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No deposit for Bail


MARCH 08, 2023

By Vijay Kumar

IT is recommended that you read the previous week's column In anticipation - of arrest before, during or after reading this.

Can a person seeking bail in a GST case be asked to pay a part of the tax alleged to have been evaded by him, as a condition for bail? Read on….

One Rajesh Kumar Dudani sought anticipatory bail in the High Court of Uttarakhand after he appeared before the GST authorities on summons, obviously in anticipation of his arrest. The High Court ordered on 22 09 2022 - 2022-TIOL-1246-HC-UKHAND-GST

The allegations are much grave. It is the case of generating fake and forged invoices so as to claim ITC. In their objections, the respondent no.2 has given categorical details of such dubious transactions and has also submitted as to how in one day, the money has routed in different accounts. The applicant transferred the money in his wife's account and, subsequently, from her account, it comes to the applicant's account. It is a kind of act, which effects the economy of the country. Added to it is the non-cooperative attitude of the applicant during enquiry. He was asked as to whether he knows one Rohil Enterprises (Question no.66). He did not reply to it. He said, "I will reply it on the next date of hearing."

Having considered the gravity of offence and its implications, this Court is of the view that the applicant is not entitled for anticipatory bail. Accordingly, the instant anticipatory bail application deserves to be dismissed.

The anticipatory bail application is dismissed.

The plight of somebody whose anticipatory bail is rejected is really inexplicable. His chances of getting arrested are far brighter now.

The taxpayer or the alleged tax non-payer took the matter in appeal to the Supreme Court.

The counsel for the appellant submitted before the Supreme Court that since Section 132 (i) (iii) prescribes punishment for a term which may be extend to one year and the entire case is based on documentary evidence and other electronic evidence which are available on record, the appellant is not required for any custodial interrogation.

The Additional Solicitor General appearing for the respondent vehemently opposed the prayer for grant of anticipatory bail. He further submitted that in any view of the matter, in order to protect the interest of revenue, the appellant may be put to terms by directing him to deposit at least half of the revenue loss of Rs. 14.68 Crores to the state exchequer, by providing fake invoices to multiple firms which has been unearthed during investigation.

The counsel for the appellant in reply submitted that there is no final assessment made under GST Act and unless such determination is made, the appellant cannot be said to be under a legal liability to make any payment much less deposit any amount as a condition for grant of anticipatory bail.

The Supreme Court recollected two of its recent judgements.

Subhash Chouhan Vs. Union of India - 20-01-2023 - 2023-TIOL-16-SC-GST

A trader was arrested for offences under the GST Act on 27.10.2021 and sought bail from the High Court of Chhattisgarh, Bilaspur which granted him bail on 21/06/2022 on the condition that he shall deposit a sum of Rs.70 lakhs, under protest or admission, in favour of the Principal Commissioner, CGST, Raipur within a period of 45 days from the date of his release. He was in jail for nearly nine months and submitted that though he was in jail for the last 9 months, but till so far, the Departmenthas not completed its investigation and is still seeking time for further investigation, though the complaint has already been filed.

Against this order of the High Court, the trader filed an appeal in the Supreme Court. It was submitted in the Supreme Court that there is no final assessment in this regard under the GST Act. Henceit cannot be presumed that the appellant is under a legal liability to pay the said amount.

As an officer of the Court, the ASG appearing for the Union of India/State fairly stated that such a condition cannot be imposed while granting bail.

The Supreme Court vide Judgment dated 20.01.2023 set aside the order passed by the High Court imposing a condition of deposit while granting bail to the appellant.

Anatbhai Ashokbhai Shah Vs. State of Gujrat - 17-02-2023 - 2023-TIOL-15-SC-MISC

A few days later, in an almost identical case - Anatbhai Ashokbhai Shah Vs. State of Gujrat, the Supreme Court observed,

Since the facts are almost identical, we see no reason to deviate from the view taken in the said case vide judgment and order dated 20.01.2023.

Following the reasons given in the said judgment and order, we hereby provide that the condition directing the appellant to deposit a sum of Rs. 2 crores is not liable to be sustained and is hereby set aside.

Coming back to the case of Rajesh Kumar Dudani , the Supreme Court observed that it is pertinent to note that in the said case (Subhash Chouhan), the Additional Solicitor General appearing for the Union of India/State had fairly stated that such a condition cannot be imposed while granting bail. The Supreme Court also noted that the statement made by the learned Additional Solicitor General is recorded in the judgment and order dated 20.01.2023.

The Supreme Court further observed, Rajesh Kumar Dudani vs The State of Uttarakhand - 27-02-2023 - 2023-TIOL-17-SC-GST

The same view has been reaffirmed by this court in another similar case, Criminal Appeal No. 523/2023, Anatbhai Ashokbhai Shah Vs. State of Gujrat vide judgment and order dated 17th February, 2023 - 2023-TIOL-15-SC-MISC.

Facts of the present case being identical to the facts of the aforesaid two Criminal appeals, we see no reason to deviate from the view taken in the aforesaid two cases.

Following the reasons given in the said judgment and orders, we are of the considered opinion that appellant is entitled to be granted anticipatory bail without imposing any condition as suggested by Learned Additional Solicitor General.

In such circumstances, it is provided that in case the appellant is arrested, he shall be liable to be released forthwith, subject to such terms and conditions which the Trial Court/Investigating agency may deem fit and proper to impose.

As a consequence, the judgment and order dated 22.09.2022 passed by the High Court of Uttarakhand at Nainital is set aside.

The appeal, accordingly stands allowed.

The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest.

Supreme Court in  State of Gujarat Vs. Mohanlal Jitamalji Porwal- 1987

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