Facts of the Case

The petitioner was apprehending arrest in connection with F.No.IV(06)/11/AE/GST/RKL/2023/PT-II, corresponding to 2(C)CC No.61/2023 pending before the Court of the learned S.D.J.M.(P), Uditnagar, Rourkela. It was alleged that the petitioner is one of the partners of M/s. Maa Dhanvarshi Enterprises, which had fraudulently shown transactions totalling Rs.40,64,76,121/- in order to avail bogus Input Tax Credit (ITC) of Rs.8,70,16,392/-. The petitioner's statement had been recorded and a summons had been issued to him by the GST authorities, pursuant to which he appeared once but did not appear subsequently. Apprehending arrest, he approached the High Court seeking anticipatory bail.

Issues Involved

  1. Whether the petitioner's apprehension of arrest, in the absence of any steps actually taken to arrest him, warranted the grant of anticipatory bail or other protective direction.

Petitioner's Arguments

  • Even according to the prosecution's own case, one Rakesh Kumar Kanodia — the petitioner's brother — was the mastermind behind the fraudulent transactions.
  • The petitioner was only a namesake partner of M/s. Maa Dhanvarshi Enterprises and had no role in orchestrating the alleged bogus ITC availment.

Respondent's Arguments

  • The learned Senior Standing Counsel for GST submitted that the petitioner was equally involved in the fraudulent transactions.
  • However, it was fairly conceded that no steps had been taken to arrest the petitioner so far, although his statement had been recorded and a summons had been issued, pursuant to which he appeared once but not thereafter.

Court Order/Findings

  • The Court held that since the petitioner had not been arrested and only a summons had been issued for his appearance, his apprehension of being taken into custody appeared to be without basis — had the Investigating Agency intended to arrest him, it would already have done so.
  • The petitioner appeared to have been let off after recording of his statement, with only a summons issued against him thereafter.
  • The ABLAPL was disposed of, directing the petitioner to appear before the Investigating Officer pursuant to the summons issued to him within a week.

Important Clarification

  • Where an investigating agency in a GST fraud/bogus ITC matter has not taken any concrete step to arrest a person despite having had the opportunity to do so (e.g., after recording his statement or during his appearance pursuant to summons), an apprehension of arrest founded merely on the pendency of the investigation may not justify anticipatory bail on merits; courts may instead dispose of such applications by directing the person to cooperate and appear as summoned.
  • Such disposal does not amount to a finding on the merits of the underlying allegations of fraudulent ITC availment.

Sections Involved

  • Input Tax Credit (ITC) provisions, CGST/OGST Act, 2017 — the alleged fraudulent availment of ITC based on bogus transactions was the subject matter of the underlying GST investigation.

Decision – In Favour of

Disposed of with directions; a limited procedural relief in favour of the Petitioner. The Court did not adjudicate the merits of the alleged bogus ITC fraud, and merely directed the petitioner to appear before the Investigating Officer pursuant to the summons already issued.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Orissa, Cuttack
  • Case No.: ABLAPL No. 11308 of 2023
  • Coram: Justice Sashikanta Mishra
  • Decision Date: 01.11.2023
  • Disposal Nature: Disposed of with directions

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