Case Law Details
Directorate General of Gst Intelligence Vs Manish Goyal (Delhi High Court)
In the realm of legal battles, the case of Directorate General of GST Intelligence (DGGI) versus Manish Goyal adds another layer of complexity. The crux of the matter revolves around the cancellation of bail for GST offenses due to non-appearance during the investigation. CRL.M.C.881/2023 has been filed by DGGI against the order granting regular bail to Manish Goyal on 21st December 2022. Conversely, CRL.M.C.6801/2023 has been filed by Goyal, seeking to set aside the subsequent cancellation of bail on 15th September 2023. This article aims to dissect the intricate details of the case, from the alleged GST offenses to the legal arguments presented by both parties.
Background and Allegations: Manish Goyal, the proprietor of M/s Radiant Traders, located at B-36-6, Jhilmil Industrial Area, Shahdara, Delhi, is accused of engaging in the manufacture of smoking mixtures. The case gained momentum when M/s Radiant Traders’ supply to M/s Harsha International, an exporting entity, came under scrutiny. Officials of DGGI intercepted a batch of consignments at Mundra Port, Gujarat, revealing that the smoking mixture was spurious and unfit for human consumption.
Investigations further disclosed that no business activity was conducted at the registered premises of M/s Radiant Traders, and their previous business location at D-248, Gali No.10, Near Laxmi Nagar Metro Station, Laxmi Nagar, Delhi, showed no signs of existence. The proprietor, Manish Goyal, was arrested on 25th November 2022, charged with offenses under Section 132(1)(b) and (c) of the Central Goods and Services Tax Act, 2017 (CGST Act).
Legal Proceedings: Manish Goyal sought regular bail after his arrest, and after initial dismissal by the Additional Chief Metropolitan Magistrate, Patiala House Courts, New Delhi, he approached the Additional Sessions Judge (ASJ). The ASJ, in an order dated 21st December 2022, granted him bail, emphasizing the need for cooperation in the investigation.
Following his release, Manish Goyal faced multiple summonses by DGGI for further investigation. Allegedly, he was late for the first two and did not appear for the next two summons. This led DGGI to seek the cancellation of the bail granted on 21st December 2022. The Sessions Court, on 15th September 2023, acceded to DGGI’s request, resulting in Goyal filing a petition to set aside the cancellation.
Arguments Presented by DGGI:
i. DGGI contends that Manish Goyal is involved in a serious economic offense related to GST evasion amounting to Rs. 218 crores.
ii. The Input Tax Credit shown by M/s Radiant Traders is questionable, as the procurement of cigarettes as raw material for smoking mixtures, resulting in a vast difference between the purchase and sale amounts, indicates potential fraud.
iii. The seized smoking mixtures at Mundra port, tested by CRCL, Kandla, were found to be spurious.
iv. Goyal’s custodial presence is deemed necessary to unravel the conspiracy and prevent interaction with other co-accused avoiding investigation.
Counterarguments by Manish Goyal:
i. Manish Goyal challenges the inconclusive nature of the CRCL Report, asserting that it cannot be the sole basis for assuming that cigarettes purchased were not used in manufacturing smoking mixtures.
ii. He argues against the presumption that all consignments were spurious, emphasizing the absence of a criminal complaint.
iii. Non-appearance on one date should not be grounds for bail cancellation. Goyal appeared for investigation on every date except 27th February 2023, citing ill-health for the absence.
Court’s Analysis: The court, after hearing both sides and perusing the materials on record, highlighted the statements recorded under Section 70 of the CGST Act. Notably, Goyal’s statement indicated a potential influence by co-accused Chirag Goel, who allegedly set up M/s Radiant Traders.
The court found prima facie evidence that Goyal may not have been fully aware of day-to-day operations and could have acted under Goel’s direction. Moreover, it was revealed that Chirag Goel had set up M/s Radiant Traders using documents provided by Goyal.
Considering these factors, the court upheld the bail granted on 21st December 2022, cautioning Goyal to strictly comply with the imposed conditions. The court acknowledged the seriousness of GST offenses but stressed the importance of evidence.
