[Breaking] No Arrest of Chartered Accountant or Advocates who had filed Returns but are not beneficiary or part of fraud without any Corroborative Evidence: Punjab & Haryana HC [Read Judgment]

The Punjab and Haryana High Court had observed that, Arrest of Chartered Accountant or Advocates who had filed Returns or Otherwise Assisted in Business but are not beneficiary or part of fraud merely on the basis of the statement without any corroborative evidence linking the professional with an alleged offence should be avoided.

The Petitioner is a practising lawyer in the field of taxation. The Petitioners through instant petition sought quashing of summons dated 28.8.2019 issued by Senior Intelligence Officer Directorate General of GST Intelligence.

The Petitioner No. 2 was interrogated on 11.9.2019 & 12.9.2019 by DGGI and thereafter handed over to DRI, who arrested him. There is nothing on record showing admission by Petitioner No. 2 and no further statement has been recorded in jail though he is in judicial custody since 13.9.2019.

The Petitioner No. 1 has already put appearance on various occasions and there is nothing in file to show which indicates that Petitioner No. 1 was connected with alleged illegal refund sought by Exporters. Concededly, the Petitioner No. 1 is neither proprietor nor partner nor shareholder of any Exporter Concern/Firm/Company, who availed refund of IGST.

There is no evidence of transfer of funds in the accounts of Petitioners or withdrawal of cash by any one of them. Petitioner No. 1 is in the legal profession since 2017 and after the introduction of GST, he had not dealt with directly or indirectly with export consignments. The Respondent has produced a copy of an order dated 1.10.2019 (date of hearing 22.5.2019) passed by Tribunal wherein Petitioner No. 1 has represented Appellants as an Advocate which buttress the argument of Petitioner that he in practice and appeared as an Advocate on behalf of four exporters who availed alleged illegal refund of IGST.

The division bench comprising of Justice Jaswant Singh and Justice Lalit Batra observed that, “the persons who are having established manufacturing units and paying good amount of direct or indirect taxes; persons against whom there is no documentary or otherwise concrete evidence to establish direct involvement in the evasion of huge amounts of tax, should not be arrested prior to determination of liability and imposition of penalty. Similarly, the arrest of Chartered Accountant or Advocates who had filed returns or otherwise assisted in business but are not beneficiary or part of fraud merely on the basis of the statement without any corroborative evidence linking the professional with an alleged offence should be avoided. It is well known that if top brass of a running concern is arrested, there are all possibilities of the closure of unit which results in unemployment and wastage of precious natural resources”.

The Court also said that, “it is the case of some misunderstanding between Petitioners and officers of Respondent/DGGI who now want to implicate Petitioner and his family members. The investigation is going on for last couple of months and Respondents are unable to produce any evidence showing direct involvement of Petitioners”.

“Intention of Respondents seems only to arrest Petitioner No. 1, one way or the other, which is evident from the fact that Petitioner No. 2 was handed over to DRI without concluding investigation at least qua petitioner no.2 and there is nothing contained in different affidavits of Respondent, filed before this Court, indicating that involvement of Petitioner No. 2 is apparent from his statements”, the Court also added.

The Court also directed to Respondent not to take him in custody without prior approval of the court.