GST Evasion of Rs. 6.31 Cr : HC grants bail to alleged Kingpin

Sanjay Prahladbhai Patel Vs State of Gujarat (Gujarat High Court)

It is submitted that the applicant is arrested in connection with the alleged demand by the GST authorities without determining the extent liability of the said alleged demand. It is submitted that the arrest of the applicant in the alleged offence is effected only on the ipse dixit of the Tax Department and in colourable exercise of powers under section 69 of the Act. It is submitted that the very basis for arriving at a quantified sum of Rs.6.31 crores of the alleged tax evasion is obscure and no detail whatsoever has been provided in support thereof, which clearly shows that the same is a result of figment of imagination of the tax authorities. It is submitted that in absolutely unprecedented manner, the department has clubbed demands and liabilities in respect of 13 different entities, for making out a case of evasion against the applicant, which is absolutely foreign to tax law. It is also submitted that though the demands in respect of 13 different entities were clubbed to arrive at alleged amount of tax evasion of Rs.6.31 crores against the accused, nevertheless separate complaint is filed against the accused, wherein some of the accused are even shown as witnesses in the charge­sheet.

Learned advocate for the applicant has submitted that the investigation in the case is over and the charge­sheet in the form of complaint has already been filed. It is submitted that a complaint is filed on conclusion of the investigation. It is submitted that present case is based on documentary evidence which may at best attract a punishment maximum up to 5 years. It is submitted that the present offence is triable by the Magistrate and considering the burden of work and pending cases in trial court the applicant may be released on bail as the applicant is in jail since 14.12.2020. It is also submitted by the learned Advocate on instructions of the applicant, that the applicant is ready and willing to deposit a reasonable amount as suggested by this Court.

Learned Additional Public Prosecutor appearing on behalf of the respondent­ State has opposed grant of regular bail considering the nature and gravity of the offence. It is submitted that the present applicant is one of the kingpin and mastermind of the whole racket involving 13 fictitious firms leading to evasion of tax to the tune of Rs.6.31 cores.

Having perused the materials placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, this Court is inclined to grant regular bail to the applicant.

In the result, the present application is allowed. The applicant shall deposit an amount of Rs.2,00,000/­ before the State Tax Officer and on depositing the aforesaid amount and producing appropriate document with regard to the depositing of the amount the applicant is ordered to be released on regular bail in connection with the Arrest Memorandum being CCST/STO/FSU­11/SANJAY PATEL/2020­21/22 dated 14.12.2020 and further the applicant shall also file an undertaking to deposit the remaining amount of Rs.13,00,000/­ within the period of 08 (eight) weeks. It is clarified that if the aforesaid order of the Court is not complied with, the bail granted to the applicant shall automatically stands cancelled. It is also clarified that the aforesaid conditions will be without prejudice to the right and contentions of the present applicant before the appropriate authority. Further, the applicant is released on bail on executing a personal bond of Rs.10,000/­ (Rupees Ten Thousand Only) with one local surety of the like amount to the satisfaction of the learned Trial Court and subject to few conditions.

FULL TEXT OF THE JUDGMENT/ORDER of GUJARAT HIGH COURT

Perused the note for speaking to minutes, wherein it has been pointed out by the learned Additional Public Prosecutor that because of difficulty of maintaining account, as no specific head is available with the authority, wherein the amount can be taken as deposit, a request is made to modify the order dated 26.04.2021, more particularly Paragraph No.8 to the effect that the amount may be directed to be deposited before the trial court instead of the State Tax Officer.

Accordingly, the order dated 26.04.2021, more particularly in Paragraph No.8 – line No.2, the words “the State Tax Officer” be read and replaced as “trial court”.

Note for speaking to minutes stands allowed. Registry to issue fresh writ accordingly. Rest of the order remains as it is.

THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 6001 of 2021

SANJAY PRAHLADBHAI PATEL
Versus
STATE OF GUJARAT

Date : 26/04/2021
ORAL ORDER

1. Heard the learned advocates for the respective parties through video conferencing.

2. The present application is filed under Section 439 of the Code of Criminal Procedure in connection with the Arrest Memorandum being CCST/STO/FSU­11/SANJAY PATEL/2020­21/22 dated 14.12.2020 for the offences punishable under Sections 132(1)(a) of the Gujarat Goods and Services Tax Act, 2017 (the Act).

