Radhey Shyam Vs Assistant Commissioner (Punjab & Haryana High Court)
The petitioners approached the Punjab and Haryana High Court seeking regular bail after being summoned to face trial for offences under the Central Excise Act, 1944, the Finance Act, 1994, and read with the saving clause under Section 174 of the Central Goods and Services Tax Act, 2017. The prosecution arose from a complaint filed by the Assistant Commissioner, Central Goods and Services Tax, Hisar, alleging large-scale evasion of service tax by a company engaged in multi-level direct marketing.
According to the complaint, intelligence inputs received by the Directorate General of GST Intelligence indicated that the company was supplying various agricultural, health, and textile products through a network of direct sellers but was not properly discharging its tax liability. It was alleged that the company had not filed GST returns from March 2018 onwards. During the inquiry, statements of the Managing Director were recorded under Section 70 of the CGST Act. Although time was sought to furnish records, the petitioners allegedly failed to cooperate, leading to sealing of the company’s registered office and their subsequent arrest.
The investigation revealed that between January 2015 and September 2018, the company received approximately ₹29,59,46,96,250 from its direct sellers in the form of membership fees, joining charges, platform access fees, and business support services. These receipts were treated as consideration for taxable services. While invoices were issued only when goods were delivered, the company allegedly provided taxable services of enrolling members by allotting unique user IDs for consideration of ₹3,750 or ₹7,500 per transaction. The authorities concluded that service tax at the applicable rate of 15% was payable but had not been deposited.
