Unraveling the Web: Forgery, Fake GST Firms, and the Pursuit of Economic Justice

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Deciphering Legal Judgments: A Comprehensive Analysis of High Court's Judgment on "The Intricate Nexus: Decoding Admissibility, Jurisdiction, and Bail in Economic Crimes"

Reported as:

2024 (9) TMI 1289 - ALLAHABAD HIGH COURT

INTRODUCTION

This case revolves around an alleged organized and synchronized crime involving the creation of fake and bogus invoices to cover the money trail and goods supply, as well as forged transactions with fictitious firms. The core legal questions presented pertain to the admissibility of evidence obtained through custodial statements, the jurisdiction of the court in economic offenses spanning multiple states, and the considerations for granting bail in such cases.

ARGUMENTS PRESENTED

The primary contentions of the parties (anonymized) are as follows:

Prosecution:

The accused persons committed the crime by making fraudulent firms using the PAN Card and Aadhaar Card of the informant, and through fake invoices, they breached the supply chain of Input Tax Credit (ITC) and gained illegal benefits.
The use of the informant's PAN Card and Aadhaar Card for registering fake GST firms and issuing fake invoices amounts to forgery, which is detrimental to national interest.
The statements made by the accused persons leading to the discovery of facts, such as laptops, mobiles, SIM cards, and fake invoices, are admissible u/s 27 of the Indian Evidence Act, 1872.
The court has jurisdiction as the complainant resides in New Delhi, and the FIR was lodged in Gautam Buddh Nagar, despite the fake firms being registered in Punjab and Maharashtra.
Bail should be denied considering the gravity of the economic offense, the potential risk of tampering with evidence, and the likelihood of the accused absconding or repeating the offense.

Defense:

The proceedings should have been initiated under the Goods and Services Tax Act, and an FIR should not have been registered.
The confessional statements made by the accused persons are inadmissible as evidence.
The court lacks jurisdiction as the alleged offenses occurred in Punjab and Maharashtra.
Bail should be granted, especially for female accused, as the principle of "bail is the rule, jail is the exception" should apply.

COURT DISCUSSIONS AND FINDINGS

The court analyzed each legal issue as follows:

Admissibility of Evidence:

The court relied on Section 27 of the Indian Evidence Act, 1872, which allows the admissibility of information received from an accused person leading to the discovery of a fact. The court held that the part of the statement directly leading to the discovery of laptops, mobiles, SIM cards, and fake invoices is admissible, as it establishes the connection between the accused persons and the main accused who registered the fake firms.

Jurisdiction:

The court referred to Section 77 of the Code of Criminal Procedure, which states that an offense shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. The court held that although the fake firms were registered in Punjab and Maharashtra, the complainant resides in New Delhi, and the FIR was lodged in Gautam Buddh Nagar. Therefore, the court has jurisdiction as the genuineness of the complaint cannot be questioned based solely on the occurrence's location.

Considerations for Granting Bail:

The court extensively discussed the principles and considerations for granting or refusing bail, relying on various Supreme Court judgments. The court emphasized that economic offenses constitute a class apart and need to be viewed seriously, considering the gravity of the offense, the nature of evidence, the severity of punishment, the character of the accused, the possibility of tampering with witnesses, and the larger public interest.

The court found that the present case involves a large-scale fraud, money laundering, and corruption, affecting the economic fabric of society. The accused persons were involved in creating fake GST firms, breaching the supply chain of ITC, and gaining illegal financial benefits through fake invoices. The court noted that the accused persons were trying to cause deliberate delay in framing charges, indicating an attempt to interfere with the judicial process.

Regarding the argument of granting bail to female accused persons, the court stated that the benefit can be given to women who do not have agency and are not connected with powerful persons, especially when the offense affects the public at large.

ANALYSIS AND DECISION

Based on the discussions and findings, the court concluded:

The part of the statements made by the accused persons leading to the discovery of facts is admissible u/s 27 of the Indian Evidence Act, 1872.
The court has jurisdiction to try the case as the complainant resides in New Delhi, and the FIR was lodged in Gautam Buddh Nagar, despite the fake firms being registered in other states.
The present case involves a grave economic offense affecting the public at large, and the accused persons were involved in creating fake GST firms, breaching the supply chain of ITC, and gaining illegal financial benefits through fake invoices.
The accused persons were trying to cause deliberate delay in framing charges, indicating an attempt to interfere with the judicial process.
Considering the gravity of the offense, the nature of evidence, the severity of punishment, the potential risk of tampering with witnesses, and the larger public interest, the court found it not a fit case for granting bail.

Consequently, the court rejected the bail applications of the accused persons.

DOCTRINAL ANALYSIS

The legal principles discussed in this case revolve around the admissibility of evidence obtained through custodial statements, the jurisdiction of courts in economic offenses spanning multiple states, and the considerations for granting bail in such cases.

Admissibility of Evidence:

The court relied on the principles established in Section 27 of the Indian Evidence Act, 1872, which provides an exception to the general rule of inadmissibility of confessions made to police officers. The court emphasized that only the part of the statement that directly leads to the discovery of a fact is admissible, striking a balance between protecting the accused from coercive confessions and the necessity of law enforcement to discover facts related to a crime.

Jurisdiction in Economic Offenses:

The court applied the principles laid down in Section 77 of the Code of Criminal Procedure, which states that an offense shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. However, in economic offenses spanning multiple states, the court held that the genuineness of the complaint cannot be questioned based solely on the occurrence's location. Instead, the court considered the connections between the accused persons, the fake firms, and the complainant's residence to establish jurisdiction.

Considerations for Granting Bail:

The court extensively discussed the principles and considerations for granting or refusing bail, as established by the Supreme Court in various judgments. The court emphasized the gravity of economic offenses, their impact on society, and the need to consider factors such as the nature of accusations, the nature of evidence, the severity of punishment, the character of the accused, the possibility of tampering with witnesses, and the larger public interest.

The court also addressed the principle of "bail is the rule, jail is the exception," highlighting that exceptions exist in cases involving grave economic offenses, where the court must be cautious in exercising discretion to grant bail, especially when the accused holds a position of influence or power.

Overall, the court's analysis and decision in this case reinforce the legal principles and doctrines surrounding the admissibility of evidence, jurisdiction in economic offenses, and the considerations for granting bail, while emphasizing the gravity of such offenses and their impact on society.

Full Text:

2024 (9) TMI 1289 - ALLAHABAD HIGH COURT