TaxTMI 
TaxTMI 
2026 (7) TMI 356
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.... at the factory premises of M/s Vikas Enterprises situated at Shankarpur Taal, Industrial Area, Gwalior, belonging to the present applicant. During inspection, several automatic pouch packing machines, manual pouch packing machines, raw materials, finished goods, documents, CCTV devices and electronic gadgets were seized. According to the prosecution, although the applicant claimed to manufacture scented supari falling under HSN 2106, investigation revealed that he was actually manufacturing pan masala by mixing scented supari with lime and other ingredients without obtaining mandatory registration under the HSNS Cess Act, 2025. It is alleged that the applicant possessed three automatic pouch packing machines and twelve manual pouch packing machines without obtaining registration or making declaration before the competent authority. It is further alleged that the applicant intentionally classified the product under HSN 2106 attracting GST @5%, whereas the goods actually manufactured were pan masala attracting GST @28% along with HSNS Cess. The prosecution has further alleged that statements recorded under Section 70 of the CGST Act establish the involvement of the applicant and tha....
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.... comprising his wife and two minor daughters. It is further argued that continued incarceration would cause irreparable hardship to his dependent family. Learned counsel submits that the applicant satisfies the well-settled triple test governing grant of bail as there is no possibility of his absconding, influencing the witnesses or tampering with the evidence. The learned counsel has further invited attention of this Court towards the seizure panchnama dated 19.03.2026 and 20.03.2026. It is submitted that the seizure memo itself does not disclose seizure of tobacco. Looking carefully to the seizure panchnama it is evident that no tobacco leaves, no tobacco dust, no nicotine, no chewing tobacco, no khaini, no zarda, no gutkha have been seized. 5. It is argued that the articles seized comprise scented supari, betel nut, cloves, cardamom, menthol, perfume, mulethi, lime, packing materials and machines. According to learned counsel, even if the entire prosecution case is accepted at its face value, the seizure itself demonstrates manufacture of scented supari and not tobacco products. It is further submitted that whether addition of lime to scented supari converts the product into ....
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....emises of M/s Vikas Enterprises situated at Shankarpur Taal, Industrial Area, Gwalior. During inspection, it was discovered that although the applicant had declared himself to be manufacturing scented supari falling under HSN 2106, he was actually engaged in manufacturing pan masala by mixing lime and other ingredients through automatic pouch packing machines. It is submitted that during inspection and search proceedings, three automatic pouch packing machines and twelve manual pouch packing machines were found installed in the factory. The applicant failed to produce any declaration or registration under the Health Security National Security Cess Act, 2025 in respect of the said machines. 11. Learned counsel further submits that under Rule 32 of the HSNS Cess Rules, 2026, once such undeclared machines are found in operation, the cess liability is required to be determined on the basis of machine capacity and the statutory deeming provision. 12. According to the respondent, invoices recovered from the premises indicate purchase of lime powder, menthol, betel nut pieces, perfume, cloves, cardamom, peppermint, flavouring agents and other ingredients ordinarily used in the manuf....
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....ambaram v. Directorate of Enforcement, (2020) 13 SCC 791, P. Chidambaram v. CBI, (2020) 13 SCC 337, Amarendra Dhari Singh v. Directorate of Enforcement (Supra), D.K. Shivakumar v. Directorate of Enforcement (supra), Gautam Khaitan v. CBI (supra), CGST Delhi West v. Vishal Goyal (supra) and Directorate of Revenue Intelligence v. Khushant Nagpal (supra) to contend that in offences punishable up to seven years, continued incarceration should not be resorted to unless custodial interrogation is necessary or the accused fails to satisfy the triple test. 17. On the other hand, the respondent has relied upon the judgments of the Hon'ble Supreme Court in Y.S. Jagan Mohan Reddy v. CBI, (2013) 7 SCC 439, and State of Gujarat v. Mohanlal Jitamalji Porwal, AIR 1987 SC 1321, as well as the decisions of the Rajasthan High Court in Rajesh Goyal v. Union of India (supra) and Amal Mubarak Salim Al Rayami v. Union of India(supra), to contend that economic offences stand on a different footing and deserve a stricter approach while considering bail. 18. There cannot be any quarrel with the proposition laid down in Y.S. Jagan Mohan Reddy (supra) that economic offences are serious in nature an....
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....ion can proceed without continued incarceration. Thus, the statutory framework governing the present case itself requires the Court to examine whether continued detention of the applicant is genuinely necessary. 25. A significant circumstance which weighs with this Court is the seizure panchnama dated 19.03.2026 and 20.03.2026. The prosecution itself has relied upon the said seizure memo. 26. A careful reading of the panchnama shows seizure of scented supari, betel nut, chopped betel nut, betel nut dust, mulethi, cloves, cardamom, nutmeg, perfume, menthol (solid and liquid), lime, packing material, pouch rolls, automatic pouch packing machines, manual pouch packing machines, finished packets described as "VM Black Scented Supari", ready mix scented supari, documents, electronic devices and CCTV equipment. 27. Significantly, the seizure memo does not record seizure of tobacco, chewing of tobacco, nicotine, khaini or any finished product that may be described as gutkha. No laboratory report has been placed before this Court at this stage demonstrating that the seized finished goods contain tobacco. Similarly, the seizure memo does not indicate recovery of tobacco leaves, tob....
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....any specific documentary evidence which still remains susceptible to tampering by the applicant. The Hon'ble Supreme Court in P. Chidambaram v. CBI, (supra), has observed that where documentary evidence is already in possession of the investigating agency, the apprehension of tampering substantially loses its force. The said principle appears applicable to the facts of the present case. 30. Nothing has been placed before this Court suggesting that the applicant ever attempted to evade the process of law. Therefore, at least for the purposes of adjudication of the present application, the applicant appears to satisfy the triple test recognised by the Hon'ble Supreme Court in P. Chidambaram v. Directorate of Enforcement, (supra). 31. This Court is conscious of the observations made by the Hon'ble Supreme Court in Y.S. Jagan Mohan Reddy v. CBI, (supra), State of Gujarat v. Mohanlal Jitamalji Porwal, AIR 1987 SC 1321, as well as the decisions in Rajesh Goyal and Amal Mubarak Salim Al Rayami (supra), wherein economic offences have been treated as grave offences affecting the economy. However, those judgments do not lay down an absolute embargo against grant of bail. Gr....