Accused charged with clandestine supply of branded TMT bars and GST evasion granted bail

The Allahabad HC granted bail to an accused charged with clandestine supply of branded TMT bars and GST evasion. The prosecution case relied solely on one witness statement with no incriminating evidence discovered during searches. The court noted the maximum punishment was five years imprisonment, trial had not commenced, and the accused had been in custody since June 2024. Considering the nature of charges, severity of punishment, and that the accused's complicity remained to be determined at trial, the HC found a case for bail was established and granted relief subject to conditions.

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Issues Involved:
1. Allegations of GST evasion by the applicant.
2. Admissibility and reliability of evidence and statements.
3. Applicant's cooperation with the investigation.
4. Legal principles governing the grant of bail in economic offenses.
5. Conditions for granting bail.

Issue-wise Detailed Analysis:

1. Allegations of GST Evasion by the Applicant:
The prosecution alleged that the applicant, through his firm, clandestinely supplied branded TMT bars worth Rs. 344 crores, evading GST of approximately Rs. 52 crores from January 2019 to November 2022. The applicant was arrested and sent to jail based on this accusation.

2. Admissibility and Reliability of Evidence and Statements:
The applicant's counsel argued that the entire prosecution case is based on the statements of Rippan Kansal and Sanjay Gupta, which are inadmissible until cross-examined under Section 136 of the CGST Act. The counsel cited several cases, including Kumar Trading Company, Varanasi vs. Commissioner of Trade Tax, U.P. Lucknow, emphasizing that the burden lies on the Revenue Authority to prove the genuineness and authenticity of the evidence seized from a third party. The applicant denied any connection with the alleged clandestine activities and claimed that no incriminating articles were found during the search.

3. Applicant's Cooperation with the Investigation:
The applicant's counsel contended that the applicant had been cooperative during the investigation, arranging inspections and providing necessary documents. They argued that the applicant could not be termed a habitual offender as the previous case involving a demand of Rs. 3.48 crores was still pending adjudication. The counsel also pointed out that the department did not seek custodial interrogation, indicating no further need for the applicant's custody.

4. Legal Principles Governing the Grant of Bail in Economic Offenses:
The court considered the legal principles laid down in various judgments, including Satender Kumar Antil vs. Central Bureau of Investigation and P. Chidambaram vs. Directorate of Enforcement. It was noted that while economic offenses require a different approach, bail is not absolutely barred. The court emphasized that the grant of bail is the rule and refusal is the exception, considering the gravity of the offense and the severity of the punishment.

5. Conditions for Granting Bail:
The court concluded that the applicant had made out a case for bail, considering that the trial had not yet started, and the applicant's complicity was yet to be determined. The alleged offense is punishable by a maximum of five years, and the applicant had been in jail since June 2024. The court imposed several conditions for granting bail, including:
- The applicant must appear before the trial court on the fixed dates.
- The applicant must not commit a similar offense.
- The applicant must not tamper with evidence or influence witnesses.
- The applicant must surrender his passport and not leave the country without court permission.

Conclusion:
The bail application was allowed, and the applicant was ordered to be released on bail on furnishing a personal bond and two heavy sureties, subject to the specified conditions. The court emphasized that any breach of these conditions would allow the prosecution to seek bail cancellation.

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