3. Learned advocate appearing for the applicant submitted that the applicant came to be implicated solely on the basis of the statement of co­accused, which is not evidence in the eyes of law. It is submitted that the investigating agency not being police officer and not falling within the ambit of sections 25 and 26 of the Indian Evidence Act have abused the power and authority to obtain inculpatory statement of the applicant under duress and coercion. It is submitted that the applicant is arrested in connection with the alleged demand by the GST authorities without determining the extent liability of the said alleged demand. It is submitted that the arrest of the applicant in the alleged offence is effected only on the ipse dixit of the Tax Department and in colourable exercise of powers under section 69 of the Act. It is submitted that the very basis for arriving at a quantified sum of Rs.6.31 crores of the alleged tax evasion is obscure and no detail whatsoever has been provided in support thereof, which clearly shows that the same is a result of figment of imagination of the tax authorities. It is submitted that in absolutely unprecedented manner, the department has clubbed demands and liabilities in respect of 13 different entities, for making out a case of evasion against the applicant, which is absolutely foreign to tax law. It is also submitted that though the demands in respect of 13 different entities were clubbed to arrive at alleged amount of tax evasion of Rs.6.31 crores against the accused, nevertheless separate complaint is filed against the accused, wherein some of the accused are even shown as witnesses in the charge­sheet.

3.1 Learned advocate for the applicant has submitted that the investigation in the case is over and the charge­sheet in the form of complaint has already been filed. It is submitted that a complaint is filed on conclusion of the investigation. It is submitted that present case is based on documentary evidence which may at best attract a punishment maximum up to 5 years. It is submitted that the present offence is triable by the Magistrate and considering the burden of work and pending cases in trial court the applicant may be released on bail as the applicant is in jail since 14.12.2020. It is also submitted by the learned Advocate on instructions of the applicant, that the applicant is ready and willing to deposit a reasonable amount as suggested by this Court.

4. Learned Additional Public Prosecutor appearing on behalf of the respondent­ State has opposed grant of regular bail considering the nature and gravity of the offence. It is submitted that the present applicant is one of the kingpin and mastermind of the whole racket involving 13 fictitious firms leading to evasion of tax to the tune of Rs.6.31 cores.

5. Learned Advocates appearing on behalf of the respective parties do not press for a further reasoned order.

6. Having perused the materials placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, this Court is inclined to grant regular bail to the applicant. This Court has considered following aspects;

(i) The applicant is in jail since 14.12.2020;

(ii) role attributed to the accused;

(iii) The investigation is over and the charge ­sheet is filed;

(iv) The present case is based on documentary evidence which may at best attract a punishment maximum up to 5 years;

(v) the prosecution has not established that the applicant can temper with the evidence.

(vi) the quantum of tax evasion

(vii) the applicant is ready and willing to deposit the amount before the concerned officer

7. This Court has also taken into consideration the law laid down by the Apex Court in the case of Sanjay Chandra Vs. Central Bureau of Investigation, (2012) 1 SCC 40;

8. In the result, the present application is allowed. The applicant shall deposit an amount of Rs.2,00,000/­ before the State Tax Officer and on depositing the aforesaid amount and producing appropriate document with regard to the depositing of the amount the applicant is ordered to be released on regular bail in connection with the Arrest Memorandum being CCST/STO/FSU­11/SANJAY PATEL/2020­21/22 dated 14.12.2020 and further the applicant shall also file an undertaking to deposit the remaining amount of Rs.13,00,000/­ within the period of 08 (eight) weeks. It is clarified that if the aforesaid order of the Court is not complied with, the bail granted to the applicant shall automatically stands cancelled. It is also clarified that the aforesaid conditions will be without prejudice to the right and contentions of the present applicant before the appropriate authority. Further, the applicant is released on bail on executing a personal bond of Rs.10,000/­ (Rupees Ten Thousand Only) with one local surety of the like amount to the satisfaction of the learned Trial Court and subject to the conditions that he shall;

(a) not take undue advantage of liberty or misuse liberty;

(b) not act in a manner injurious to the interest of the prosecution;

(c) surrender his passport, if any, to the lower court within a week;

(d) not leave the State of Gujarat without prior permission of the concerned Trial Court;

(e) mark presence before the concerned Police Station on alternate every Monday for initial six months and thereafter, on alternate Monday of every English calendar month, for a period of six months, between 10:00 a.m. and 2:00 p.m.;

(f) furnish latest address of residence to the Investigating Officer and also to the Court at the time of execution of the bond and shall not change the residence without prior permission of the Trial Court;

9. The Authorities will release the applicant only if he is not required in connection with any other offence for the time being. If breach of any of the above conditions is committed, the concerned Trial Court will be free to issue warrant or take appropriate action in the matter. Bail bond to be executed before the Trial Court having jurisdiction to try the case.

10. It will be open for the concerned Court to delete, modify and/or relax any of the above conditions in accordance with law. At the trial, learned Trial Court shall not be influenced by the observations of preliminary nature, qua the evidence at this stage, made by this Court while enlarging the applicant on bail. Rule is made absolute accordingly.

11. Registry is directed to intimate the concerned jail authority and the concerned Sessions Court about the present order by sending a copy of this order through Fax message, email and/or any other suitable electronic mode.

12. Learned advocate for the applicant is also permitted to send a copy of this order to the concerned jail authority and the concerned Sessions Court through Fax message, email and/or any other suitable electronic mode.