Conclusion: In a nuanced decision, the court established that non-appearance on one or two investigation dates does not suffice as grounds for bail cancellation. The case illuminates the intricacies of economic offenses, emphasizing the delicate balance between individual rights and law enforcement objectives. While the court validated the continuation of bail for Manish Goyal, a stern warning was issued, signaling potential consequences if he fails to comply with future summonses. This case serves as a significant precedent in understanding the legal implications surrounding GST offenses and the criteria for bail cancellation.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. CRL.M.C.881/2023 has been filed on behalf of the agency Directorate General of GST Intelligence (DGGI) against the order dated 21st December, 2022, passed by the learned Additional Sessions Judge (ASJ), Patiala House Courts, New Delhi, whereby regular bail was granted to the accused Manish Goyal.
2. CRL.M.C.6801/2023 has been filed on behalf of the accused Manish Goyal seeking setting aside of the order dated 15th September, 2023, passed by the learned Additional Sessions Judge (ASJ), Patiala House Courts, New Delhi, whereby regular bail granted vide order dated 21st December, 2022 was cancelled.
3. Brief facts, as agitated by the DGGI, are as follows:
3.1 The accused Manish Goyal is the proprietor of M/s Radiant Traders situated at B-36-6, Jhilmil Industrial Area, Shahdara, Delhi, which is engaged in manufacture of smoking mixtures.
3.2 M/s Radiant Traders had supplied their smoking mixture to M/s Harsha International, who exported the said mixtures. One of the batch of consignments which were sent for export by M/s Harsha International were intercepted by the officials of DGGI at Mundra Port, Gujarat and were examined by the Central Revenues Control Laboratory (CRCL), Kandla, wherein it was revealed that the aforesaid smoking mixture was a spurious product and not fit for human consumption.
3.3 During the course of investigation, it was found that no business activity was being conducted from the registered premises of M/s Radiant Traders and no goods or plant or machinery was found at their premises. Further, search was also conducted at the previous business premises of M/s Radiant Traders situated at D-248, Gali No.10, Near Laxmi Nagar Metro Station, Laxmi Nagar, Delhi and it was found that M/s Radiant Traders was not existing.
3.4 Subsequently, statement of accused Manish Goyal was recorded under Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act).
3.5 Manish Goyal was arrested on 25th November, 2022 under the allegations of having committed offences under Section 132(1 )(b) and (c) of the CGST Act.
3.6 Manish Goyal approached the learned Additional Chief Metropolitan Magistrate (ACMM), Patiala House Courts, New Delhi for grant of regular bail which was dismissed vide order dated 8th December, 2022.
3.7 Thereafter, Manish Goyal preferred a bail application before the learned Additional Sessions Judge (ASJ), Patiala House Courts, New Delhi, which was allowed vide order dated 21st December, 2022 and he was released on regular bail.
4. After the grant of bail, Manish Goyal was summoned by the DGGI on four subsequent occasions and Manish Goyal was late by two hours in respect of the first two summons and did not join investigation in respect of the next two summons.
5. Resultantly, the DGGI moved the Sessions Court seeking cancellation of the bail granted to him vide order dated 21st December, 2022, which was allowed by the learned ASJ, Patiala House Court, New Delhi, vide order dated 15th September, 2023. This Court had granted stay on the aforesaid order vide order dated 19th September, 2023.
6. Senior Standing Counsels appearing on behalf of the DGGI have made the following submissions:
I. Manish Goyal is involved in a serious economic offence relating to evasion of Goods and Services Tax (GST) to the tune of Rs.218
II. In the present case, Input Tax Credit has been shown to be received by M/s Radiant Traders on the basis of procurement of cigarettes which have been shown to be used as raw material to manufacture smoking mixture. M/s Radiant Traders has purchased raw material worth Rs.221 crores and sold the finished products (smoking mixtures) at Rs.69 crores. Therefore, the aforesaid method is neither economically viable nor technically feasible and has been done only to commit fraud upon the exchequer.
III. The smoking mixtures seized at Mundra port were tested by CRCL, Kandla, wherein it has been established that the smoking mixture is a spurious product and not fit for human consumption.
IV. Manish Goyal is required in custody in order to unearth the conspiracy behind the present case and to ensure that he does not interact with the other co-accused persons, who are avoiding investigation.
V. As per the statement of Manish Goyal recorded under Section 70 of the CGST Act, he has admitted that no manufacturing activity was being carried out at M/s Radiant Traders and cigarettes were not used as inputs in manufacturing of smoking mixtures. He has further stated that if cigarettes are shown to be received at the premises of M/s Radiant Traders, they must have been sold in the wholesale market in Delhi.
