the applicant apprehending his arrest in connection with the File No.DCST/ENF-1/AC- 4/SUMMONS/2021-22/B-597 registered with the office of the Deputy Commissioner of State Tax, Enforcement, Division (1), Ahmedabad.

3. Learned Senior Advocate Mr. Panchal would submit that the present applicant who is proprietor of one 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, 2017 (hereinafter referred to as the ‘CGST Act’) .

4. Learned Senior Advocate would submit that the summons dated 01.08.2021 inter alia required the applicant to remain present and furnish documents and records mentioned in the schedule to the notice with regard to an inquiry against one M/s Gurukrupa Traders and the company of the applicant being M/s Lucky Steel. Learned Senior Advocate would submit that the present applicant since he was not in town, could not remain present before the officer concerned and whereas the applicant had written a letter dated 02.08.2021 seeking a date after 15-20 days and also to submit relevant details of documents required by the officer concerned. Learned Senior Advocate would submit that the said communication was replied by another letter of the department i.e. the office of the Deputy Commissioner of State Tax ( Enforcement), Division (1), Ahmedabad calling upon the applicant to remain present on 17.08.2021.

It is stated that the applicant had provided vide his communication dated 16.08.2021 documents relating to M/s Lucky Steel and whereas the applicant had submitted that he did not have any connection with the other entity named in the summons i.e M/s Gurukrupa Traders. It would be pertinent to mention herein that the applicant had not remained personally present rather he had sent explanation along with documents vide communication as referred to hereinabove. It appears that the residential premises of the applicant had also been been searched in the interregnum on 01.08.2021.

5. Learned Senior Advocate would submit that since the applicant did not appear, the respondents had filed a complaint against the applicant under Sections 174 and 175 of the Indian Penal Code read with Section 70 of the GGST Act, 2017 and CGST Act, 2017.

5.1 Learned Senior Advocate would further submit that as such Section 70(1) of the CGST Act, inter alia empowers the proper officer to summon any person whose attendance is necessary to give evidence or to produce any document. Learned Senior Advocate would submit that the power to summons any person in an inquiry under Section 70 is as specified in the statute, equivalent to the powers provided to a Civil Court under the provisions of the Code of Civil Procedure, 1908. Learned Senior Advocate would thereafter refer to Section 136 of the CGST Act and would submit that a statement given by a person in response to a summons under Section 70 during the course of inquiry or proceedings under the Act, could only be relevant for proving the truth of facts if the person making a statement is either dead or incapable or whose presence could not be obtained etc. or when such person making the statement is examined as a witness in a case before the Court and the Court is of the opinion that such statement should be admitted. Learned Senior Advocate would submit that since a statement under Section 70 of the CGST Act, not being of very high evidentiary value, except under circumstances as mentioned in Section 136 of the CGST Act, the respondents, under the guise of the applicant being called to respond to such summons, would arrest the present applicant. It is further submitted that as such the applicant had provided all details of his firm i.e. M/s Lucky Steel and whereas he has no connection with the other entity named in the summons. It is also submitted that the name of the present applicant, had cropped up during an inquiry proceedings, and whereas the persons in whose statement the name of the present applicant had cropped up, have now been listed as accused. Learned Senior Advocate would submit that merely on the basis of statement of accused, the present applicant ought not to have been attempted to be arrested.

5.2 Learned Senior Advocate would submit that as such the present applicant is ready and willing to co-operate with the investigation and subject to protection granted by this Court, the applicant is ready and willing to appear before the authority concerned, on any date, as may be directed by this Court. Thus submitting learned Senior Advocate has requested this Court to grant anticipatory bail to the present applicant.

6. On the other hand, this application is vehemently opposed by the learned Public Prosecutor Mr. Mitesh Amin appearing with learned Additional Public Prosecutor Mr. Ronak Raval on behalf of the respondent – State.

