Completion of assessment was not precondition for arrest under Section 69(1) of 2017 Act.

Completion of assessment was not precondition for arrest under Section 69(1) of 2017 Act.

Goods & Services Tax

Revenue Power to arrest — Punishment for certain offences — Preconditions — Assessee filed instant writ submitting that power of arrest under Section 69(1) of the of Central Goods and Service s Tax Act, 2017 c ould be exercised only after completion of assessment — Held, Division Bench of this Court in P.V. Ramana Reddy vs. Union of India (2019) 03 CCHGST 0205 ( Tel - HC ) had held that list of offences included in sub- s ection (1) of s ection 132 of the of Central Goods and Service s Tax Act, 2017 have no co-relation to assessmen t; prosecutions for these offences did not depend upon completion of assessment ; hence, it could not be accepted that there could not be an arrest even before adjudication or assessment — In view of said decision, w hen very arrest of assessee was not prohibited prior to completion of assessment, any coercive action lesser than arrest, could not also be said to be prohibited — Petition dismissed.

1. M/s VS Ferrous Enterpriseq Private Limited, Plot No. 18, Nagarjuna Hills, Panjagutta, Hyderabad repredented by Director Seshagiri Rao lppagunta.


2. Seshagiri Rao lppagunta, R/o Plot No.53/A, Road No. 11, Baba Temple, Film Nagar, Shaikpet, Hyderabad-500096 Petitioners.


AND


1. Union of lndia, Ministry of Finance Department of Revenue, represented by Secretary, North Block, New Delhi.


2. Commissioner of Central Excise and Service Tax, Hyderabad-1, Commissionerate, Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad-500034.


3. Superintendent (Anti Evasion) GST Bhavan, LB Stadium Road, Basheer Bagh, Hyderabad-500034.


Respondents.


Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction more particularly one nature of writ of prohibition.


lA NO: 1 OF 2019


Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the respondents not to take any coercive action unless notice u/s 73(1) or 74(1) of the CGST Act, 2017 as the case maybe, is issued and reply considered, pending disposal of WP 10350 of 201 9, on the file of the High Court.


The petition coming on for hearing, upon perusing the Petition and the affidavit filed in support thereof and the orders of the High Court dated 5-05-2019 made herein and upon hearing the arguments of M/s. A. CHANDANA Advocate for the Petitioners, Sri K.M.Natraj (AST SOL GEN), for the Respondents.


i)[ 3156 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD for a declaration that the power of arrest under section 69(1) of the CGST Act can be exercised only after the completion of the assessment in accordance with the provisions of the CGST Act and the raising of a demand on him and only if it is found necessary to arrest the person concerned having regard to his failure to comply with the summons issued by the CGST authorities and.


ln the alternative, that the provisions of section 69(1) and 132 of the CGST Act be declared u nconstitutional, bad in law and null and void and Issue a writ of prohibition to the respondents restraining them from acting in contravention to the interpretation of Section 69 and Section 132 in prayer (a) and for such further and other reliefs as may be considered appropriate, in the circumstances of the case Y


Between:


1. M/s.Bharani Commodities, Plot No.48, Nagarjuna Hills, Punjagutta, Hyderabad represented by its Proprietor Sri J.S.Sridhar Reddy.


2. Jagannagari Satya Sridhar Reddy, S/o J.Satya Reddy, aged about 50 years, Rl/o DzlA,2no Floor, Celestial Grand, Road No.1, Opp. Vengalrao Park, Beside Puma Showroom, Road No.1, Banjara Hills, Hyderabad.


AND Petitioners


1. Union of lndia, Ministry of Finance Department of Revenue, represented by Secretary, North Block, New Delhi.


2. Commissioner of Central Excise and Service Tax, Hyderabad-|, Commissionerate, Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad-500034.


3. Superintendent (Anti Evasion) GST Bhavan, LB Stadium Road, Basheer Bagh, Hyderabad-S 00034.


Respondents.


