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2025 (4) TMI 1370 - DSC - GSTSeeking grant of regular bail - evasion of GST - clandestine supply of online money gaming services - HELD THAT - Present case was registered against the applicant/ accused for evasion of GST of Rs.56.78 Crore approximately. As per the report of the Department applicant/ accused had made taxable supplies without issue of invoice. It is averred by the Department that applicant/ accused alongwith his other associates made clandestine supply of online money gaming to recipients in India through various online money gaming platforms without issue of invoices and without payment of GST. It is a settled position of law that the gravity of the offence has nothing to do with the punishment provided for the same. The gravity is to be judged by the impact the offence has on the society economy and financial stability of the country. It is settled law that economic offences in itself are considered to be gravest offences against the society at large and hence are required to be treated differently in a matter of bail. As per report of Department to make payment to Indian customers of online money gaming against their winning amounts applicant/ accused used third party applications namely Portal and from the data extracted from the mobile phone of the applicant/ accused login credentials for such third party app and OTP for logging in such third party app were received on the mobile phone of applicant/ accused - There are serious allegations of evasion of GST of Rs.56.78 Crore against applicant/ accused. Investigation in the present case is at very crucial stage. Key members of the syndicate indulged in the present case are yet to be apprehended. Applicant/ accused is one of the key operators in this offence. The apprehension of the Department that accused might misuse his liberty once released on bail seems to hold merit. Conclusion - The applicant/accused is a key operator in a large-scale GST evasion syndicate involving online money gaming platforms with substantial incriminating evidence against him. Considering the seriousness of allegations and gravity of offence this Court is not inclined to release the applicant/ accused on bail. Therefore present bail application stands dismissed.
Issues Presented and Considered
The core legal questions considered by the Court in this bail application under Section 483 BNSS are:
Issue-wise Detailed Analysis 1. Entitlement to Bail in Economic Offence Involving GST Evasion The legal framework governing bail applications in economic offences is well established. The Court referred to the settled principles that socio-economic offences, particularly those involving tax evasion and financial frauds, constitute a distinct category requiring a stringent approach in bail matters. The Court relied on authoritative precedents which hold that the gravity of an offence is to be judged by its impact on society and the economy rather than merely by the prescribed punishment. This principle was emphasized with reference to the judgment in "The State of Bihar and Anr. vs Amit Kumar @ Bachcha Rai," which underscores that socio-economic offences affect the moral fabric of society and cause irreparable harm, thus necessitating careful consideration before granting bail. The Court noted that evasion of GST amounting to Rs. 56.78 Crore is a serious offence with significant adverse implications on the government's revenue and the economy. The clandestine supply of online money gaming services without issuing invoices or paying applicable GST further aggravates the offence's gravity. The Court emphasized that economic offences are gravest against society and require a different approach in bail considerations. 2. Evidence Against the Applicant/Accused The Court examined the key evidence presented by the Department, which included:
The Court found that the evidence collectively establishes a prima facie case against the applicant/accused, indicating his active involvement in the supply of online money gaming and evasion of GST. 3. Applicant/Accused's Cooperation and Compliance The applicant/accused contended that he had a registered business under CGST, was filing GST returns, depositing taxes timely, and cooperating fully with the investigation. He complied with summons and appeared before the Department as directed. The applicant/accused also asserted that no incriminating evidence was found during searches of his factory premises and that he was not required for custodial interrogation. However, the Court observed that despite these claims, the applicant/accused admitted in his statement to operating a master account for online money gaming and receiving deposits from Indian customers, but failed to produce daily deposit sheets or details of all bank accounts used. This omission undermined the claim of full cooperation. Further, the presence of incriminating evidence in the form of mobile data and statements of mule account holders negated the assertion of no evidence against him. 4. Prejudice to Investigation and Bail Considerations The Department submitted that the investigation was at a crucial stage, with key members of the syndicate still at large. The arrest of the applicant/accused had advanced the investigation considerably. The Department expressed apprehension that granting bail could prejudice the investigation or lead to misuse of liberty by the accused. The Court acknowledged that economic offences often involve complex conspiracies and multiple actors. It recognized the Department's concern that releasing the accused on bail at this juncture could hamper the investigation or lead to interference with witnesses or evidence. The Court noted the presence of two sets of incriminating materials: statements of various persons and electronic evidence from mobile phones. Considering these factors, the Court found merit in the Department's apprehensions and concluded that bail was not appropriate at this stage. 5. Treatment of Competing Arguments and Precedents The applicant/accused relied on several precedents to support his bail plea, including judgments emphasizing the right to bail, the necessity of custodial interrogation, and principles limiting pre-trial detention. However, the Court distinguished these cases on facts, noting that the present case involved serious socio-economic offences with substantial incriminating evidence and ongoing critical investigation. The Department relied on Supreme Court precedents that affirm the stringent approach towards bail in economic offences, emphasizing the gravity and societal impact over mere punishment severity. The Court aligned with this jurisprudence in denying bail. Significant Holdings The Court held that:
On the facts, the Court concluded that the applicant/accused was a key operator in a large-scale GST evasion syndicate involving online money gaming platforms, with substantial incriminating evidence against him. The investigation was at a crucial stage, and releasing the accused on bail would likely prejudice the investigation and potentially enable misuse of liberty. Accordingly, the Court dismissed the bail application, emphasizing that the decision did not express any opinion on the merits of the case.
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