2024 (1) TMI 905 - HC - GST

Bail denied for tax evasion accused in crores fraud involving fake import invoices and GST registration

PANKAJ KARSANBHAI THACKER Versus STATE OF GUJARAT

Gujarat HC dismissed regular bail application for tax evasion accused. Applicant allegedly conspired with others to evade taxes worth crores by ... Seeking grant of regular bail - evasion of tax - the present applicant has indulged into the activities of intentional evasion of tax by falsely representing that they have imported betel nuts from abroad by fabricating various purchase invoices - Petitioner has obtained false GST registration and opened bank account in the name of said firm and by creating false and fabricated record, same has been used as genuine - HELD THAT:- It is found out from the available record that the present applicant – accused, in connivance with other accused persons, have hatched criminal conspiracy of evasion of tax and as a part of said conspiracy, they have prepared false and fabricated documents i.e. purchase invoices and by using it as genuine, they have committed an offence of tax evasion in crores of rupees, which has come on record during the course of investigation. It is true that the applicant is not named in the FIR, however, the role played by the applicant at the time of commission of crime is found out from the investigation papers collected so far. Further during the course of investigation, the statements of the witnesses as also the accused persons, whose names are there in the FIR, have been recorded and at that point of time, the involvement of the present applicant as prime accused is found out. There are past antecedents of the applicant – accused in similar type of nature, wherein also, the applicant – accused in connivance with other accused persons, have committed offence of tax evasion in crores of rupees and thereby the Government exchequer has suffered loss in crores of rupees and the said fact is substantiated from the police papers collected so far, however, it is not proper at this stage to disclose at this juncture. Thus from this fact itself, it is clear that the applicant is habitual offender and is adopting such type of modus operandi while committing offence. Further from the statements of the witnesses recorded by the concerned IO during the course of investigation, the witnesses have described the modus in a very categorically terms and from those statements, entire picture would be crystallized. Over and above that, strong apprehension has been shown by prosecution that if the applicant is released on bail then, there is possibility of tampering with the evidence and fleeing away from the trial. Further as stated above, the present application is filed before submission of the chargesheet and the investigation is not yet completed and the apprehension has been shown by prosecution that if the applicant is released on bail then, there is possibility of tampering with the evidence and hampering with the witnesses, which would affect the trial. Therefore considering the nature of offence, role attributed to the applicant, played by him and past antecedents of the applicant similar in nature, it is opined that the present application deserves to be rejected. Application dismissed. Issues Involved:1. Application for regular bail under Section 439 of the Code of Criminal Procedure, 1973.2. Allegations of tax evasion and forgery under the Indian Penal Code.3. Jurisdiction and authority under the Central Goods and Services Tax Act, 2017 (GST Act).4. Consideration of past antecedents and potential for tampering with evidence.Summary:1. Application for Regular Bail:The application was filed under Section 439 of the Code of Criminal Procedure, 1973, for regular bail in connection with an FIR registered for offenses under Sections 420, 465, 467, 468, 120(B), 201, 472, and 114 of the Indian Penal Code. The applicant was arrested on 30.11.2023 and has been in judicial custody since then.2. Allegations of Tax Evasion and Forgery:The allegations against the applicant include intentional evasion of tax by falsely representing the import of betel nuts through fabricated purchase invoices, thereby obtaining illicit financial gains. The applicant allegedly orchestrated a scheme to defraud the Government by selling imported betel nuts without remitting the required tax obligations. The applicant's involvement surfaced during the investigation, which revealed the creation of false and fabricated bills in the name of Mohit Enterprise and the opening of a bank account in the firm's name.3. Jurisdiction and Authority under the GST Act:The defense argued that as per the GST Act, only officers not below the rank of Joint Commissioner have the authority to inspect, search, and seize, and the power of arrest is subject to written approval by the Commissioner. The defense cited the case of Canon India Pvt. Ltd. Vs. Commissioner of Customs, asserting that only proper officers under the Customs Act can investigate tax evasion cases. The court, however, noted that the FIR was registered under the Indian Penal Code and not under the GST Act, making the defense's argument about jurisdiction and procedure under the GST Act irrelevant.4. Consideration of Past Antecedents and Potential for Tampering with Evidence:The prosecution opposed the bail, citing the nature and gravity of the offense and the ongoing investigation. The applicant was identified as the main accused, with a significant role in the criminal conspiracy involving tax evasion through forged documents. The court considered the applicant's past antecedents, which included similar offenses of tax evasion and forgery, leading to substantial losses to the Government exchequer. The court expressed concerns about the potential for tampering with evidence and witnesses if the applicant were released on bail.Conclusion:The court rejected the bail application, emphasizing the seriousness of the allegations, the applicant's role in the conspiracy, and the potential for tampering with evidence. The decision was based on the need to balance individual liberty with societal interests, as highlighted by the Supreme Court in Rajesh Ranjan Yadav @ Pappu Yadav Vs. CBI Through its Director. The observations made were confined to the decision of the present bail application.