The Bombay High Court has issued contempt notice to state tax officer for illegal arrest of a businessman who was allegedly involved in wrongful availment of Input Tax Credit (ITC) worth Rs. 9.5 crores.
The bench of Justice M.S. Sonak and Justice Jitendra Jain has observed that as per the Arrest Memo the authorisation for this arrest was obtained on 20 December 2024 itself and the Petitioner Mishal J Shah was arrested at 7.55 am on 20 December 2024 itself, amounts to interference with the administration of justice, and consequently, might amount to a Contempt of Court.
It was alleged by the department that the accused/businessman was indulged in fraudulent activities of wrongfully availing or utilising input tax credit using invoices from GSTIN cancelled suppliers who have issued invoices or bills without supply of goods or services.
The taxpayer has affected inward supplies of Rs. 53.02 crores without actual movement of goods or services in violation of provisions of MGST Act, 2017 leading to wrongful availment or utilisation of non genuine input tax credit at Rs. 9.54 crores.
The department has filed an application before Additional Chief Judicial Magistrate, Mumbai seeking judicial custody of the accused till completion of pending investigation by the complainant.
Dr. Sujay Kantawala, the Counsel for the accused submitted that the summons was issued to the accused calling for recording his statement on 30.12.2024. The writ petition was pending in the Bombay High Court challenging the bank account freezing. Accused has been co-operating and attended the officers in his office on 28.11.2024 and 29.11.2024 when officers conducted inspection of premises. Hence, no reason to believe existed for arresting illegally and hasty manner.
The lower court strongly observed that the arrest is in a hasty and illegal manner and so arrest is illegal. Hence, accused cannot be taken in judicial custody and is liable to be released.
The Petitioner, Mishal J Shah has been placed under arrest. This is despite the fact that by communication dated 19 December 2024, Mr. Chandar Kamble, the Assistant Commissioner of State Tax, had issued a summons to the Petitioner Mishal Jaswant Shah to remain present for recording his statement at 30 December 2024 at 11.00 am. This summons was served upon the Petitioner at 6.00 pm on 19 December 2024 i.e. after the hearing before the Court.
From the Arrest Memo dated 20 December 2024, it is apparent that this Arrest Memo is signed again by Mr. Chandar T Kamble, the Assistant Commissioner of State Tax. The Arrest Memo shows that the authorisation for this arrest was obtained on 20 December 2024 itself and the Petitioner Mishal J Shah was arrested at 7.55 am 20 December 2024 on itself.
The court prima facie, observed that it amounts to interference with the administration of justice and consequently, might amount to a Contempt of Court.
The court posted the matter on 06 January 2025. Before that date, the Commissioner should consider and dispose of the Petitioner’s objections/representation dated 11 December 2024 made in Form GST DRC-22A under Rule 159(5) of the MGST Rules. For this, the Commissioner must give a hearing to the Petitioner and pass a speaking order.
Read More: GST Weekly Flashback: 16 December 2024 to 22 December 2024
Case Details
Case Title: Mishal J Shah HUF Versus State of Maharashtra & ors.
Case No.: Writ Petition (L) No.38480 Of 2024
Date: 20 December 2024
Counsel For Petitioner: Pratibha Namboodiri
Counsel For Respondent: Jyoti Chavan
