2022 (12) TMI 263 - SC - GST

Landmark Bail Order: Tax Evasion Case Sees Relief for Unmanufactured Tobacco Transportation Accused Under GST Regulations

Ratnambar Kaushik Versus Union of India

SC granted bail in GST tax evasion case involving unmanufactured tobacco transportation. Despite substantial tax allegations, court recognized completed ... Seeking grant of bail - clandestine manufacture and supply of chewing tobacco without payment of leviable duties and tax - offence alleged against him under Section 132(1)(a),(h),(k) and (l) read with Section 132(5) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- It is no doubt true, that an allegation is made with regard to the transportation of unmanufactured tobacco and it is alleged that such procurement of unmanufactured tobacco is for clandestine manufacture and supply of zarda without payment of leviable duties and taxes. Though it is further contended that in the process of the investigation, the transportation of a larger quantity of unmanufactured tobacco weighing about 35,57,450 kgs. is detected, these are all matters to be established based on the evidence, in the trial. In considering the application for bail, it is noted that the petitioner was arrested on 21.07.2022 and while in custody, the investigation has been completed and the charge sheet has been filed. Even if it is taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132(1)(l)(i), the punishment provided is, imprisonment which may extend to 5 years and fine. The petitioner has already undergone incarceration for more than four months and completion of trial, in any event, would take some time. Needless to mention that the petitioner if released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Hence, it is directed that the petitioner be released on bail subject to the conditions to be imposed by the trial Court, which among others, shall also include the condition to direct the petitioner to deposit his passport - SLP allowed. Issues:1. Bail application under Section 439 of Cr.P.C. dismissed by High Court.2. Allegations of clandestine transportation and evasion of tax under GST.3. Disputed tax amount and projected value of unmanufactured tobacco.4. Consideration of evidence and trial proceedings.5. Grant of bail with imposed conditions.Analysis:1. The petitioner approached the Supreme Court challenging the High Court's order dismissing the bail application under Section 439 of the Cr.P.C. related to alleged offences under the Central Goods and Services Tax Act, 2017 (GST).2. The allegations against the petitioner involve clandestine transportation of unmanufactured tobacco for the manufacture and supply of chewing tobacco without paying applicable duties and taxes. The prosecution contends a substantial tax amount of &8377;15,57,28,345 is involved, while the petitioner disputes this amount, arguing it should be significantly lower.3. The petitioner's senior counsel argued that the allegations are exaggerated to portray a non-bailable offence, aiming to prevent bail and secure custody. The respondent highlighted the transportation of a larger quantity of unmanufactured tobacco, emphasizing the need for evidence and trial proceedings to establish the facts.4. The Supreme Court refrained from delving into the merits of the case, recognizing that detailed examination should occur during trial proceedings. The court acknowledged the completion of investigation, filing of the charge sheet, and the petitioner's custody since July 2022, considering the potential imprisonment and fine under Section 132(1)(l)(i) of the GST Act.5. In granting bail, the court emphasized the need for the petitioner to comply with imposed conditions, including depositing the passport and actively participating in the trial. Given the documentary and electronic nature of evidence, with official witnesses providing testimonies, the court found no risk of tampering or influencing evidence. Consequently, the court directed the petitioner's release on bail, subject to conditions set by the trial court to ensure trial participation and compliance.This detailed analysis outlines the key issues addressed in the Supreme Court judgment, encompassing the bail application dismissal, contested tax amounts, trial considerations, and the subsequent grant of bail with specified conditions.