2020 (8) TMI 416 - HC - GST

Bail Granted in Tax Evasion Case: Conditions Set to Ensure Compliance and Safeguard Rights

Kishore Wadhwani Versus State of M.P.

Kishore Wadhwani Versus State of M.P. - 2020 (43) G. S. T. L. 145 (M. P.) Issues Involved:1. Application under Section 439 of Cr.P.C.2. Alleged tax evasion under GST Act and IPC.3. Petitioner’s involvement and responsibility.4. Validity of statements recorded under Section 70 of GST Act.5. Arrest procedure and legality.6. Pendency of investigation and custodial interrogation.7. Impact on investigation if the petitioner is released.8. Previous judgments on similar bail petitions.Detailed Analysis:1. Application under Section 439 of Cr.P.C.The petitioner filed the first application under Section 439 of the Cr.P.C. in crime no.23/2020, registered under Section 132(1)(a)(i) of the GST Act and Sections 409, 467, 471, 120-B of the IPC.2. Alleged Tax Evasion under GST Act and IPC:The Department alleged that the petitioner was involved in tax evasion through clandestine sales of Pan Masala. The petitioner was linked to various firms, including M/s Vishnu Essence, and was accused of being the mastermind behind the tax evasion scheme, which allegedly resulted in a loss of crores of rupees to the exchequer.3. Petitioner’s Involvement and Responsibility:The petitioner argued that he was merely the landlord of the premises where the alleged tax evasion occurred and had no involvement with the tenant’s business operations. The Department countered, stating that vehicles used for transporting Pan Masala had stickers of the petitioner’s media company, and drivers carried identity cards from the same company, suggesting his involvement.4. Validity of Statements Recorded under Section 70 of GST Act:The petitioner contended that the statements recorded under Section 70 were retracted as they were made under duress and threat. The petitioner argued that such statements should not be relied upon, especially since they did not lead to any recovery and lacked supporting evidence.5. Arrest Procedure and Legality:Both parties debated whether the petitioner’s arrest was in accordance with legal powers and procedures. The petitioner argued that the arrest was contrary to prescribed law, while the Department maintained it was justified based on the evidence and gravity of the allegations.6. Pendency of Investigation and Custodial Interrogation:The petitioner argued that since the Department did not request further custodial interrogation and the charge sheet was due within 60 days of arrest, he was entitled to default bail. The Department, however, argued that the release of the petitioner would hamper ongoing investigations.7. Impact on Investigation if the Petitioner is Released:The Department claimed that the petitioner’s release could obstruct the investigation, citing an incident where officials were assaulted during a search at the petitioner’s house. The petitioner contested this, stating that the FIR was lodged to pressure him and that officials had misbehaved with the women of the house.8. Previous Judgments on Similar Bail Petitions:The court referred to the bail petitions of co-accused Amit Bothra and Ashok Daga, where similar arguments were considered. The court noted that the petitioners were granted bail despite the Department’s objections, emphasizing the need to balance the gravity of allegations with the rights of the accused.Judgment:The court, after considering the evidence and arguments, decided to grant bail to the petitioner. The petitioner was directed to furnish a personal bond of Rs. 10,00,000 with one solvent surety. The conditions included cooperation with the trial, no inducement to witnesses, no involvement in criminal activities, and surrendering of the passport. The court emphasized that the decision was made without commenting on the merits of the case to avoid prejudicing either party.Conclusion:The judgment balanced the serious nature of the allegations with the procedural rights of the petitioner. By granting bail under stringent conditions, the court aimed to ensure the petitioner’s cooperation with the ongoing investigation while safeguarding his legal rights.