6.1 Learned Public Prosecutor Mr. Amin would submit that the department had received certain material against one M/s Madhav Copper Limited and whereas upon detailed investigation, it was found that the said entity, had shown fake purchases to the tune of Rs. 762.66 Crores from 36 fictitious entities and thereby availed input tax credit to the tune of Rs.137.28 Crores. Learned Senior Advocate would submit that one Nileshbhai Natubhai Patel was the person who was overall in- charge of the company and whereas the modus operandi of the scam was that the company i.e M/s Madhav Copper Limited would purchase fake invoices, without any actual physical movement of goods to M/s Madhav Copper Limited and the company based upon the fake invoices would make payment through banking challan to the supplier. It is further submitted that the amount paid would thereafter being re-routed to the persons in-charge of M/s Madhav Copper through Aagadia firms by way of cash. It is submitted by learned Public Prosecutor, relying upon certain confidential documents submitted to this Court that during search proceedings at the residential premises of one Afzal Sadiq Ali Savjani, various electronic devices were recovered. It is submitted that details of whats app chat have been retrieved from digital devices of the said Afzal Savjani and whereas the said details would show the money trade leading back to the present applicant. As a matter of fact according to learned Public Prosecutor based upon the documents, while Nilesh Patel was the overall in-charge of the company named M/s Madhav Copper Limited whereas it appears that the present applicant was the mastermind of the entire scam and whereas the applicant was a prime beneficiary of the entire scam.

7. Learned Public Prosecutor would thereafter rely upon the decision of the learned Co-ordinate Bench of this Court in Criminal Misc. Application No. 17697 of 2021 and other allied matters dated 14.10.2021 whereby learned Co-ordinate Bench had been pleased to reject the application for anticipatory bail preferred by the said Nilesh Patel, in charge of M/s Madhav Copper Limited. Learned Senior Advocate would submit that learned Co-ordinate Bench of this Court had gone into the issue in detail, and had come to a conclusion that discretion could not be exercised in favour of the applicant therein. Learned Public Prosecutor would also submit that the learned Co-ordinate Bench of this Court had also come to a conclusion that in the facts of the case custodial interrogation of the applicant therein would be necessary and whereas it is also submitted that the fact of the maximum punishment which could be imposed being of 5 years, had also not been countenanced by learned Co-ordinate Bench more particularly relying upon decision of the Honble Apex Court.

8. Learned Public Prosecutor would submit that the decision of learned Co-ordinate Bench had been assailed by the applicant therein before the Hon’ble Apex Court and whereas the Hon’ble Apex Court had declined to interfere.

9. Having regard to the same learned Public Prosecutor would submit that in case of a co-accused more particularly where the present applicant is stated to be the mastermind of the entire scam then the learned Co-ordinate Bench has refused to interfere and such order having been upheld by the Hon’ble Apex Court, this Court may not interfere and exercise discretion in favour of the present applicant.

10. Heard learned Advocates for the parties who have not submitted anything further.

11. Having appreciated the submissions of learned Senior Advocates, in the considered opinion of this Court, discretion ought not to be exercised in favour of the present applicant.

12. This Court based upon the submissions of the learned Public Prosecutor more particularly relying upon confidential documents provided to this Court, is of the opinion that the present applicant, who was mastermind of the entire scam, whereby the entity in question one M/s Madhav Copper Limited had availed input tax credit to the tune of Rs.137.28 Crores. It also clearly appears from the said documents that the present applicant was also a prime beneficiary of the scam in question. In the considered opinion of this Court, when learned Co-ordinate Bench of this Court has thought it fit not to exercise its discretion in favour of a person who had almost similar or slightly lesser role than that played by the present applicant in the scam in question, then certainly this Court would not exercise its discretion in favour of the present applicant. Though many of the submissions before learned Co-ordinate Bench, have not been raised before this Court, yet, in view of the commonality of the facts, this Court deems it appropriate to refer to observations of the learned Co-ordinate Bench in decision dated 14.10.2021 in Criminal Misc. Application No. 17697 of 2021 more particularly paragraphs no. 30, 31, 33, 34, 35, 36 and 38 which are reproduced hereinbelow:

