2020 (8) TMI 40 - HC - GST

Petition for Granting Bail - Clandestine manufacturing and sale of pan masala without payment of GST - alleged evasion of tax - It is argued that the petitioners have been falsely implicated in the case. - petitioners, despite their right to challenge the assessment by depositing 10% of the amount assessed, they have deposited entire amount of ₹ 7 crores - Sale and distribution of pan masala has been completely banned across the country due to pandemic induced lockdown - HELD THAT - On careful consideration of nature and gravity of the allegation made against the petitioners and the specific evidence collected in respect of these allegations, elaborate discussion of which would not be apt as it may adversely affect the interest of either party, the specific facts put-forth by the learned senior counsels for the petitioners and their reply and other facts and circumstances of the case, in the considered opinion of this court, the case for granting bail is made out. Therefore, without commenting on the merits of the case, both the petitions stand allowed. It is directed that the petitioners be released from custody on their furnishing a personal bond in the sum of ₹ 5,00,000/- each with separate sureties to the satisfaction of the Trial Court for their appearance before it as and when required further subject to the following conditions imposed.

Summary

Issues:
1. Bail application under section 439 of the Cr.P.C. in a case related to GST Act offenses.

Analysis:
The case involved two petitions arising from the same crime number under the GST Act. The prosecution alleged that the petitioners were involved in clandestine clearance of Pan Masala without paying GST, leading to a significant tax evasion. The petitioners were partners in a firm that was found to have evaded GST to the tune of crores. The defense argued that the firm was registered and paying GST regularly, refuting the allegations of tax evasion. The defense also claimed that the petitioners' statements were obtained under pressure and retracted later. The defense highlighted the impact of the COVID-19 pandemic on their business operations, leading to delays in paperwork and submission of invoices.

The defense further argued that the petitioners were falsely implicated, with no concrete evidence linking them to the alleged offenses. They contended that the officials had not followed proper procedures for arrest, recording statements, and search and seizure. The defense emphasized that the petitioners were willing to pay any assessed deficit and had already deposited a substantial amount. They also stated that the petitioners had no connection with certain individuals mentioned in the case.

The prosecution, on the other hand, asserted that the petitioners had a significant role in a syndicate involved in clandestine manufacturing and sale of Pan Masala, causing substantial losses to the exchequer. They presented evidence suggesting the petitioners' involvement in illegal activities and their nexus with other wrongdoers in the syndicate. The prosecution argued that the petitioners' release would hamper the ongoing investigation, as more evidence was expected to surface. They highlighted the seriousness of the offenses, especially during the pandemic-induced lockdown, and the potential threat posed by the petitioners to the investigation and witnesses.

After hearing both parties and examining the evidence, the court granted bail to the petitioners. The court considered the nature and gravity of the allegations, specific evidence collected, and other facts of the case. The bail was granted subject to certain conditions, including cooperation with the trial, non-involvement in criminal activities, and submission of passports if any. The court emphasized that the bail was granted without commenting on the merits of the case, allowing the petitioners to be released on a personal bond with specified sureties.