Petition under Article 226 o'f the Constitution of lndia praying that'in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction more particularly one nature of writ of prohibition.


a) for a declaration that the power of arrest under section 69(1) of the CGST Act can be exercised only after the completion of the assessment in accordance with the provisions of the CGST Act and the raising of a demand on him and only if it is found necessary to arrest the person concerned having regard to his failure to comply with the summons issued by the CGST authorities and.


b) ln the alternative, thatthe provisions of section 69(1) and '132 of the CGSTAct be declared unconstitutional, bad in law and null and void and.


i) Declare that the statements made by the petitioner before the respondents are not admissible in evidence.


ii) Compensate the petitioner appropri respondents,


J tely for wrongful confinement by the


iii) for such further and other reliefs as may be considered appropriate, in the circumstances of the case.


Petition under Sectibn '151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the respondents not to takq any coercive action unless notice u/s 73('1) or 74(1) of the CGST Act, 2017 as the case maybe, is issued and reply considered, pending disposal of WP 1035'1 of 2019, on the file of the High Court.


The petition coming on for hearing, upon perusing the Petition and the affidavit filed in support thereof and the orders of the High Court dated 15-05-2019 made herein and upon hearing the arguments of M/s. Prashant Kalli, Advocate for the Petitioners, Sri K.M.Natraj (AST SOL GEN), for the Respondents.

c) lssue a writ of prohibition to the respondents restraining them from further acting in contravention to the interpretation of Section 69 and Section 132 in prayer (a) and


lA NO: 1 OF 2019

/' Between:

1. BRS Enterprises and Trading Limited, #2, Beside Nuzen Hair Oil, Police Station Road, IDA Bollaram, Jinnaram Mandal, Medak District. Telagana-502325, rep. by its Director K. Raji Reddy, S/o. K. Bakvanta Reddy, aged about 46 years, R/o. 6- 3-15/3, New Boiguda, Secunderabad - 500 003. 2. K. Raji Reddy, S/o. K. Bakvanta Reddy, aged about 46 years, R/o 6-3-1 5/3, New Boiguda, Secunderabad - 500 003 Petitioners


AND


1. Union of lndia, Ministry of Finance, Department of Revenue, represented by its Secretary, North Block, New Delhi.


2. Commissioner of Central Excise and Service Tax, Hyderabad-l Commissionerate, Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad-500034.


3. Superintendent (Anti Evasion) GST Bhavan, LB Stadium Road, Basheer Bagh, Hyderabad-500034 Respondents


Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction by


a) Declaring the provisions contained in Section 67(1 0), 69(1), 70, '132(5) and 135 of the CGST Act, 2017 as ultra vires the Constitution of lndia being Violative of Article 14 and 21 of the Constitution, and


b) Alternatively, the provision contained in Section 69(1) of the CGST Ac|,2017 be read down in a manner that the power of arrest u/s 69(1) cannot be exercised unless notice u/s 73(1) or 74(1) ot the CGST Act, 2017, as the case may be, is issued and a determination of evasion of tax made under the aforesaid provisions. and.


c) lssue a writ of prohibition restraining the respondents from exercising their power of arrest u/s 69 against the directors/promoters and the employees of the petitioner company.


Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the respondents 2 and 3 not to exercise power of arrest as against the 1st petitioner, its officers and directors unless notice u/s 73(1 ) or 74(1) of the CGST Act, 2017 as the case may be, is issued and reply considered and adjudicatory order in the form of assessmenUre-assessment, pending disposal of WP 10354 of 2019, on the file of the High Court.


The petition coming on for hearing, upon perusing the Petition and the affidavit filed in support thereof and the orders of the High Court dated 15-05-2019 made herein and upon hearing the arguments of M/s. Dida Vi.jayakumar, Advocate for the Petitioners, Sri K.M.Natraj (AST SOL GEN), for the Respondents, and the Court made the following.


ORDER:


Heard counsel for petitioners and Sri K.M.Natraj, Additional Solicitor General appearing for respondents.


