2020 (9) TMI 983 - HC - GST

Grant of Anticipatory Bail - Allegation of Bribery - Excise and Taxation (GST) officer - evasion of GST - The evasion of tax is by connivance of transporters, officers/officials of Excise and Taxation Department and the passers - It is alleged that the tax was being evaded by ensuring that there was no checking or verification of the documents or goods, while being transported to from State of Punjab - HELD THAT - The nature of allegation in present case of evasion of GST requires a deeper probe. There are far reaching ramifications which may vary from allowing of input credit/ MODVAT of tax not paid to the Government to an eventuality that the credit of tax paid on some other product is used for something else. Not only this, someone later in chain in spite of being a bona fide purchaser not aware of the earlier misdeed in the chain yet will have to suffer the consequences - The term 'passer' has been repeatedly used. He is a person who acts as a Mediator between the dealers, transporters and the officers. He ensures the ground level implementation that the goods in transport reach the destination without checking. It is for this facility that the amount is charged and the said bounty is shared and distributed. The allegation in the present case are very serious. There is alleged connivance of the transporters, passers and the officials to facilitate the evasion of tax. The investigation is going on, it appears that the officials were being paid bribe on monthly basis - There is no quibble that the liberty of a person is of utmost importance. But when personal liberty is pitted against a sovereign function i.e. collection of tax which is life blood of the economy, the latter would prevail. Present is a case where arrest is imperative for fair and full investigation. The official position of petitioner can be used to influence witness or temper with evidence. Considering the complexity of the issue, the tax impact on chain of sellers and purchasers, the material as on date with the investigating agency, the multi dimensional aspects involved which needs a deeper probe, no case is made out for grant of pre-arrest bail - Petition dismissed.

Summary

Issues:
1. Rejection of anticipatory bail in a case involving allegations of tax evasion and corruption against an Excise and Taxation Officer.

Analysis:
The petitioner, an Excise and Taxation Officer, filed a petition for anticipatory bail against an order rejecting the same in a case involving allegations of tax evasion and corruption. The FIR was based on information received by the Vigilance Bureau regarding tax evasion by a transporter in connivance with officers of the Excise and Taxation Department. The petitioner was accused of receiving bribes and not following proper procedures in dealing with detained vehicles. The State argued that the petitioner was specifically named in a register maintained by the transporter, which detailed amounts paid to officers. The petitioner refuted these claims, stating that he was not actively involved during a certain period. The court noted the seriousness of the allegations, emphasizing the importance of fair investigation in cases involving tax evasion and corruption.

The court delved into the working of the Goods and Services Tax (GST) regime, highlighting the interconnected chain of sellers and purchasers and the potential impact of any irregularity in the chain. The term "passer" was explained as a mediator facilitating tax evasion by ensuring goods reach their destination without checks. The court emphasized the gravity of the allegations, pointing out the alleged connivance between transporters, passers, and officials to evade tax. Despite the petitioner's arguments, the court found the allegations serious and necessitating custodial interrogation for a thorough investigation.

The court dismissed the petition for anticipatory bail, citing the importance of tax collection for the economy and the need for a fair investigation. The complexity of the case, the impact on the chain of sellers and purchasers, and the material with the investigating agency were considered in denying pre-arrest bail. The court highlighted the potential misuse of the petitioner's official position to influence witnesses or tamper with evidence. The decision to dismiss the petition was made in light of the seriousness of the allegations and the necessity for a comprehensive probe.

In conclusion, the court dismissed the petition for anticipatory bail, emphasizing the significance of tax collection and the need for a thorough investigation in cases involving tax evasion and corruption. The decision was based on the seriousness of the allegations, the complexity of the issue, and the potential impact on the economic chain of sellers and purchasers. The court clarified that its discussion was limited to deciding the petition and should not be construed as an opinion on the merits for investigation or trial.