Case Law Details

Case Name : Kashmir Kumar Agrawal Vs State of Odisha (Orissa High Court)
Appeal Number : BLAPL No. 9462 of 2020
Date of Judgement/Order : 15/11/2021
Related Assessment Year :

Kashmir Kumar Agrawal Vs State of Odisha (Orissa High Court)

Facts- The prosecution allegation is that the petitioner claims to be the Director of the company named M/s. Madhusmita Steel Industries Pvt. Ltd. which is a fictitious entity.

The petitioner is in custody since 17.08.2020. P.R. was submitted on 09.10.2020 keeping the investigation open. From the report filed by the prosecution on 02.07.2021, it is seen that further investigation is still in progress. The question is, can this be a ground to deny bail to the accused indefinitely.

Conclusion- It should be kept in mind that the offences under Section 132(1)(b)(c)&(i) of the CGST Act are punishable with a maximum punishment of five years Rigorous Imprisonment. Therefore, investigation ought to be completed within 60 days as per Section 167 Cr.P.C. Of course, Section 173(8) Cr.P.C. permits the investigating agency to keep the investigation open. But the same, if not concluded for an indefinite period, cannot obviously be cited as a ground to detain the accused in custody. As is seen, the initial prosecution report was filed way back on 09.10.2020 and till date further investigation is said to be in progress. Thus, more than a year has elapsed from the date of submission of initial P.R.. This cannot be a ground to detain the accused in custody indefinitely.
In result, the application for bail is allowed.

FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT

Heard Mr. R.P. Kar, learned counsel for the petitioner and Sri Sunil Kumar Mishra, learned Additional Standing Counsel for CT & GST.

2. The petitioner is in custody since 17.08.2020 in connection with 2(c)CC Case No. 38/2020 pending in the court of learned S.D.J.M., Panposh corresponding to GST and CT Enforcement Unit, Rourkela Case No. 1/2020­-2021 for the alleged commission of offence punishable under Section 132(1)(i) of Odisha Goods and Services Tax Act, 2017 (hereinafter referred to as OGST Act).

3. The prosecution allegation is that the petitioner claims to be the Director of a company named M/s. Madhusmita Steel Industries Pvt. Ltd. Rourkela, which is a fictitious entity. It is alleged that the petitioner effected purchase of goods worth Rs.100.44 crores and availed Input Tax Credit (ITC) of Rs.18.08 crores and passed on ITC worth Rs.19.78 crores against sale of Rs.109.88 crores. Thus, the total ITC availed and passed on by the accused in his individual capacity against the name of the said company comes to Rs.37.86 crores. However, there was neither any purchase nor sale of goods and that the transactions were made only on paper with a view to illegally avail ITC. Similarly, it is alleged that the petitioner acting in collusion with other persons created 17 fictitious firms and availed bogus ITC of Rs.117.25 crores on the basis of fake purchase invoices and passed on bogus ITC of Rs.130.78 crores on the basis of fake sale of goods both inside and outside the State of Odisha. In the process, the accused defrauded the exchequer to the tune of Rs.248.03 crores. Thus, the petitioner availed and passed on total ITC to the tune of Rs.285.89 Crores thereby, committing the offence under the aforementioned section of OGST Act.

The alleged fraud having come to light, the above mentioned case was registered and upon sanction accorded by the Commissioner of GST, the accused and other persons involved in the occurrence were prosecuted. As already stated, the accused was arrested and taken into custody on 17.08.2020 during investigation. The prosecution report was submitted on 09.10.2020 by the Deputy Commissioner of State Tax Enforcement Unit, Rourkela (Investigating Officer) against the accused-petitioner with a request to keep the investigation open for addition of new materials and evidence.

4. Sri R.P. Kar, submits that even assuming that there is a prima facie case against the petitioner, fact remains that the prescribed punishment for the alleged offence is only five years and the accused has in the meantime stayed more than one year in custody. Since the prosecution report has already been submitted, there should be no impediment in directing release of the petitioner. Mr. Kar further contends that the master mind of the entire transaction as per the prosecution report was one Atul Bansal, who, being similarly prosecuted for the same offence and facing trial in 2(c)CC No. 6/2019 pending in the court of learned JMFC, Chandikhol corresponding to GST and CT Enforcement Wing, Jajpur, Jajpur Road Case No. 1/2019-20, has since been granted bail by this court vide order dated 06.03.2020 passed in BLAPL No. 9529 of 2019. It is also contended that there is no scope of tampering of evidence as all the information and records are stored in electronic form and within the knowledge and possession of the prosecution and as such, any further custodial interrogation is not necessary. That apart, the petitioner being a permanent resident of Rourkela, there is hardly any chance of his absconding and on the contrary the petitioner undertakes to cooperate with the prosecution as and when necessary. Finally, Mr. Kar submits that the petitioner does not have any criminal antecedents. On such grounds it is prayed that the accused should also be similarly treated and released on bail.

