2022 (9) TMI 1105 - DSC - GST

Anticipatory bail granted in tax evasion case due to prosecution's reliance on presumption without concrete evidence

The Patiala House Court-DSC granted anticipatory bail to the accused in a tax evasion case involving tobacco product manufacturing through shell firms. ... Seeking grant of anticipatory bail - shell firms/entities - tax evasion - manufacture of of Tobacco products - entire case is based on a presumption that 33 trucks dropped raw material at the factory which was unaccounted, but there is no claim as to how the finished products were removed from the factory - HELD THAT:- In present case, there is no claim that accused has been shifting factories, there is no claim that statements of the accused wherein the guilt has been admitted in terms has been recorded, there is no statement by the proprietors of the alleged fictitious firms that they were only dummy owners and the real owners/beneficiaries are the accused, there is no statement by the sellers directly implicating the applicants, there is no claim that on being summoned, the employees of the accused persons have not responded to the summons because of any threat or inducement by the applicants/accused - The entire case is based on a presumption that 33 trucks dropped raw material at the factory which was unaccounted, but there is no claim as to how the finished products were removed from the factory. Raw material and finished products are two sides of the same coin and one is directly corelated to the other. Merely, because statement of the accused has to be recorded, is not a reason for declining pre arrest bail to the accused. Further, the stand of the IO that accused is required to be arrested, while apparently, no decision in that regard has been taken by the competent authority under the Act, further strengthens the claim of the applicants. Considering that the accused is not a fly by night entity and has been paying considerable amount of taxes, which is not disputed, it is directed that in the event of the arrest of the accused, he be admitted to bail on furnishing of bail bonds, two surety bonds in the sum of Rs.1,00,000/- each. Application disposed off. Issues Involved:1. Allegations of tax evasion and clandestine production.2. Discrepancies in the investigation and claims by the Investigating Officer (IO).3. Applicant/accused's medical condition and its impact on the bail decision.4. Legal precedents and the applicability of anticipatory bail.Issue-wise Detailed Analysis:1. Allegations of Tax Evasion and Clandestine Production:The applicant/accused, a 54-year-old businessman in the tobacco industry, faced allegations stemming from the interception of two trucks in June 2022. These trucks, allegedly linked to the applicant's factory, were suspected of carrying under-invoiced tobacco products. The Department claimed that 33 trucks, traced via GPS data, transported raw tobacco to the applicant's factory in Noida instead of their intended destination. The investigation suggested that 75 trucks of raw tobacco were sold to fictitious firms, ultimately ending up at the applicant's factory, potentially leading to a tax evasion of Rs. 83 crores. However, the IO admitted that during a raid on 16.08.2022, no unaccounted raw tobacco or finished products were found at the applicant's factory.2. Discrepancies in the Investigation and Claims by the Investigating Officer (IO):The IO's claims were inconsistent. While the IO suggested the involvement of shell firms and the need for the applicant's custody to prevent further tax evasion, the Department's reply indicated that the investigation was at an initial stage and no arrest was imminent. The IO admitted that none of the proprietors of the fictitious firms had been arrested or traced, and no statements had been recorded to confirm their non-existence. The IO's inability to show unaccounted production or storage during the raid further weakened the Department's case.3. Applicant/Accused's Medical Condition and Its Impact on the Bail Decision:The applicant's counsel highlighted the applicant's severe medical history, including multiple surgeries for bone/brain tumors, diabetes, hypertension, and a recent coronary event. The Department did not dispute the applicant's medical condition. The court considered the applicant's medical history and the maximum punishment of five years for the alleged offense, emphasizing leniency for old age, sick, and infirm individuals under Section 437 of the Cr.PC.4. Legal Precedents and the Applicability of Anticipatory Bail:The court referenced several legal precedents, including Sushila Aggarwal Vs. State of NCT of Delhi, Ameet Khandelwal Vs. State of NCT of Delhi, and Tarun Jain Vs. DGGI. These cases underscored that anticipatory bail does not restrict the police's ability to investigate and that economic offenses, while serious, do not always necessitate custodial interrogation. The court noted that the Department had not shown any production or storage of unaccounted goods and that the applicant had cooperated with the investigation. The court also acknowledged the applicant's substantial tax payments and the lack of evidence implicating the applicant directly in the alleged offenses.Conclusion:The court granted anticipatory bail to the applicant, considering the inconsistencies in the investigation, the applicant's medical condition, and the legal precedents favoring bail in similar cases. The court directed that the applicant be admitted to bail on furnishing bail bonds and surety bonds, emphasizing that the applicant was not a flight risk and had a history of substantial tax payments. The application was disposed of, and the order was issued dasti.