In all these Writ Petitions, the constitutional validity of Sections 67(10), 69(1), 70, 132(5) and 135 of the Central Goods and Service Tax Act, 2017(for short 'the Act') is challenged.


However, the main contention being raised by the petitioners is that power of arrest under Section 69(1) of the Act can be exercised only after completion of.

This point was raised by the petitioners in W.P.No.10350 of 2019 and others in W.P.No.5130 of 2019 and batch before this Court and a Division Bench of this Court had dismissed the said Writ Petitions declaring as under in paras 52 and 61 there of:


"52. But, to say that a prosecution can be launched only after the completion of the assessment, goes contrary to Section 132 of the CGST Act, 2017. The list of offences included in sub-Section (1) of Section 132 of CGST Act,2017 have no co-relation to assessment.


lssue of invoices or bills without supply of goods and the availing of ITC by using such invoices or bills, are made offences under clauses (b) and (c) of sub-Section (1) of Section 132 of the CGST Act. The prosecutions for these offences do not depend upon the completion of assessment. Therefore, the argument that there cannbt be an arrest even before adjudication or assessment, does not appeal to us.


61. ln view of the above, despite our finding that the writ petitions are maintainable and despite our finding that the protection under Sections 41 and 41-A of Cr.P.C., may be available to persons said to have committed cognizable and non-bailable offences under this Act and despite our finding that there are incongruities within Section 69 and between Sections 69 and 132 of the CGST Act, 2017, we do not wish to grant relief to the petitioners against arrest, in view of the special circumstances which we have indicated above,"


These orders were challenged by the petitioners therein in Special Leave to Appeal(Crl.)No.4430 of 2019 and Batch before the Supreme Court and on 27,05:2019, a Bench piesided over by the Hon'ble the Chief Justice of lndia dismissed the said Special Leave Petitions, Therefore, when the very arrest of the petitioners is not prohibited prior to the completion of the assessment, any coercive action lesser than arrest, can not also be said to be prohibited.


Accordingly, the interim order granted on 15.05.2019 in W.P.No,10350 of 2019 is vacated.


Since the petitioners in W.P.Nos.10351 of 2019 and 10354 of 2019 stand on the same footing as the petitioners in W.P.No.10350 of 2019, the interim order obtained by the petitioners in W.P.Nos.1035'l ot 2019 and 10354 of 2019 on 15.05.2019 on 15-05-2019 cannot also stand, and they are also accordingly vacated.


List the Writ Petitions on 03.06.2019 in ML.


. SOI- N.PURUSHOTHAM REDDY


ASSIS ANT REGISTRAR


TRUE COPY FoT AS;SISTANT REGISTRAR


The Secretary, Union of lndia, Ministry of Finance Department of Revenue, North Block, New Delhi.


Commissioner of Central Excise and Service Tax, Hyderabad-|, Commissionerate, Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad-500034.


Superintendent (Anti Evasion) GST Bha'ian, LB Stadium Road, Basheer Bagh, Hyderabad-500034 (1 to 3 by RPAD)

To, the assessment in accordance with the provisions of the Act and on raising of a demand on the petitioners, and only if it is found necessary to arrest the person having regard to his failure to comply with the summons issued by the CGST authorities.


4. One CC to M/s, CHANDANA ADAMALA, Advocate [OPUC] 5. One CC to SRI K.M.Natraj (AST SOL GEN) Advocate [OPUC] 6. Two spare copies.


7. One CC to M/s. Prashant Kalli, Advocate. (OPUC)


8. One CC to M/s. Dida Vijayakumar, Advocate. (OPUC)


HIGH COURT MSRJ & ARRJ DATED:29/05/2019


List the Writ Petitions on 03.06.2019 in ML.


ORDER


WP.Nos.10350, 10351 & 10354 of 2019

INTERIM ORDERS VACATED

LEGAL REFERENCES
Section 1 Section 2 Section 151 Section 73(1) Section 132 Section 69 Section 61 Section 52 Section 41 Section 69(1) Section 67(10) Section 00034 Section 73('1) Section 67(1 0) Section 73(1 )
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