2014 (2) TMI 530 - HC - Service Tax

Arrears of service tax - applicant has been arrested in connection with the offence punishable under Section 89 read with Section 90 of the Finance Act, 1994 - prayed for his release on bail or grant of temporary bail - applicant has collected service tax amounting to Rs.2.17 crores for the State and has not deposited the same to the State. - Held that - applicant has deposited Rs.87,60,475/- and Rs.1,29,86,207/- is still due. Considering period of detention of the applicant, liability of the applicant, amount due against the applicant, grounds taken in the applications for conditional bail and undertaking, and offer of the applicant, it would be appropriate to provide one opportunity to the applicant in the light of his offer/ proposal. - conditional bail/temporary bail to the applicant is partly allowed.

Summary

Issues Involved:
1. Competency of Mr. Kishore Bhaduri, Additional Advocate General/Public Prosecutor to represent the applicant.
2. Jurisdiction of criminal courts to try the offence under Section 89 read with Section 90 of the Finance Act, 1994.
3. Grant of conditional/temporary bail to the applicant.

Detailed Analysis:

1. Competency of Mr. Kishore Bhaduri, Additional Advocate General/Public Prosecutor to Represent the Applicant:
Initially, Mr. Kishore Bhaduri, Additional Advocate General/Public Prosecutor, represented the applicant. However, his competency was objected to by the Standing Counsel for Central Excise and Customs. The objection was based on the premise that the offence was cognizable and against the State, thus the State had entrusted the administration of criminal justice to the Office of the Advocate General. Consequently, Mr. Bhaduri could not represent the accused against the State. This position was supported by precedents such as Lt. Col. K.C. Sud, New Delhi v. S.C. Gudimani, New Delhi 1981 Cri LJ 1779, which held that Public Prosecutors cannot appear against the State in criminal matters. Dr. N.K. Shukla, Senior Advocate, subsequently represented the applicant, confirming that Mr. Bhaduri was not competent to represent the applicant against the State.

2. Jurisdiction of Criminal Courts to Try the Offence Under Section 89 Read with Section 90 of the Finance Act, 1994:
The court examined whether criminal courts have jurisdiction to try the offence under Section 89 read with Section 90 of the Finance Act, 1994. It was established that the Finance Act, 1994, did not provide specific provisions for the trial of the offence. As per Sections 4 and 5 of the Code of Criminal Procedure, 1973, in the absence of specific provisions in a special Act, all offences shall be investigated, inquired into, and tried according to the Code. This principle was upheld by the Supreme Court in A.R. Antulay v. Ramdas Sriniwas Nayak AIR 1984 SC 718. Thus, criminal courts were deemed competent to try the offence under the Finance Act, 1994.

3. Grant of Conditional/Temporary Bail to the Applicant:
The applicant sought bail under Section 439 of the Code of Criminal Procedure, 1973, having been arrested for collecting service tax amounting to Rs.2.17 crores and not depositing it to the State. The applicant proposed to deposit three postdated cheques to cover the outstanding dues. The court considered the applicant's period of detention, the amount due, and the proposal to pay the dues. It was decided to grant conditional and temporary bail for three months under specific conditions:
- The applicant must deposit three postdated cheques for the due amounts on specified dates.
- Furnish a personal bond of Rs.50,00,000/- with two sureties of Rs.25,00,000/- each.
- The applicant must not leave the State without permission and must regularly appear before the court.
- Any breach of conditions or defaults in appearance would result in automatic cancellation of the bail.

The court partly allowed I.A. No.4 for conditional bail/temporary bail and accepted I.A. No.5 for undertaking for grant of temporary bail, providing the applicant an opportunity to fulfill his financial obligations while ensuring compliance with legal procedures.