2020 (10) TMI 44 - HC - GST

Pre-arrest Bail Application - allegation of monthly amount were being paid as bribe to the officers and officials of taxation department. - alleged tax evasion in connivance with the officers/ officials of Excise and Taxation Department. - It is alleged that the tax was being evaded by ensuring that there is no checking or verification of the documents or the goods while being transported to and from State of Punjab - Sections 420, 465, 467, 468, 471 and 120-B of the Indian Penal Code, 1860 and Sections 7, 7(a) and 8 of the Prevention of Corruption Act, 1988 - HELD THAT - With the introduction of GST regime, one of the object worked upon was free movement of goods, by removal of barriers and Information Collection Centres. The responsibility was shifted upon the Excise and Taxation Officers/ officials and more so on the mobile wing of the department. Under the GST, there is an inter-connected chain of sellers and purchasers as the purchaser gets the credit of tax paid or suffered by seller. The chain can be within the State or PAN-India. One link in the chain being ingenuine, doctored or non-existant, would impact the entire chain. 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 bona fide purchaser not aware of the earlier misdeed in the chain yet will have to suffer the consequences. 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 petitioner being an exofficer of the department can influence the witness or temper with the 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:
Petition for anticipatory bail rejection in a case involving Sections 420, 465, 467, 468, 471, and 120-B of the Indian Penal Code, 1860, along with Sections 7, 7(a), and 8 of the Prevention of Corruption Act, 1988.

Detailed Analysis:

1. Allegations and Investigation:
The FIR was based on allegations of tax evasion through connivance between a transporter and officers of the Excise and Taxation Department. The petitioner, a retired officer, was named in the FIR, accused of receiving bribes. Call recordings indicated discussions about bribe payments and evasion strategies involving various individuals.

2. Petitioner's Argument:
The petitioner's counsel argued that there was no concrete evidence against the petitioner in the FIR. They emphasized the lack of recorded calls involving the petitioner, his retirement before the FIR, and his long unblemished service record to support the plea for anticipatory bail.

3. State's Argument:
The State contended that the petitioner was specifically named in the FIR and highlighted statements implicating the petitioner in bribe transactions. They argued that the petitioner's retirement did not absolve him of involvement in pre-retirement activities relevant to the investigation.

4. GST Evasion and Investigation Significance:
The judgment delved into the significance of investigating GST evasion due to its potential impact on the tax chain and the economy. The involvement of transporters, officers, and passers in tax evasion schemes was highlighted as a serious issue requiring thorough investigation.

5. Role of Passers and Tax Evasion:
The concept of "passers" acting as mediators to facilitate tax evasion by ensuring goods reach destinations without inspection was explained. The ease of tax manipulation in the absence of proper checks during transportation was emphasized as a significant concern.

6. Decision and Rationale:
The court denied the petition for anticipatory bail, citing the seriousness of the allegations, the necessity for custodial interrogation to uncover the truth, and the potential influence the petitioner, as a former officer, could have on the investigation. The judgment underscored the importance of tax collection for the economy over individual liberty in such cases.

7. Conclusion and Clarification:
The petition was dismissed, with the court clarifying that its decision was based on the current circumstances and did not imply a judgment on the merits of the investigation or trial. The complexity of the case, the impact on the tax chain, and the need for a thorough investigation were pivotal in rejecting the plea for anticipatory bail.