Manish Pitale JUDGMENT
Manish Pitale, J.
1. Rule. Rule made returnable forthwith. With the consent of learned counsel appearing for the parties, heard finally.
2. The petitioner has approached this Court claiming that his arrest under the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the CGST Act"), is illegal as he has been kept in custody in a bailable offence. On this basis, the petitioner seeks a direction for his release forthwith.
3. The petitioner was arrested on 30.12.2020 and he was produced before the Additional Chief Metropolitan Magistrate, Mumbai, who remanded the petitioner to magisterial custody. Respondent No. 2 proceeded against the petitioner on the basis that he had committed offence under section 132 (1) (b) (c) of the CGST Act and that since the input tax credit wrongly availed by the petitioner exceeded Rs. 500 lakh (Rs. 5 crores) and the offence was punishable with imprisonment for a term, which could extend to five years and with fine under section 132(1) (i) of the CGST Act, it was a cognizable and non-bailable offence under sub-section (5) thereof. The power to arrest the petitioner was exercised by respondent No. 2 under Section 69 of the CGST Act.
4. According to respondent No. 2, the petitioner was effectively operating four business establishments which had indulged in fake purchase invoices and sale invoices whereby bogus input tax credit was claimed to the tune of at least Rs. 11.54 crores and the amount of wrongful input tax credit passed on through fake sale invoices was not less than Rs. 9.29 crores. On the basis of such figures arrived at during the investigation initiated against the petitioner, he was put under arrest on 30.12.2020.
5. In the writ petition, it was contended that the entire action of arresting the petitioner and then his remand to judicial custody was illegal as four specific distinct legal entities were wrongly treated as one and thereupon it was wrongly treated as if the input tax credit illegally availed exceeded the figure of Rs. 5 crores. It was submitted that on a proper application of the provisions of the CGST Act to the claims of respondent No. 2, it would be clear that in the case of each of the four individual legal entities, the input tax credit allegedly wrongly availed did not exceed Rs. 5 crores and therefore, even if it was to be treated that offences under section 132 of the CGST Act had been committed, these were non-cognizable and bailable offences. On this basis, it was claimed in the Writ Petition that the arrest and continued custody of the petitioner was wholly illegal and, therefore, unsustainable.
6. Mr. Ponda, learned senior counsel appearing on behalf of the petitioner, reiterated the grounds of challenge raised in the writ petition by inviting attention of this court to the provisions of the CGST Act. Attention of this court was invited to the definition of the expression "person" as stated in section 2(84) of the CGST Act. It was submitted that under the said provision an individual, a Hindu undivided family, a company, a firm and so on were treated as distinct persons, which was significant for the present case. It was submitted that respondent No. 2 had proceeded on the basis that the four business establishments being investigated were controlled by the petitioner. But, a perusal of the documents, on the basis of which respondent No. 2 proceeded, would show that the petitioner was a propri........