2015 (3) TMI 1181 - HC - Central Excise

Misappropriation of government money - Seeking direction to release on bail in the event of arrest - Neither paid dues towards service tax nor provided requisite details to the department - Appellant did not joined the investigation also - Respondent submitted that the application is pre-mature as even no order for arrest of the applicant has been passed by the competent authority and if that being so, there is no apprehension of arrest of the applicant. Held that - as per circular number 974/08/2000-CX, the power to arrest a person needs to be exercised with utmost caution. Before arresting a person requisite permission from the competent authority is required. In the instant case so far no such permission has been granted by the competent authority. That being so, the applicant has no apprehension of arrest, as such, the application is premature. Moreover, no direction for issuing notice to the applicant in case of his arrest can be given in view of the observations of the Supreme Court in Union of India v Padam Narayan etc. 2008 (10) TMI 1 - SUPREME COURT . Also this view was reiterated in Union of India and another v Ashwani Aggarwal and followed by this Court in Department of Customs v Arvinder Singh 2007 (5) TMI 558 - DELHI HIGH COURT . Therefore, the application being premature is dismissed and the interim protection granted to the applicant stands vacated. - Application disposed of

Summary

Issues:
Application for bail under Section 438 of Cr.P.C. in proceedings initiated by the Office of the Commissioner of Service Tax under Section 14 of the Central Excise Act, 1944.

Analysis:
The applicant, a director of a company, sought bail due to alleged outstanding service tax dues and threats of arrest. The applicant claimed he joined the company in 2012 and made efforts to pay off dues, depositing substantial amounts. He resigned in 2014, transferring liability to the company with appointed oversight. The respondent alleged non-cooperation, non-payment of service tax, and misappropriation, initiating recovery actions. The respondent argued the gravity of the offense, emphasizing the non-depositing of collected taxes. The court noted the serious nature of economic offenses and cited precedents highlighting the community's interest in prosecuting economic offenders.

The respondent opposed the bail application, citing the applicant's alleged involvement in misappropriation of government funds. The respondent highlighted non-cooperation during investigations, non-appearance in response to summons, and the company's outstanding service tax liability. The respondent emphasized the applicant's role in finance and non-depositing of collected taxes, indicating a prima facie case of non-payment. The respondent argued that the applicant's resignation and transfer of responsibility were not valid, as the applicant still held crucial company records and failed to cooperate in investigations.

The court dismissed the bail application as premature, citing the absence of an arrest order and the need for caution in exercising arrest powers. Referring to circulars and legal precedents, the court held that no notice for arrest was required before taking action. The court emphasized that the application was premature and ordered the vacating of interim protection granted earlier. The decision was based on the seriousness of the allegations, the lack of an imminent arrest threat, and the legal principles regarding arrest procedures and anticipatory bail applications.