“30. Thus keeping in view the aforesaid decisions rendered by the Division Bench of this Court, this Court would like to examine the facts of the present case. It is alleged by the prosecution that the present applicants in connivance with other persons, entered into transaction with 36 dummy firms and false invoices and sales were raised and in pursuance thereto, the Company has issued cheques to 36 dummy firms including four person, who are now arrested by the respondent – department. There were receipts of more than Rs.737.00 Crores and amount has been withdrawn by bearer cheque or transferred to other Company or by RTGS to dummy firms and during the course of investigation from one Mr.Afzal, certain material is collected. It is contended by learned Public Prosecutor that after the withdrawal of the amount by dummy firms, the said amount is transferred to the applicants respondent –through Angadia in cash. The respondent- department has Collected certain material during the course of investigation with other accused, who have been arrested. It is the specific case of the department that the transaction worth of Rs.737.00 Crores were entered into with 36 dummy firms and there would be liability of more than Rs.137.00 Crores. Thus this Court is of the view that in the facts of the present case, the custodial interrogation of the applicants would be required.

31. Now it is the case of learned advocate for the applicants that the applicants have complied with the requirements of GGST Act and the Company has entered into transaction with the firms, which have valid registration numbers at the time of transaction, however subsequently, the said registration has been cancelled with retrospective effect. It is also the contention of learned advocate for the applicants that the sales and purchase transactions were matched and no action was taken by the respondent – department for a particular period and, therefore, the transaction entered into by the Company with the so-called dummy firms can be said to be valid. However, the said submissions are misconceived. There are provisions in the GGST Act that the registration of the firm can be cancelled with retrospective effect. In the present case, during the course of investigation, it has been revealed that at the time of registration of the firm, the concerned persons have provided necessary documents for the purpose of registration, however as per the case of the prosecution, subsequently it was found that without there being any actual movement of the goods, false invoices were raised and after the arrest of four persons and during the course of investigation, it is revealed that those 36 firms were dummy firms. Thus in the facts of the present case, the custodial interrogation of the applicants is necessary.

33. It is contended by learned advocate for the applicants that the maximum punishment prescribed for the alleged offences is five years and therefore even after the conviction, if the applicants are entitled to be released on bail then, at this stage also, they are entitled to be released on anticipatory bail. However, the said submission is misconceived. As observed hereinabove, the custodial interrogation of the applicants would be required in the facts of the present case. There are more than 700 transactions between the applicants and other persons of dummy firms and transactions worth of Rs.737.00 Crores were entered into between the parties. At this stage, this Court would like to refer to the order dated 17.04.2020 in No.1803/2020, passed Special wherein by the Leave to the Hon’ble Hon’ble Supreme Appeal (Crl) Supreme Court has passed following order:

“The allegation against the petitioner is that he has created about 555 fake firms and has committed fraud to the tune of Rs.74,00,00,000/- (Rupees seventy four crore only).

Mr. K.M. Natraj, learned additional solicitor general, submits that the investigation is still pending and more number of fake firms created by the petitioner are being detected.

It is not in dispute that the maximum punishment to be imposed on the petitioner, if convicted, is five years. It is also not in dispute that the petitioner has already undergone one year and eight months imprisonment. It is brought to our notice that some of the accused are released on bail.

Be that as it may, having regard to the totality of facts and circumstances, we deem it appropriate to pass the following order:

The State shall make endeavour to complete the investigation within three months from today.

In case the investigation is not completed within three months from this day, the petitioner shall be released on bail by the Trial Court by imposing appropriate terms and conditions.

If the investigation is completed, the report shall be filed before the concerned court. In case, the investigation is completed and the report is filed within three months from today, it is open for the petitioner to move the trial court for bail, if he so chooses. If such an application is filed, the same shall be considered on its own merits by the trial Court.

