Tax evasion over Rs. 5 crores ruled non-bailable under Section 132 of TNGST Act, bail denied to prevent evidence tampering

The HC held that the tax evasion in the case exceeded Rs. 5 crores under the TNGST Act, confirming the offence as non-bailable under Section 132. Despite discrepancies in figures in the arrest memo, prosecution material demonstrated continuous evasion since 2018-2019. The court found a strong apprehension that the petitioner, having created fictitious companies and records, would tamper with evidence if released. Given the investigation was at a crucial stage, bail was denied to prevent interference with the inquiry. The petition for bail was dismissed.

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Issues:
Bail application under Section 132 of TNGST Act, 2017 for offences related to tax evasion exceeding Rs. 5 crores.

Analysis:
1. Magnitude of Tax Evasion: The petitioner, a proprietor engaged in bill trading activities, is accused of fraudulently passing on Input Tax credit, resulting in a loss of Rs. 5,16,66,620 to the government. The complaint alleges creation of fake invoices without actual movement of goods, availing input tax credit fraudulently, and wrongful utilization of funds, totaling over Rs. 5 crores. The prosecution contends that the offence falls under Section 132(1) of TNGST Act, a non-bailable offence due to the substantial amount involved.

2. Bail Grounds: The petitioner seeks bail citing the evasion amount being Rs. 3.39 crores, a bailable offence under Section 132 of TNGST Act. Additionally, it is argued that inadequate opportunity was given before remand, as required by law. The petitioner's claim of being entitled to bail after custodial interrogation, which has already taken place, is presented as a ground for release.

3. Prosecution's Counter: The respondent asserts that after thorough inspection and record collection, the petitioner failed to produce authentic documents, indicating involvement in tax evasion exceeding Rs. 5 crores. The prosecution presents a detailed breakdown of the tax evasion across different financial years, emphasizing the petitioner's issuance of fake invoices without actual goods movement and minimal cash payments compared to the total amount involved.

4. Legal Provisions: Section 132 of TNGST Act outlines various offences related to tax evasion, with specific penalties based on the amount involved. The law categorizes offences based on the quantum of tax evaded, with imprisonment terms ranging from one to five years and fines. The section also specifies that offences under clauses (a) to (d) are cognizable and non-bailable, emphasizing the seriousness of tax-related crimes.

5. Judicial Decision: The court notes discrepancies between the petitioner's claims of a lesser evasion amount and the prosecution's evidence indicating a higher sum exceeding Rs. 5 crores. Considering the critical stage of investigation and the risk of evidence tampering, the court dismisses the bail application, upholding the non-bailable nature of the offence and the prosecution's concerns regarding potential interference with the case.

In conclusion, the judgment highlights the complexity of tax evasion cases, the legal framework governing such offences, and the judicial scrutiny applied to bail applications in light of the seriousness of financial crimes.

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