Peeyush Kumar Jain vs UOI

No Rule To Deny Bail In Case Of Grave Economic Offence”: Allahabad HC Grants Bail To Businessman Accused Of Stashing ₹196 Crore In Cash

1. Heard Sri Anurag Khanna, the learned Senior Counsel assisted by Sri Rahul Agarwal, Ms. Tanya Makker, Sri. Malay Prasad, Ms. Saloni Mathur and Sri. Piyush Kant Shukla, the learned counsel for the applicant and Sri Dhananjay Awasthi and Sri Digvijay Nath Dubey,  the learned Senior Standing Counsel for the Directorate General of Goods and Services Tax Intelligence (DGGI).

2. By means of the instant application, the applicant is seeking his release on bail in Criminal Case No. 7646 of 2022 in the Court of learned Special Chief Judicial Magistrate (Economic Offences) / Additional Metropolitan Magistrate-III, Kanpur Nagar, arising out of a complaint filed in respect of offence under Section 132 (1) (a) read with Section 132 (1) (i) and 132 (5) of the Central Goods and Services Tax Act, 2017.

3. Briefly stated, the facts of the case are that on 22-12-2021 the Officers of the DGGI started making a search on the residential and official premises of the applicant at Kannuaj and Kanpur, which continued till 28-12-2021. Cash amounting to Rs. 196.57 Crores was seized from the applicant’s premises besides recovery of 23 kilograms gold, which was handed over to the Officers of the Directorate of the Revenue Intelligence. The applicant was arrested on 26-12-2021.

4. On 22-02-2022, the DGGI filed a complaint before the learned Special Chief Judicial Magistrate (Economic Offences) / Additional Metropolitan Magistrate-III, Kanpur Nagar against the applicant seeking his prosecution and punishment for committing the aforesaid offences. It has been  stated in the complaint that the applicant is one of the partners in the firm M/S Odochem Industries and he used to operate and manage two proprietorship concerns namely Odosynth Inc., (of which the applicant’s wife Smt. Kalpana Jain is the proprietor) and M/S Flora Naturale (of which Smt. Vijay Laxmi Jain, wife of Sri Ambrish Kumar Jain is the proprietor) and it was revealed during investigation that the aforesaid firms operated by the applicant along with his brother Ambrish Kumar Jain were collectively engaged in illicit supply of finished goods, namely perfumery compounds, without issuing any tax invoice and without payment of GST.

5. It has further been stated in the complaint that in his voluntary statement recorded on 25-26.12.2021, 06-07-08.01.2022 and 05.02.2022 under Section 70 of the CGST Act, 2017, the applicant had admitted having made illicit supply of perfumery compounds by the aforesaid firms and he had offered to pay Rs. 52 Crores towards his tax liability along with the applicable interest and penalty and that he has managed purchase of raw materials required for manufacturing of perfumery compounds without accounting for in the books and without payment of GST, but he has not disclosed the names and particulars of the buyers and sellers of the aforesaid firms.

6. As per the complaint averments, the amount of GST evasion far exceeds Rs. 500 lakhs prescribed under Section 132 (1) (i) of the Act and the offence committed by the applicant is punishable for a term which may extend to five years.

7. On 02-03-2022, the  applicant filed an application before the learned Trial Court for being released on bail and on 05-02-2022, the Trial Court passed an order rejecting the bail application on the ground that the applicant is an active partner in all the three firms; that more than Rs.196.58 Crores cash was seized from the applicant’s premises; that the financial records of the firms showed different liability of tax than seized amount of cash and no reasonable explanation was provided for the huge amount of cash seized; that the applicant has neither denied the ownership of the searched premises nor did he deny possession of the huge amount of the cash; that the matter is serious in nature and is very harmful to the economic health of the country and granting bailb in such a matter would be likely to promote such type of modusoperandi in evasion of tax. 

8. On 04-04-2022, the applicant filed an application before the Sessions Judge seeking his release on bail, and the learned Sessions Judge rejected the bail application by means of an order dated 28-04-2022 on similar grounds.

9. It has further been stated in the affidavit that the applicant is suffering from multiple illnesses like double vision, glaucoma, insomnia, hypertension, anxiety and blood pressure for which he is undergoing treatment.

10. The DGGI has filed a counter affidavit stating that during the searches conducted at the business and residential premises of the firms operated by the applicant along with his family members, unaccounted cash of Rs.196,57,02,539/- has been seized; that the applicant has  admitted that the amount seized is the sales proceed of the goods clandestinely supplied by him without payment of tax and the applicant has paid Rs. 54.09 crores towards GST liability along
with interest and penalty as per his own calculation, but as the investigations are still in progress, DGGI is yet to ascertain the final tax liabilities under Section 74 (7) of the CGST Act, 2017.

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