TaxTMI 
TaxTMI 
2026 (5) TMI 917
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....ess premises of M/s Hunka Traders, a proprietorship concern of the applicant situated at AB Road, Purani Chhawani, Shankarpur Tal, Industrial Area Motijheel, Gwalior, Madhya Pradesh, in exercise of powers under Section 67(2) of the C.G.S.T. Act read with Section 12F of the Central Excise Act, 1944. 3. During search proceedings conducted in the presence of independent panch witnesses, it was found that the applicant, while portraying himself as a trader of detergent and scented tobacco, was engaged in illegal manufacture and packing of chewing tobacco, zarda and scented tobacco pouches through packing machines installed in the premises. It is alleged that two electricity-operated single-track packing machines were found installed in the premises. One machine bearing Motor No. PGD 65315 was operational having packing capacity of approximately 105 pouches per minute and the second machine, though claimed by the applicant to be nonfunctional, was installed with electric panel switch VFD-L RS-485 and allegedly capable of production at 115-120 pouches per minute. 4. The raw tobacco, perfume/flavour and menthol were mixed in a mixer machine to manufacture scented tobacco which was t....
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....ught to apply. The applicant does not bear any criminal antecedents and is a law abiding citizen along with a reputed trader. The applicant is sole breadwinner of the family and has dependent wife and minor child. The investigation is substantially documentary in nature and all relevant documents, machinery and goods have already been seized, therefore, there is no requirement of custodial interrogation and also there is no possibility of tampering with evidence or influencing witnesses. 7. Learned counsel for the applicant relied upon certain judgements which have been passed from time to time and the same are reproduced herein for ready reference:- 8. This Court has gone into all the aspect of the arguments and has perused the spirit of all these judgements, but for the sake of concise order, the relevant parts are reproduced herein;- (i) P. Chidambaram v. Directorate of Enforcement (2020) 13 SCC 791, the applicant relied upon the judgment to contend that even in economic offences bail cannot be denied as a rule and that gravity of offence is only one factor in addition to the "triple test" namely flight risk, tampering of evidence and influencing witnesses. ....
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....atements recorded under Section 70 of the CGST Act establish involvement of the applicant. The investigation regarding purchase, installation and usage period of machines and involvement of co-accused persons is pending. The applicant failed to disclose supplier details, purchaser details and source of raw materials. If the applicant is enlarged on bail, the applicant may tamper with evidence or influence witnesses. The offence under Section 9 read with Section 9A(1A) of the Central Excise Act is of non-bailable nature The applicant's brother is also involved in another major tax evasion case indicating existence of organized syndicate activities. Even, the applicant failed to cooperate during interrogation even while in judicial custody. 10. It is further argued that the present applicant is accused of not only tax evasion, but some other offences like obtaining license for manufacturing some other goods and is preparing some other goods, this act of the applicant also comes under the ambit of offence punishable under relevant Sections of IPC. 11. Learned counsel for the the respondent/Department relied upon the following judgements- Y.S. Jagan Mohan Reddy v. Central Bureau ....
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.... and Rule 22 of the Rules, 2026 by concealment of packing machines and clandestine manufacturing activity. Prima facie material including statements under Section 70 of the CGST Act, seizure of machines, raw materials and finished products, support the prosecution allegations. 19. This Court further finds that the offences alleged are economic offences involving substantial evasion of government revenue. The Hon'ble Supreme Court in Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation(supra) has categorically held that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. 20. Similarly, in State of Gujarat v. Mohanlal Jitamalji Porwal (supra), the Hon'ble Supreme Court observed that economic offences are committed with deliberate design affecting the community and national economy. 21. This Court is conscious of the principles laid down in P. Chidambaram v. Directorate of Enforcement (supra) and Sanjay Chandra v. Central Bureau of Investigation(supra) relied upon by learned counsel for the applicant. However, the said judgments themselves recognize that gravity of economic offence, magnitude of evasion and l....