The Hon’ble Bombay High Court in Sunil Kumar Jha and Akshay Chhabra v. Union of India & Ors. [Writ Petition (ST) No. 5484 of 2021 & Writ Petition (ST) No. 5486 of 2021, decided on March 11, 2021] granted bail to the accused arrested under Section 69 of the Central Goods and Services Tax Act, 2017 (CGST Act) for committing offence of availing ineligible Input Tax Credit (ITC) of INR 9,04,89,054 and issued notice to the revenue department. Held that the arrest made without any formal accusation and continued detention for alleged fake ITC availment, would not be justified when accused is cooperating in investigation.
Facts:
Akshay Chhabra (“the Petitioner No. 2”) is the Chairman cum Managing Director and Sunil Kumar Jha (“the Petitioner No. 1”) is the Chief Financial Officer of One Point One Solutions Ltd. (“the Petitioner Company”) that is engaged in the business of providing business process outsourcing (“BPO”) services to various clients covering a range of services from customer support to consultancy services, to healthcare and retailing etc.
On various occasions a search and seizure operations were conducted by the officers of the Revenue Department (“Respondents”) at office premises of the Petitioner Company as well as in the residential premises of the Petitioner No. 2. Subsequently, the bank account of the Petitioner Company was attached, and various documents were seized during the operation.
It is alleged by the Petitioners that the employees of the Petitioner Company including female staff were not allowed to go home during the search operation. It is stated that Petitioners brought to the notice of Respondent the harassment meted out to the employees notwithstanding full cooperation rendered by the Petitioner Company and by the Petitioners to the respondentsOn February 16, 2021, both the Petitioners were arrested under Section 69 of the CGST Act and were produced before the Court of Judicial Magistrate First Class, Vashi at Belapur that allowed remand application filed by Respondents and sent the Petitioners to judicial custody for 14 days. Though a bail application was made on behalf of the Petitioners, the same was ultimately rejected by order dated March 03, 2021.
The Petitioner Company and some of its officials including directors have filed a writ petition before the Hon’ble Bombay High Court being Writ Petition (ST) No. 4557/2021 wherein the Court vide order dated February 25, 2021 had issued notice and directed that no coercive action shall be taken against the officials who had moved this Court though they would cooperate with the investigation. It was further recorded that the allegations against the Petitioners is that they have committed the offence of availing ineligible ITC to the extent of INR 9,04,89,054.00 by using fake invoices i.e. without actual supply of goods or services. It was also noted that out of the alleged availing of ineligible ITC of slightly more than INR 9 crores and the Petitioner Company had deposited more than INR 4.80 crores which is more than 50% of the alleged dues.
Aggrieved by the arrest and continued detention of the Petitioners, these writ petitions have been filed.
Issue:
Whether the continued detention of the Petitioners is legal, valid and justified?
Held:
The Hon’ble Bombay High Court in Writ Petition (ST) No. 5484 of 2021 & Writ Petition (ST) No. 5486 of 2021, decided on March 11, 2021 held as under:
