The Bombay High Court recently issued notice to two officers of the State Goods and Services Tax ( SGST ) Department for ‘illegally’ arresting a businessman suspected to have fraudulently availed Input Tax Credit (ITC) of Rs.9.5 Crore.
The Bombay High Court issued show-cause notices to the Assistant Commissioner of Sales Tax, Chandar Kamble and Joint Commissioner Prerna Deshbhratar, querying their authorization to have conducted arrest despite the businessman being given time to appear before the Authorities to record his statement.
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Accused businessman Mishal Shah, had been issued summons by the GST authorities on December 20, 2024 for matters regarding suspicious transactions conducted during 2018-19. The Revenue alleged that Mishal Shah had illicitly claimed ITC of ₹9.5 Crore utilizing invoices from Manidhari Trading Co., Karnataka which had facilitated the issuance of invoices without actual supply of goods or services.
Authorities were of the view that Manidhari Trading Co. was a non-existent company that fraudulently obtained registration for the purpose of averting tax liabilities, with the claims deepened by the unearthing of questionable documentation pertaining to 199 truck deliveries conducted during 2018-19.
Following apprehension, Shah’s bank account was frozen by the tax officials, which was contested before the Bombay High Court, represented by Advocate Prasannan Namboodiri. Advocate Namboodiri submitted before the Division Bench that the Petitioner had been arrested to intimidate and penalise him for approaching the Higher Court to contest the unlawful arrest.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Order issued by the Division Bench of Justice M S Sonak and Justice Jitendra Jain reads “At least prima facie, we think that this amounts to interference with the administration of justice and consequently, might amount to a contempt of court. Yesterday (Dec 19) the matter was argued. Chandar Kamble was present in court at the time of arguments. Based on his understanding of the proceedings, it is possible that this action was taken.”
Though the petitioner had been issued summons on December 19, requiring him to appear for recording his statement on December 30, he was arrested by Assistant Commissioner of Sales Tax, Chandar Kamble who asserted that the arrest had been conducted upon authorization from Commissioner Prerna Deshbhratar.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Following the observations of the Bombay High Court, the matter was heard by the lower court where Advocate Sujay Kantawala appearing for the accused informed the lower Court of the observations made by the Division Bench.
Observing the arrest to be hasty and illegal, the lower court granted bail to Shah in consonance with the High Court’s observations.
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