Facts of the Case

Rajesh Kanodia, a partner in M/s. Maa Dhanvarshi Enterprises, apprehended arrest in connection with a GST investigation (File No. IV(06)/11/AE/GST/RKL/2023/PT-II) alleging that the firm had fraudulently shown transactions totalling Rs. 40,64,76,121 in order to avail bogus Input Tax Credit of Rs. 8,70,16,392.

The applicant's case was that the actual mastermind behind the fraudulent transactions was his brother, Rakesh Kumar Kanodia, and that he himself was only a namesake partner in the firm.

The GST department's Senior Standing Counsel submitted that the applicant was equally involved, but fairly conceded that no steps had yet been taken to arrest him, although his statement had been recorded and a summons issued, pursuant to which he had appeared once but had not appeared subsequently.

Issues Involved

  1. Whether the applicant's apprehension of arrest was well-founded, warranting grant of anticipatory bail (ABLAPL), given that no arrest had been made or appeared imminent.

Petitioner's Arguments

  • The applicant was only a namesake partner and the entire fraudulent scheme was masterminded by his brother, Rakesh Kumar Kanodia.

Respondent's Arguments

  • The GST department submitted that the applicant was equally involved in the fraudulent availment of Input Tax Credit, though it conceded no arrest steps had been taken so far and only a summons had been issued.

Court Order / Findings

  • The Court observed that since the applicant had not been arrested and only a summons for appearance had been issued, his apprehension of custodial arrest appeared unfounded — had the investigating agency intended to arrest him, it likely would have done so already.
  • It noted the applicant appeared to have been let off after recording his statement, with only a summons pending against him.
  • The ABLAPL was disposed of by directing the applicant to appear before the Investigating Officer pursuant to the summons issued, within a week.

Important Clarification

This order is disposed of on a narrow factual basis — the absence of any imminent arrest threat — rather than any examination of the alleged Rs. 8.7 crore bogus Input Tax Credit fraud or the underlying GST-fraud mechanics. It should not be read as commenting on the merits of the fraud allegations or the applicant's culpability.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — the provisions governing Input Tax Credit and its fraudulent availment, underlying the investigation.
  • Code of Criminal Procedure, 1973 — the anticipatory bail (ABLAPL) framework under which the application was filed.

Decision – In Favour of

Disposed of on a limited basis in favour of the applicant, Rajesh Kanodia, to the extent that no coercive arrest action was directed — he was simply directed to appear before the Investigating Officer within a week; no ruling was made on the merits of the alleged fraud.

Case Details

  • Court: High Court of Orissa at Cuttack
  • Case No.: ABLAPL No. 11308 of 2023
  • Coram: Justice Sashikanta Mishra
  • Date of Order: 1 November 2023

Link to Download the Order

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