Bail granted in fictitious entity investigation as petitioner was in custody for more than a year

5. Sri Sunil Kumar Mishra, learned Addl. Standing Counsel for CT & GST on the other hand, has vehemently opposed the prayer for bail by submitting that even though prosecution report has been submitted, investigation was kept open and that further investigation is presently in progress. It is further submitted that investigation so far has revealed that the fraud played by the accused has had its effect not only in Odisha but also in several States. Therefore, having regard to the modus operandi adopted by the accused and his intention of defrauding the State exchequer, it can be reasonably assumed that after release, he will seek to tamper with the evidence. It is further argued that the case of co-accused-Atul Bansal cannot be equated with that of the present accused, inasmuch as, after being granted bail, the said Atul Bansal violated the conditions imposed, for which the trial court has issued NBW against him, against which he has approached this court in CRLMC No.1702 of 2022, which is presently pending. It is further submitted by Mr. Mishra that it would be evident from the prosecution report that the present petitioner had not cooperated with the investigation and therefore, such conduct disentitles him from bail as he may not cooperate with the investigating agency even now when further investigation is in progress. Citing the above grounds, Mr. Mishra has forcefully argued that the accused petitioner should not be granted bail.

6. Before delving into the merits of rival contentions it would be apt to mention that both parties have referred to several decisions to buttress their respective points.

Mr. Kar has referred to the order of bail passed by this court in favour of the co-accused- Atul Bansal. Mr. Kar has also referred to some other orders passed by this court, all of which involve the offence under Section 132(1)(b)(c)&(i) of OGST Act, 2017, such as, BLAPL No.4125 of 2020 (Pramod Kumar Sahoo vs. State of Odisha), BLAPL No. 4266 of 2020 (Bikash @ Vikas Sarawgi vs. State of Odisha), BLAPL No. 6643 of 2020 (Amit Beriwal vs. State of Orissa), BLAPL No. 3175 of 2021 (Subash Chandra Swain vs. State of Odisha), BLAPL No. 4687 of 2020 (Kamal Pasati vs. Union of India), and BLAPL No. 7260 of 2019 (Rajesh Kumar Mishra vs. Union of India). It is observed that in all the cases, the concerned petitioners, being involved in cases involving commission of offence punishable under Section 132(1)(b)(c)&(i) of OGST Act have been granted bail.

7. On the other hand, Mr. S.K. Mishra, has referred to the decision of the apex court in the case of Y.S. Jagan Mohan Reddy vs. Central Bureau of Investigation reported in (2013) 55 OCR (SC) 825; State of Gujarat vs. Mohanlal Jitamalji Porwal reported in AIR 1987 SC 1321; Nimmagadda Prasad vs. Central Bureau of Investigation, reported in (2013) 7 SCC 466; and judgment of this Court in BLAPL No. 7580 of 2018 (Mrs. Leena Mahesh Motewar vs. Republic of India); and BLAPL No. 5883 of 2021 (Smruti Ranjan Sahoo vs. State of Odisha).

8. The ratio laid down in the aforementioned cases decided by the apex Court as cited by Mr. Mishra mainly postulates that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail and that the entire community is aggrieved, if the economic offenders, who ruin the economy of the State are not brought to book.

In the case of Leena Mahesh Motewar (supra), this court held that there is no absolute hidebound rule that bail must necessarily be granted to the co- accused when another co-accused has been granted bail.

9. This Court is fully conscious of the ratio laid down in the cases referred above but then, it is also the settled position of law that bail is basically a matter of judicial discretion, for which the facts and circumstances of each case would have to be considered whether to grant bail or not. As has been held by the apex court in the case of Gurucharan Singh and others vs. State (Delhi Administration) reported in AIR 1978 SC 179, there cannot be an inexorable formula in the matter of granting bail.

The position of law as laid down in the cases of Y.S. Jagan Mohan Reddy (supra), Mohanlal Jitamalji Porwal (supra) and Nimmagadda Prasad (supra), is that economic offences must be viewed with a different approach in the matter of bail, but it has nowhere been laid down as an inflexible rule that bail should not be granted in economic offences.

