GST Arrest Declared Illegal by Gurugram CJM Court Over Procedural Lapses

CHIEF JUDICIAL MAGISTRATE, GURUGRAM

Central Goods & Service Tax
Versus
Yogesh Gupta

Date of Judgment: January 17, 2025
CNR No:-HRGR03-005388-2025

Brief Facts

Relevant Section:

 Section 132( 1) of CGST Act, 2017
 Section 41A of Cr. P.C./Section 35 of BNSS Act, 2023
The Court is of the view that prosecution was under obligation to comply with the provisions of Section 41, 41A of Cr.P.C/35 of BNSS Ac, 2023 before arresting the accused but same has not been complied and as such, arrest of accused cannot be termed as legal Accused Yogesh Gupta produced before the Court in custody. An application for seeking judicial remand under Section 167 of Cr.P.C. read with Section 187 of BNSS Act, 2023 for 14 days has been moved on behalf of complainant department. Arguments heard. The learned counsel for the applicant/accused has
submitted that the present offence is punishable under Section 132(1) of CGST Act, 2017, for which sentence is 5 years. It is further argued that grounds of arrest were not communicated properly to the accused and just formality has been made by the complainant in the name of informing the grounds of arrest and as such, the grounds of arrest as
provided by the prosecution is not sufficient to understand the nature of case. It is further argued that compliance of Section 41A of Cr.P.C./Section 35 of BNSS Act, 2023 has not been made because issuance of notice prior to arrest of applicant/accused was necessary before arresting him as the offence involved in the present case is punishable not exceeding 7 years. Therefore, it has been requested that arrest of accused is illegal and he may be released from the custody.

IMPORTANT PARAS

Para 8. Further in case law titled as The State of Gujarat etc. Vs. Choodamani Parme Shwaran lyer and another 2023 Live Law (SC) 552 (S.C.), Hon’ble Apex Court has observed that contention of prosecution that in view of Section 69(3) of CGST Act, 2017, petitioners cannot fall back upon the limited protection against arrest. found in Sections 41 and 41A of Cr.P.C., may not be correct. The relevant paras No.41 to 43 are reproduced as under for ready reference :-

 41. Though for the purpose of summoning of witnesses and for summoning the production of documents, the Proper  Officer holding the enquiry under the CGST Act. 2017 is treated like a Civil Court, there are four other places in the Act, where a reference is made, directly or indirectly to the Cr.P.C. They are (1) the reference to Cr.P.C. in relation to search and seizure under Section 67(10) of CGST Act, 2017, (2) the reference to Cr.P.C. under sub-Section (3) of Section 69 in relation to the grant of bail for a person arested in connection to a non-cognizable and bailable offence, (3) the reference to Cr.P.C. in Section 132 (4) while making all offences under the GST Act, 2017 except those specified in clauses (a) to (d) of Section 132 (1) of CGST Act, 2017 as non– cognizable and bailable and (4) the reference to Sections 193 and 228 of IPC in Section 70(2) of the CGST Act, 2017. Therefore, the contention of learned Additional Solicitor General that in view of Section 69(3) of the CGST Act. 2017. the petitioners cannot fall back upon the limited protection against arrest. found in Sections 41 and 41A of Cr. PC., may not he correct. As pointed out earlier, Section 41-A was inserted in Cr. PC. by Section 6 of the Code of Criminal Procedure (Amendment) Act. 2008. Under sub-Section (3) of Section 41A Cr.P.C., a person who complies with a notice for appearance and who continues to comply with the notice for appearance before the Summoning Officer, shall not he arrested. In fact, the duty imposed upon a Police Officer under Section 41A(1) Cr.P.C., to summon a person for enquiry in relation to a cognizable offence, is what is substantially ingrained in Section 70(1) of the CGST Act. Though Section 69(1) which confers powers upon the Commissioner to order the arrest of a person does not contain the safeguards that are incorporated in Section 41 and 41A of Cr.P.C. we think Section 70(1) of the CGST Act takes care of the contingency.

42. In any case, the moment the Commissioner has reasons to believe that a person has committed a cognizable and non-bailable offence warranting his arrest, then we think that the safeguards before arresting a person, as provided in Sections 41 and 41A of Cr.P.C., may have to he kept in mind.

43. But, it may be remembered that Section41A(3) of Cr PC., does not provide an absolute irrevocable guarantee against arrest. Despite the compliance with the notices of appearance. a Police officer himself is entitled under Section 41.4(3) Cr.P.C. for reasons to be recorded, arrest a person. At this stage, we may notice the difference in language between Section 41A(3) of Cr.P.C’. and 69(1) Of. CGST Act, 2017. Under Section 41A(3) of Cr P.C. “reasons are to be recorded”, once the Police Officer is of the opinion that the persons concerned ought to be arrested. In contrast. Section 69(1) uses the phrase “reasons to believe”. There is a vast difference between “reasons to be recorded” and “reasons to believe.”

Para 9. In view of the above observations, this Court is of the view that prosecution was under obligation to comply with the provisions of Section 41, 41A of Cr.P.C/35 of BNSS Ac, 2023 before arresting the accused but same has not been complied and as such, arrest of accused cannot be termed as legal. In view of the matter, the application tiled on behalf of applicant/accused Yogesh Gupta is hereby allowed. Accordingly, applicant/accused Yogesh Gupta is released from custody forthwith. However, prosecution/complainant department is given liberty to re-arrest the applicant/accused after following the due procedure as described in Section 41, 4I A of Cr.P.C./35 of BNSS Act, 2023/70(1) of CGST Act. File be consigned to the record room after due compliance.