The special leave petition is disposed of accordingly.”

34. Thus from the aforesaid order, it is clear that though the concerned accused was in jail since 1 year and 8 months, the Hon’ble Supreme Court had not exercised the discretion in favour of the said accused. In the present case, these are the applications filed by the applicants under Section 438 of the Code and, therefore in the facts of the present case, this Court is discretion in not inclined to exercise discretion in favour of to the applicants.

35. Learned advocate for the applicants has placed reliance upon decision rendered by the different High Courts and, has thereafter, it the is contended that various High Courts have enlarged the concerned accused on anticipatory bail in connection with the offences, which are punishable under Section 132 of the GGST Act. However in the facts of the present case, this Court is not inclined to exercise the discretion in favour of the applicants and the aforesaid decisions were rendered by the concerned High Court on the facts of a particular case.

36. Learned advocate, Mr. Mangukiya has placed reliance upon the recent order dated 07.10.2021 passed by the Hon’ble Supreme Court in case of Satender Kumar Antil Vs. Central Bureau of Inveestigation & Anr. in Special Leave to Appeal(Crl.) No.5191/2020. However, this Court is of the view that the Hon’ble Supreme Court has laid down certain guidelines for the grant of bail in categories/types of offence. It is pertinent to note that the present offfence can be categorized as “economic offence” where huge public money in the form of alleged tax liability of Rs.137.00 Crores is involved. This Court has considered the seriousness of the charges and the fact that the applicants have not cooperated with the investigating agency though directed by one Hon’ble Supreme Court and, therefore in the fact of the present case, the aforesaid order passed by the Hon’ble Supreme Court would not be applicable.

38. In case of Sushila Aggarwal (supra), the Hon’ble Supreme Court has observed and laid down the guidelines for considering the application under Section 438 of the Code. This Court has kept in view the said decision while considering the present case, this Court is of the view that the applicants are not entitled to be released on anticipatory bail.”

13. Insofar as the submissions made by the learned Senior Advocate for the present applicant that the only material with the Investigating Officers, is the statement of co-accused, which may not be a basis, to implicate the present applicant, in the considered opinion of this Court, at this stage, the department based upon the material that had been collected by them, are inquiring/ investigating in the scam and whereas in the considered opinion of this Court, more particularly in view of the material shown to this Court by the learned Public Prosecutor, it could not be stated that the statements of the co-accused would be the only material which is available with the department. In any case in a scam of such a huge latitude, with all its intricacies, custodial interrogation of the applicant, would be required and whereas such right of the Investigating Agency had also been upheld by learned Co-ordinate bench more particularly at para 30 of the judgement reproduced hereinabove.

14. Insofar as submissions with regard to relevancy of statement under Section 70 of the GCST Act, more particularly in context of Section 136 of the GCST Act, in the considered opinion of this Court, at the stage of anticipatory bail, the consideration which would weigh with this Court would be the parameters which are laid down by the Hon’ble Apex Court in case of Siddharam Satlingappa Mhetre v. State of Maharashtra and Ors. reported in (2011)1 SCC 694, more particularly paragraph no. 112 of the said decision and the observations of the Hon’ble Apex Court in case of Sushila Aggarwal & Ors. Vs. State (NCT of Delhi) & Anr., reported in (2020) 5 SCC 1.

15. Having regard to the law laid down by the Hon’ble Apex Court, in the considered opinion of this Court, the submissions made by learned Senior Advocate for the applicant more particularly with regard to admissibility of the statement under Section 70 of the CGST Act would not be appreciated by this Court at this stage.

16. Having regard to the discussion, reasoning and conclusions as hereinabove, in the considered opinion of this Court, this should not be the case where this Court would exercise discretionary jurisdiction under Section 438 of the Code of Criminal Procedure to release the present applicant on anticipatory bail. Hence the present application is rejected.