As regards the observation of this court in the case of Leena Mahesh Motewar (supra), while being in respectful agreement with the above proposition, this Court is of the humble view that in the case of Leena Mahesh Motewar (supra) it has merely been reiterated that the principle of parity cannot be applied in all cases, but it has not been held that such principle cannot be applied in any case. On the principle of parity, the Apex Court in a recent decision reported in (2021) 6 SCC 230, (Ramesh Bhavan Rathod vs. Vishanbhai Hirabhai Makwana (Koli) and another) have observed as follows:

“In the event that parity is claimed in such a case thereafter, it is for that court before whom parity is claimed to determine whether a case for the grant of bail on reasons of parity is made out.”

Therefore, the case of Leena Mahesh Motewar (supra) cannot be taken as a bar to consider the grant of bail to the accused on grounds of parity in the case at hand.

10. The facts of the case may now be considered in the backdrop of the aforementioned legal propositions.

The petitioner is in custody since 17.08.2020. P.R. was submitted on 09.10.2020 keeping the investigation open. From the report filed by the prosecution on 02.07.2021, it is seen that further investigation is still in progress. The question is, can this be a ground to deny bail to the accused indefinitely. It should be kept in mind that the offences under Section 132(1)(b)(c)&(i) of the OGST Act are punishable with a maximum punishment of five years Rigorous Imprisonment. Therefore, investigation ought to be completed within 60 days as per Section 167 Cr.P.C. Of course, Section 173(8) Cr.P.C. permits the investigating agency to keep the investigation open. But the same, if not concluded for an indefinite period, cannot obviously be cited as a ground to detain the accused in custody. As is seen, the initial prosecution report was filed way back on 09.10.2020 and till date further investigation is said to be in progress. Thus, more than a year has elapsed from the date of submission of initial P.R.. This cannot be a ground to detain the accused in custody indefinitely.

As regards the contention that the case of co-accused Atul Bansal and the present case stand on different footings, Mr. Kar has referred to the prosecution report to contend that the said Atul Bansal has been categorically mentioned as being the master-mind of the entire fraudulent transactions. Mr. Kar has drawn attention of this Court to paragraphs, 8, 9, 13, 15, 17 and 18, the Observation-A at page 43, Summary of Findings at page 141 & 142, 193, and the Concluding Observation at page 195-196 of the prosecution report, wherein accused Atul Bansal has been described as the mastermind. On such basis, it is contended by Mr. Kar that if the mastermind has been granted bail, there is no reason why the same benefit should not be granted to the present accused, who according to the prosecution, was merely acting at his instance.

Without expressing any opinion on this point, this Court is of the considered view that since the transactions in question were basically one and the same involving the present petitioner and the co-accused Atul Bansal, there is hardly any justification to treat the petitioner differently than him.

11. Coming to the apprehension of the prosecution that the present petitioner may tamper with the evidence, this Court is unable to accept the same for the reason that a bare perusal of the prosecution report would suggest that the same was submitted after thorough investigation during which several documents and records were verified and statements collected from different persons. The report of further investigation also suggests that the same has been/is being conducted in different States whereby, several incriminating materials have supposedly been discovered. It is not specifically put forth by the prosecution as to how the accused can possibly tamper with the evidence that has already been collected against him and which are basically document-based and also stored in electronic form. Thus, the apprehension expressed by the prosecution does not appear to be reasonable for being considered as a ground to refuse bail to the petitioner.

The further apprehension that given his past conduct the accused may not cooperate with the investigation, also does not seem to be well founded because cooperating in the investigation can always be laid down as a condition for his release on bail and in the event the accused violates such condition it would always be open to the prosecution to seek cancellation of the bail but only on such apprehension, bail cannot be denied.

12. From the foregoing discussion, therefore, this Court finds that the petitioner has been successful in making out a good case for his release on bail. On the other hand, the prosecution has failed to satisfy the court as to how it would be prejudiced by grant of bail to the petitioner.

13. In the result, the application for bail is allowed. It is directed that the petitioner shall be released on bail by the court in seisin over the matter on such terms and conditions as may be imposed by it including the following conditions:

(i) The accused shall not leave the territorial jurisdiction of Sundargarh district without leave of the court in seisin of the matter.

(ii) He shall fully cooperate with the ongoing further investigation and make himself available as and when required for such purpose.

14. BLAPL is accordingly disposed of accordingly.

Download Judgment/Order

Author Bio

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Telegram

taxguru on telegram GROUP LINK

Review us on Google

More Under Goods and Services Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

May 2022
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
3031