Recently, the Bombay High Court in Mahesh Devchand Gala Versus Union of India & Ors.¹ was adjudicating a petition filed under Article 226 of the Constitution of India, wherein the Petitioner was praying for quashing and setting aside of his arrest by the Inspector, CGST and Central Excise, Mumbai (West Commissionerate) and for a declaration that his arrest was illegal and contrary to law. Other prayers are also sought, including the prayer for interim cash bail / regular bail.

Petitioner’s Submissions

• The investigation carried out by the CGST relates to an old case of 2021. In the year 2021, summons were issued to the Company asking it to produce records and attend the office of the CGST for tendering oral evidence as well as for production of documents. The Petitioner appeared on behalf of the Company and officers of the CGST were aware of the GST liability of the Company and had crystallized the same. The Company was called upon to pay the GST liability, pursuant to which, the Company paid Rs.23.61 Lakh and secured Rs.2.93 Crores by way of blocking of the Input Tax Credit of that amount by the Department, which was undertaken to be reversed by the Company upon unblocking.
   
• The audit of the Company was carried out in September, 2022 by the officers of CGST and a copy of the audit report was generated and furnished to the Investigating Wing, Mumbai (West). Thus, all the CGST returns for the period from 2017 to 2020 were available with the Inspector, pursuant to which, they noted certain violations, which were quantified at approximately Rs. 4.48 Crores, out of which, Rs. 2.93 Crores were frozen, Rs. 23.61 Lakh was paid in cash and Input Tax Credit of Rs. 1.32 Crores was reversed.
   
• The Inspector’s claim that currently, in 2024, they did not have copies of the GST returns available and had to download it for 4 hours was nothing but an endeavour to explain the delay for non-production of the Petitioner within 24 hours of being detained. There was a delay of 13 hours which was not explained by the Inspector during the Petitioner’s remand. The explanation offered by the Inspector that the Petitioner came without informing and therefore, the Inspector did not have the details of the CGST returns, is nothing but an eye-wash and an after-thought.
   
• The Petitioner arrived at the CGST office at 1:30 pm on 13th March, 2024; was kept overnight; and was arrested on the next day i.e. 14th March, 2024 at 7:30 pm. Thereafter, the Petitioner was detained at the police station and thereafter, produced before the learned Magistrate on 15th March 2024 at 3:30 pm. Thus, the detention of the Petitioner being more than 24 hours is illegal, warranting Petitioner’s immediate release.

High Court’s Observation
The Division Bench observed that investigation of the Company was done in 2021 and the Petitioner had appeared before the authorities. A full-fledged inquiry was conducted and the authorities had audited the accounts of the years 2017 to 2020.

The Bench further observed that the time span mentioned by the Inspector for generating the GST returns and getting the Dowment Identification Number (DIN), prima facie appeared to be an eye- wash and appears to have been done to show, that the Petitioner was produced within 24 hours. The Bench held that there was no reason for Inspector to keep the Petitioner overnight, when he did not have documents to question the Petitioner, more so as the Petitioner had cooperated before and he could have been called on some other day or even on the next day.

The Bench further deprecated the practice of keeping a person overnight under the guise of recording of a statement, irrespective of whether the person volunteered or not. The Bench held that arrest is a serious matter and cannot be made in a routine manner on a mere allegation of commission of an offence, as it can cause incalculable harm to the reputation and self-esteem of a person. Thus, the Hon’ble Bombay High Court granted interim bail to the Petitioner.

By - Lakshmi Raman