GST Evasion accused released on regular bail after 2½ years

Manish Vs State of Haryana (Punjab and Haryana High Court)

Facts- The petitioners are alleged to have floated bogus firms and by entering into bogus transactions with bigger firms, they were getting huge amounts deposited in the bank accounts of the bogus firms so floated and were eventually facilitating the big firms to save on GST in a fraudulent manner and thus, deprived the State Exchequer of the GST which was legitimately due. It was informed that the said accused were moving about in Hyundai ‘i20’ car while carrying laptops and were waiting for someone near the T-point railway line, Grain Market.

Conclusion-  The petitioner has been behind the bars for a substantial period of 2 ½ years. It is held that no useful purpose would be served by further detaining the petitioners behind bars who have been in custody for the last about 2 ½ years. Consequently, the petitions merit acceptance and are hereby accepted, and the petitioners are ordered to be released on regular bail on their furnishing bail bonds/surety bonds to the satisfaction of the learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned.

FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT

This order shall dispose off the above mentioned three regular bail petitions filed on behalf of Manish, Rajesh and Inder Partap Singh as they arise out of the same FIR i.e. FIR No.571 dated 4.6.2019 under Sections 259, 419, 420, 467, 468, 471/120-B IPC at Police Station Chandni Bagh, District Panipat.

2. The instant FIR was lodged at the instance of ASI Vinod Kumar wherein it has been alleged that on 4.6.2019 when he along with other police officials was present near grain market bridge in connection with patrolling, then he received a secret information to the effect that one Rajesh Mittal, Inder Partap Singh and Manish are committing huge loss to the exchequer on account of fraudulent and bogus transactions. The information was further to the effect that the said accused float bogus firms and by entering into bogus transactions with bigger firms, they were getting huge amounts deposited in the bank accounts of the bogus firms so floated and were eventually facilitating the big firms to save on GST in fraudulent manner and thus, deprived the State Exchequer of the GST which was legitimately due. It was informed that the said accused were moving about in Hyundai ‘i20’ car bearing registration No. HR-06AJ-2474 while carrying laptops and were waiting for someone near T-point railway line, Grain Market.

3. It is the case of prosecution that pursuant to receipt of said information, the police conducted raid at the nominated place and was able to apprehend the accused Rajesh Mittal, Inder Partap Singh and Manish and from whose possession, laptops, cheque books, fake rubber stamps of ETO and of DTC and various files of bogus firms were recovered. The car in which the accused were travelling was found to be registered in the name of Vipul Jindal, brother-in-law of Rajesh Mittal. During investigation, it was revealed that it is Rajesh Mittal, who is the kingpin of the racket of evasion of GST and who had prepared forged bills purported to have been issued by M/s Lalit Trading Company which was infact previously a defunct company. As per the said bogus bills issued in favour of 18 firms which had been constituted and registered by the accused themselves for the purpose of commission of offences, sale of yarn by M/s Lalit Trading Company was shown to have been made to the said 18 firms. Upon investigation, it was found that the said 18 firms had been incorporated/registered by associating persons of limited means like rickshaw pullers etc. and were actually not businessmen. Upon investigation, it further transpired that the 18 firms so constituted by the accused had further issued bills in favour of 421 different industrial units based in Panipat and the said industrial units of Panipat, on the basis of such bills which also reflected payment of GST had inflated their expenditure and payment of GST though infact such expenditure had never been actually incurred. In other words, such industrial units of Panipat were evading payment of a substantial amount of GST on the ground that the initial supplier i.e. M/s Lalit Trading Company had already charged GST. Although, the payments by the said industrial units used to be made by the aforesaid bogus 18 firms by way of banking transactions but the said amount used to be withdrawn from the accounts of the said firms by the accused and used to be given back to the industrial units of Panipat after retaining a certain percentage. It is the case of prosecution that fraudulent transactions of colossal amount of more than `1325 crores had been effected ultimately leading to a loss of about `80 crores to the State Exchequer in the shape of evasion of payment of GST.

