2024 (1) TMI 126 - HC - GST

Bail Order Stands: GST Evasion Case Maintains Prior Release Despite Procedural Concerns and Potential Documentation Gaps

The SC dismissed the petition seeking bail cancellation for GST evasion allegations. Despite concerns about insufficient arrest documentation and ... Seeking cancellation of the bail granted to the respondent/accused - suppression of value of taxable supplies and non issuance of invoices with intention to evade payment of GST - HELD THAT:- When the arrest memo does not contain the reasons why the individual has to be arrested which would also be the grounds for the arrest then, at this stage, it may not be appropriate on the part of this Court to go on a hunting spree trying to cull out the reasons for arrest. They may be available in the file and it is always be to the respondent to examine them but as observed by the learned Principal Sessions Judge, the accused was not furnished with a copy of any reason to believe that it is imperative that he must be arrested. On the side of the petitioner, a grievance is expressed that the learned Sessions Judge had given findings which might play upon the mind of trial Judge during the course of recording of evidence and while deciding the finality of the case - Any Judgment passed would be on the basis of the records available / materials produced and those materials would primarily be the complaint, the oral and documentary evidence, produced during the course of trial. An order granting or denying bail can never be looked upon as sufficient material for passing a Judgment of either conviction or acquittal. This Criminal Original Petition stands dismissed. Issues involved: 1. Petition seeking cancellation of bail granted to the accused under Section 439(2) of Cr.P.C. 2. Allegations of suppression of value of taxable supplies and non-issuance of invoices to evade GST payment. 3. Dismissal of bail application by Additional Chief Metropolitan Magistrate and subsequent grant of bail by Principal Sessions Judge. 4. Examination of reasons for bail grant in conformity with CGST Act provisions. 5. Comparison of Section 69(2) of CGST Act with Section 19 of Prevention of Money Laundering Act. 6. Requirement of recording reasons for arrest and conveying grounds of arrest to the accused. 7. Absence of reasons for arrest in the arrest memo and implications on the case. 8. Concerns regarding findings made by Sessions Judge influencing trial proceedings. Details of the Judgment: The petitioner, a Senior Intelligence Officer, filed a petition seeking cancellation of bail granted to the accused, Shri Dhivi Nellaiyah, based on allegations of GST evasion through suppression of taxable supplies and non-issuance of invoices. The respondent had been arrested and remanded to judicial custody following a search and seizure under the CGST Act. The bail application was initially dismissed by the Additional Chief Metropolitan Magistrate but later granted by the Principal Sessions Judge, leading to the current petition for cancellation of bail.The Court considered whether the reasons for bail granted by the Sessions Judge aligned with the provisions of the CGST Act and whether the necessary criteria for arrest under Section 69(2) were met. The Judge noted similarities between Section 69(2) of the CGST Act and Section 19 of the PMLA, emphasizing the importance of recording reasons for arrest to substantiate the belief that the accused should be detained for further investigation.It was highlighted that the reasons for arrest should be documented in writing to ensure clarity and prevent arbitrary decision-making. The Court raised concerns about the absence of reasons for arrest in the provided arrest memo, emphasizing the significance of conveying the grounds of arrest to the accused. The petitioner argued that the reasons stated in the remand report were not sufficient for the accused to understand the basis of their custody.Furthermore, the Court addressed the petitioner's apprehension regarding the Sessions Judge's findings influencing the trial proceedings. It was clarified that the decision on bail should not impact the judgment of conviction or acquittal, and the trial Judge should independently assess the evidence presented during the trial.In conclusion, the Criminal Original Petition seeking cancellation of bail was dismissed, with the Court emphasizing that the trial Judge should base their decision on the evidence and materials presented during the trial, rather than on the bail order.