Vague Arrest Memo, Allahabad High Court Grants Bail To Accused In Fake GST ITC Worth Rs.88 Crores

The Allahabad High Court has granted bail to the person allegedly involved in the creation of 92 fake GST Forms and the passing of fake Input Tax credits (ITC) to the tune of Rs. 88 crore.

The bench of Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastava has observed that even in the arrest memo, the Department is not sure as to what offence has been committed by the petitioner, and they have used the words "clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 of the GST Act, 2017".

The petitioner challenged Section 69 of the Central Goods and Service Tax Act, 2017 as unconstitutional. The challenge was mainly on the ground that the provision is arbitrary and ultra vires of Articles 14 and 21 of the Constitution of India.

The petitioner has also prayed for the summoning of records and the setting aside of his illegal arrest made purportedly under the impugned Section 69 of the CGST Act, 2017. The petitioner has challenged the arrest dated 27.6.2023.

The department alleged that the petitioner was the mastermind who was involved in the creation of 92 fake GST Forms and the passing of fake Input Tax Credit (ITC) to the tune of Rs. 88 crores. Searches of the premises of 16 firms have confirmed that they are not operational. The statement of the petitioner was recorded, and on the basis of incriminating evidence, the petitioner has been arrested.

The petitioner submitted that even the remand application, which narrates the allegation for forming reasons to believe the commission of the offence, is silent about the 'necessity to arrest' and compliance with Section 41 (1) CrPC.

The court noted that the conduct of the Department shows that they are satisfied with the interrogation made by them and may not be interested in further interrogating the petitioner. The assurance has been given by the petitioner that he will cooperate in the investigation and will not, in any manner, hamper it.

The court, while granting bail to the petitioner, directed that the petitioner shall cooperate in the investigation in all possible manners and will produce himself before the Investigating Team as and when required, except in unavoidable circumstances.

Case Title: Ashish Kakkar vs. UOI [WRIT TAX No. - 834 of 2023]

Case Citation: 2023 LiveLaw (AB) 223

Counsel For Appellant: Raghav Dev Garg

Counsel For Respondent: Dhananjay Awasthi

Click Here To Read The Order