VI. Statements given under Section 70 of the CGST Act can be used as evidence and are a valid piece of evidence in view of Section 136 of the CGST Act which pertains to the relevancy and admissibility of statements made and signed under Section 70 of the CGST Act. In this regard reliance has been placed on the case of Tofan Singh State of Tamil Nadu (2021)4 SCC 1.
VII. Manish Goyal was granted bail on the condition that he shall join investigation and co-operate in the same. However, Manish Goyal was late on two occasions and did not appear on the next two occasions on being summoned after the grant of bail on 15th September, 2023.
7. Per contra, counsel appearing on behalf of Manish Goyal has made the following submissions:
I. As has been observed in the impugned order dated 21st December, 2022, passed by the learned ASJ, the CRCL Report is inconclusive and on the basis of the report it cannot be said that the cigarettes purchased have not been used in the manufacture of the smoking mixture.
II. Merely on the basis that one of the consignments was found to be spurious, it cannot be assumed that all previous consignments were spurious as well.
III. There is no infirmity in the order granting bail and hence there is no ground for interfering with the same.
IV. No criminal complaint has been filed in the present case and therefore this is a pre-chargesheet case.
V. Non-appearance on one date cannot be a ground for cancellation of bail. The accused has appeared for investigation on every date except 27th February, 2023, which was on account of is ill-health.
8. I have heard the counsels for the parties and perused the material on record.
9. The DGGI has drawn attention to the statements of various persons involved in the present case including Manish Goyal, in a sealed cover.
10. Manish Goyal, in his statement under Section 70 of the CGST Act has stated that no manufacturing activity with respect to smoking mixtures was being carried on by M/s Radiant Traders and no smoking mixtures have been supplied by his firm to M/s Harsha International. However, he has stated that he had provided signed copies of documents such as Aadhar Card, PAN Card, photographs among others, to Chirag Goel, who had set-up M/s Radiant Traders in his name.
11. It also appears from the statement given by Abhay Kumar, the Director of Pinnacle Exports Trade Pvt. Ltd., who was also the driver of Chirag Goel, that Manish Goyal was an employee of Chirag Goel, the main
12. As per the DGGI itself, when the suppliers of cigarettes to M/s Radiant Traders were questioned as to who contacted them on behalf of M/s Radiant Traders, they all named Chirag Goel as the proprietor of M/s Radiant Traders.
13. Therefore, on a prima facie view, it appears that Manish Goyal was acting on the directions of the co-accused Chirag Goel and was not responsible for or aware of the day to day functioning of M/s Radiant Traders. It also appears that it was Chirag Goel who had set up M/s Radiant Traders by taking documents from Manish Goyal and the real control of the firm was with Chirag Goel.
14. Further, Manish Goyal has spent almost a month in custody and it is not the case of the DGGI that further custodial interrogation is required.
15. In these facts and circumstances, this Court finds no infirmity in the order dated 21st December, 2022 passed by the learned ASJ granting bail to Manish Goyal.
16. I am in agreement with the submissions made on behalf of Manish Goyal that non-appearance for investigation on one or two dates cannot be ground for cancellation of bail. It is an admitted position that after grant of regular bail, Manish Goyal did appear before the authorities pursuant to summons received by him on various occasions. Therefore, the order dated 15th September, 2023, passed by the Sessions Court cancelling bail on account of non appearance on one or two dates is harsh and is accordingly set aside.
17. However, it is made clear that Manish Goyal shall strictly comply with the conditions imposed vide order dated 21st December, 2022, passed by the learned ASJ while granting bail.
18. Though this Court is confirming the bail granted to Manish Goyal, he is warned that in the future, if he does not appear pursuant to summons issued by the DGGI, his bail would be liable to be cancelled. However, the DGGI shall give a notice of at least 48 hours to appear pursuant to the issuance of summons.
19. Liberty is given to the DGGI to seek cancellation of bail in the event Manish Goyal fails to appear in a timely manner pursuant to summons issued.
20. Accordingly, CRL.M.C.881/2023 filed on behalf of the DGGI is dismissed and CRL.M.C.6801/2023 filed on behalf of Manish Goyal is allowed. All pending applications stand disposed of.
21. Needless to state that any observations made herein are purely for the purposes of deciding the question of grant of bail and shall not be construed as an expression on the merits of the case.
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