2022 (2) TMI 991 - DSC - GST

Seeking grant of anticipatory bail - Clandestine manufacturing and sale - interim protection granted to the accused is seriously hampering the investigation or not - availment of fake input tax credit - retraction of statements already recorded - Section 132 of GST Act - HELD THAT - The present case is of clandestine manufacturing and sale which is covered by Section 132 (1) (a). Although, the punishment and the status of the case has cognizable and non bailable is the same, the evidence of both category of cases would necessarily be different. In case of offence under sub Section (1) (b) (c), the evidence would necessarily be documentary and also available in the form of returns submitted as they involve an element of filing of return. Whereas, Section 132 (1) (a), pertains to a situation where there may not be any bills or invoices and evidence would have to be mostly ocular. Considering that such evidence would have to be given by the employees and persons involved in the production, transportation and sale, in cases, it may be possible for the accused persons to yield influence which may hamper the investigation. In the present case, as has been pointed out, initially, at least, two of the applicants did not respond to summons and now, neither the Directors on record nor several employees are not responding to the summons of the Department. The possibility of investigation being influenced or thwarted cannot therefore, be ruled out. Needless to say, that the alleged evasion of duty has been calculated in several crores. This is not a fit case for grant of anticipatory bail to the accused persons - Bail application dismissed.

Summary

Issues:
Grant of anticipatory bail in a case of GST evasion involving clandestine manufacturing and sale.

Detailed Analysis:

1. Statements Recorded Under Duress:
The counsel for the accused contended that the statements were recorded under duress, where the accused had no choice but to sign them. Reference was made to a previous decision to support the argument that anticipatory bail should be granted liberally in cases of GST evasion. However, the Department's counsel highlighted that there was no retraction on the statements already recorded, indicating the accused's involvement.

2. Non-Cooperation with Investigation:
The Department pointed out that the accused and related individuals were not cooperating with the investigation. The accused admitted that the Directors were dummy Directors, and they were actually running the business. Additionally, a network of small firms owned by the accused was involved in clandestine activities, making it difficult for the Agency to conduct a thorough investigation.

3. Evidence and Modus Operandi:
Evidence retrieved from a mobile phone indicated a complex system of codes for transactions and accounting to maintain a clandestine operation without a paper trail. Previous instances of evasion and penalty payment by the accused in 2018 were highlighted, showing a pattern of avoiding GST compliance.

4. Nature of Offense and Investigation Interference:
Distinction was made between offenses under different sections of the law, highlighting that the present case involved clandestine manufacturing and sale covered by a specific section. The non-cooperation of the accused and their associates raised concerns about potential interference with the investigation, given the significant amount of duty evasion involved.

5. Decision and Dismissal of Anticipatory Bail:
Considering the lack of cooperation, the potential for interference with the investigation, and the substantial amount of duty evasion, the Court concluded that this was not a suitable case for granting anticipatory bail. The applications for anticipatory bail were dismissed, emphasizing the seriousness of the allegations and the need for a thorough investigation.

In conclusion, the judgment delves into the complexities of the case, including the nature of the offense, evidence, lack of cooperation with the investigation, and the potential for interference. The decision to dismiss the anticipatory bail applications underscores the gravity of the situation and the importance of conducting a thorough and unhindered investigation into the alleged GST evasion involving clandestine activities.