2020 (3) TMI 513 - HC - GST

Directors' anticipatory bail plea denied in alleged GST evasion case due to non-cooperation with investigation.

Smt. Jecintha Pillai Versus The State of Telangana

Smt. Jecintha Pillai Versus The State of Telangana - TMI Issues involved:1. Application for anticipatory bail under Section 438 Cr.P.C.2. Allegations of evasion of GST by the Directors of a company.3. Dispute regarding the innocence of the petitioners and their involvement in the alleged offences.4. Non-cooperation of the petitioners with the investigation.5. Legal interpretation of the provisions of the CGST Act, 2017.6. Precedents related to arrest and anticipatory bail in cases of financial fraud.1. Application for anticipatory bail under Section 438 Cr.P.C.:The judgment pertains to a Criminal Petition filed under Section 438 Cr.P.C. seeking anticipatory bail for the petitioners in connection with proceedings related to alleged evasion of GST. The petitioners are Directors of a company accused of providing taxable services without raising invoices and not paying appropriate GST, resulting in a significant loss to the government exchequer.2. Allegations of evasion of GST by the Directors of a company:The prosecution's case is that the petitioners, as Directors of the company, were involved in evasion of GST on taxable services provided by the company. The investigation revealed that the company evaded a substantial amount towards GST by not issuing invoices and suppressing details in the returns filed, causing a loss to the government exchequer. The petitioners were summoned but failed to cooperate with the authorities, leading to the application for anticipatory bail.3. Dispute regarding the innocence of the petitioners and their involvement in the alleged offences:The petitioners claimed innocence, stating they were not connected to the alleged offences and were falsely implicated. They argued that they were unaware of the activities conducted by the Chairman and CEO of the company, who was primarily responsible for the evasion. The petitioners expressed concerns about being falsely implicated and coerced into confession.4. Non-cooperation of the petitioners with the investigation:The Special Public Prosecutor contended that the petitioners, as Directors, did not cooperate with the investigation despite multiple summonses. It was argued that their release on anticipatory bail could lead to manipulation of records, hindering the complex nature of the financial fraud investigation.5. Legal interpretation of the provisions of the CGST Act, 2017:The judgment referenced the provisions of the CGST Act, 2017, specifically highlighting that prosecutions for offences such as issuing invoices without supply of goods do not depend on the completion of assessment. The Court rejected arguments that arrests should only occur after assessment and emphasized the severity of the alleged offences.6. Precedents related to arrest and anticipatory bail in cases of financial fraud:The judgment cited a Division Bench order emphasizing the complexity of financial fraud cases and the necessity to examine various evidences thoroughly. It was noted that the petitioners could not be placed above those seeking anticipatory bail, and the jurisdiction under Article 226 should be sparingly used in such cases.In conclusion, based on the observations made by the Division Bench and ongoing investigations into the alleged offences, the Court rejected the prayer for anticipatory bail and dismissed the Criminal Petition filed by the petitioners.