In P.V. Ramana Reddy vs Union of India (2019) Telangana High Court had opined Yes arrest could be made before Adjudication in certain matters.
The Petitioners were allegedly guilty of Circular Trading by claiming ITC on material Never purchased & that Petitioners passed on such ITC to companies to whom goods were never sold.
High Court held that:
(i) Issuing Invoices or Bills without supply of goods or services or both and availing ITC by using such Invoices are Offence U/s 132 (1) (b) & (c)
(ii) offences U/s 132 are not co-related to Assessment
(iii) Prosecution for these Offences was not dependent upon completion of Assessment.
SLP against this Order was dismissed by Supreme Court.
Let's drew some basic principles
Assessment before arrest is needed when alleged amount is due to classification issue. Department has to first establish that person have evaded Taxes. - Delhi High Court [ Make My Trip vs UOI, 2016] (Login to read full case law)
Assessment is not pre-condition where Offence is U/s 132 of issuing Fake Invoices without supplies. - Telangana High Court [PV Ramana Reddy vs UOI, 2019] (Login to read full case law)
All arrest should follow safeguards laid out by Supreme Court in DK Basu vs State of West Bengal (1997). (Login to read full case law)
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Author-Abhishek Raja Ram
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