4. The learned counsel representing the accused has submitted that there is no concrete evidence worth credence to establish their involvement in the alleged scam and that they have falsely been implicated in the instant case. The learned counsel has further submitted that it is infact a case of double jeopardy wherein the petitioners are also being prosecuted separately in a complaint lodged under provisions of Section 132 of GST wherein they have already been granted bail. The learned counsel has further submitted that although the case of the prosecution is that the accused had caused a loss to State Exchequer to the tune of about ` 80 crores but infact the entire loss has already been made good by the industrial units of Panipat who infact were the beneficiaries and were infact the real accused. It has further been submitted that the petitioners, in any case, have been behind bars since the last about 21/2 years and in these circumstances deserve the concession of bail, particularly when the amount allegedly defrauded has already been recovered back.

5. Opposing the petition, the learned State counsel has submitted that the present FIR has been lodged in respect of the allegations of cheating and forgery which are not part of the complaint lodged under provisions of Section 132 of the GST Act and that as such, the instant FIR can very well separately proceed and it cannot be termed to be a case of double jeopardy. The learned State counsel has further submitted that during the course of investigation, the police has been able to collect definite information which clearly shows that the 18 firms in question had been constituted and registered by the petitioners as at the time of registration of several of these 18 firms, the e-mail ID, telephone numbers and other particulars are same and infact even the bank accounts in respect of several of the firms are also being operated by the same person, being authorized signatory.

6. The learned State counsel, in this regard, has drawn attention of this Court to a tabulated statement in respect of the 18 firms floated by the accused which reads as follows :

7. The learned State counsel has submitted that Rajesh Mittal is the kingpin of the scam and had registered himself as primary authorized signatory in respect of 5 out of the 18 fake firms and had furnished his mobile number and e-mail ID in respect of most of the said firms at the time of registration. It has further been submitted that incriminating evidence in the shape of bogus stamps of Excise and Taxation Department etc. had been recovered at the instance of Rajesh Mittal which clearly reflects on his culpability. It has been submitted that Manish and Inder Partap Singh are close associates of the main accused Rajesh Mittal and that while the firm M/s Ansh Hospitality stands registered in the name of Manish, the firm M/s Shree Balaji Wooltex stands registered in the name of Inder Partap Singh. The learned State counsel has submitted that there are instances of transfer of money to the personal accounts of the aforesaid petitioners from the account of the fake firms which shows their complicity. The learned State counsel has, however, informed that an amount of approximately `6 crores has already been recovered by way of compounding from the industrial units of Panipat who had benefited from the bogus bills issued by the petitioners. The learned State counsel has also submitted that ever since the dismissal of earlier petition on 25.2.2020 by this Court, there has been no substantial change in circumstance so as to justify grant of bail at this stage.

8. The learned State counsel has, however, not disputed the fact that the petitioners have been behind bars since the last about 2 1/2 years and that till date even the charges have not been framed, though challan was presented on 10.8.2019.

9. I have considered rival submissions addressed before this Court.

10.The evidence collected during the course of investigation certainly points towards the complicity of the petitioners, particularly the fact that bogus firms have been registered while furnishing e-mail ID and phone numbers of the accused. Still further, in various of the firms, it is Rajesh Mittal, who is the authorized signatory. Further, transfer of amounts in the personal bank account of the accused from the accounts of the firms would also nail the accused as regards their guilt. However, in the instant case, the challan was presented about 2 years back and till date even the charges have not been framed. An amount of about `6 crores has already been recovered by way of compounding, from the owners of the industrial units in Panipat who had allegedly benefited from the forged bills. The petitioners have been behind bars for a substantial period of about 21/2 years. Conclusion of trial is likely to consume time as the trial has not even commenced till date.

11. Keeping the aforesaid facts and circumstances in mind, particularly the fact that the trial is yet to commence, no useful purpose would be served by further detaining the petitioners behind bars who have been in custody since last about 21/2 years. Consequently, the petitions merit acceptance and are hereby accepted and the petitioners are ordered to be released on regular bail on their furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned.

12. Since the matter is stated to be fixed before the trial Court on 2.11.2021 to consider framing of charges, the trial Court shall endeavor to hear arguments on the question of framing of charge on the said date and to proceed with the matter expeditiously. The accused are directed to render utmost cooperation with the proceedings of trial. In case, the trial Court finds that the accused are not rendering cooperation or are resorting to dilatory tactics, it shall be open to the trial Court to cancel the bail after issuing notice to the accused through their counsel.