jurisdiction on criminal courts
Case Title | Subodh Kumar Garg vs Union of India |
Court | Allahabad High Court |
Honorable Judges | Justice Siddharth |
Citation | 2022 (7) GSTPanacea 186 HC Allahabad CRIMINAL MISC. BAIL APPLICATION No. – 19902 of 2022 |
Judgement Date | 19-July-2022 |
Council for Petitioner | Ms. Pragya Pandey and Mr. Anurag Mishra |
Council for Respondent | Mr. – Dhananjay Awasthi |
The High Court of Allahabad, bench of Justice Siddharth,J held that let the applicant be released on bail on his furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned subject to following conditions. Further, before issuing the release order, the sureties be verified.
FACTS OF THE CASE
The instant bail application has been filed on behalf of the applicant, Subodh Kumar Garg, with a prayer to release him on bail under Sections 132(1)(c) of the Central Goods and Service Tax Act,2017 during pendency of trial.
The applicant is a proprietor of M/s Shree Traders having its principal place of business at Araon Road Sirsaganj , Firozabad, apart from three other places of business at Manish Nagar Bodla Agra, Moja Kotta , Mathura and 41, Saryu Vihar, Kamla Nagar, Agra. The firm of the applicant is engaged in business of trading of iron and scrap and is duly registered with G.S.T. Department.
Learned counsel for the applicant has submitted that applicant’s firm received goods from registered dealers after payment of G.S.T. The firm has filed returns with G.S.T. Department. The returns from July 2017 to March 2018 could not be filed due to negligence of G.S.T. consultant firm of the applicant which was closed with effect from December, 2022 and he applied for cancellation of G.S.T. registration on 2.2.2021 which was rejected by the Department. Thereafter he again applied on 31.1.2022 for cancellation of G.S.T. registration which was allowed on 8.4.2022 .During pendency of cancellation application search in dispute was conducted by the DGGI, Regional Unit, Agra on 15.3.2022. The applicant presented himself in response to summons dated 15.3.2022 and his statement was recorded from night of 15..3.2022 to evening 16.3.2022 and he was served with arrest memo on 17.3.2022 and was arrested without lodging any complaint. Applicant stated in his statement that he purchased goods on proper Invoice, E-bill, etc., from duly registered suppliers. The application was made before Special C.J.M.Agra for taking applicant in judicial custody for further investigation alongwith complaint alleging that applicant has availed input tax credit(I.T.C.) of Rs.8.76 corers and committed offence under section 132(1) (c) C.G.S.T. Act which is non bailable and cognizable offence providing for five years maximum punishment.
Learned counsel for the applicant has further submitted that entire case of the prosecution rests on the statement of the applicant recorded by the officials of DGGI .The bail was rejected by the court below without application of mind.Out of 21 firms from which supply was taken by the firm of the applicant, 18 firms was registered on date of transaction and their registrations were cancelled either suo moto or without reason retrospectively. . At the time business with the applicant’s firm aforesaid companies were duly registered. In the Punchnama prepared by the Department no local witness is there. The grant of registration and cancellation is done by the department and not by the applicant and implication of the applicant only on ground that supplier firms of the applicant’s firm have subsequently got re-registered cannot be a ground for implicating the applicant.
Learned counsel for the applicant has finally submitted that investigation is going on in the matter and the liability is only to the extent of Rs. 3,30,59,527/- and not Rs. 8,76,45,100/ hence applicant is entitled to be released on bail since the amount is below 5 crores.The final assessment and adjudication proceedings have not been initiated. The applicant is 56 years old and is suffering from various ailments. He is willing to comply the conditions which may be imposed by this court.The applicant has availed I.T.C. without receiving any goods from supplier only on the basis of tax invoice is not correct .Applicant has deposited differential amount at the G.S.T Rs.41,69,267/- The entire case of the department in the complaint is based on the statement of the applicant and his suppliers. He has submitted that statement of the applicant under section 136 of C.G.S.T. Act cannot be read against him at this stage.
Per contra, learned counsel for the opposite party, Shri Dhanjay Awasthi, has vehemently opposed the bail application and has submitted that applicant is proprietor of M/s Shree Traders and his son Sarthak Agarwal is proprietor M/S S&S Steel Corporation, Agra and both are engaged in the business of supply of scrap, ferrous waste and scrap waste and scrap of precious metals. The firm of the applicant has taken credit from 21 non existing firms whose G.S.T. registrations have been obtained by submitting false/forged documents of amount of 87,645 lacs in G.S.T. as per section 29(3) of C.G.S.T. Act 2017. Cancellation of the registrations of such firms shall not be effect the liability of the applicant to pay tax and other dues. The investigation is going on and in case applicant is released on bail he will influence the investigation, tamper with evidence and influence the witnesses. The applicant could not explain why he has taken credit of Rs.8.76/-,crores from non existent firms in his statement. His bail application has rightly been rejected by the courts below. The offence committed by the applicant fallse under section 132(1) (c) of C.G.S.T Act, which is cognizable and non bailable offence since he has availed illegal I.T.C. worth of Rs. 8.76 Crore. He has finally submitted that applicant is not entitled to bail keeping in view of seriousness of economic offence committed by him.
jurisdiction on criminal courts
COURT HELD
After hearing rivals submission this court finds that documentary evidences collected by the department has already been placed before the court. Applicant has been found to be dealing with 18 non existent firms and their details have been furnished in the complaint. Their registrations have already been cancelled. The applicant’s case is that at the time of business with the aforesaid firms they were duly registered and allegation that firms were fake is yet to be proved.It has not been explained how applicant will tamper with the evidence or influence the witnesses.Merely because of seriousness and magnitude economic affect the bail cannot be denied to the accused. Applicant is not stated to have any criminal antecedents. He is not shown to be habitual offender.
The Calcutta High Court in WPA No. 23512 of 2019, M/s LGW Industries Ltd. Vs. Union of India decided on 13.12.2021, specifically held “(i) ITC cannot be denied if the supplier’s registration is cancelled after the date of transaction,(ii) in such circumstances no failure on the part of the purchaser is casted upon,(iii)there is no obligation on the part of the recipient to check the genuineness of the supplier in question,(iv) if any action is to be taken by the department the same is to be taken against the supplier and not against the recipient since the recipient paid the entire amount towards the cost of the goods on the supply of goods including due tax under CGST and SGST through banking channel and the recipient is not liable to pay double tax and penalty.”. In the present case the applicant has further clarified in his statement dated 15.3.2022/16.3.2022 that he has taken Input Tax Credit on proper invoices issued by the supplier of the goods. The aforesaid goods were transported to the applicants premises through valid E-way Bills, Bilty and other transport documents and payment has been made through proper banking channel. As such the applicant is liable to be released on bail as no case under Section 132(1) (c) and read with section 132(5) of the Act is made.
Section 132(1)(i) provides for punishment as that ‘in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; and section 132(2) provides that, where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.
Section 138 of the Act makes provision for compounding of offences under the Act, even after the institution of prosecution, on payment by the person accused of the offence, such compounding amount in such manner as may be prescribed. The compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences, on payment of compounding amount as may be determined by the commissioner, the criminal proceeding already initiated in respect of the said offence shall stand abated.
Taking into consideration the provisions of law and the fact that the Commissioner is empowered to recover the due amount and propose for abating the proceedings and as the trial will take its own time to conclude, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant.
In the instant case, we have already noticed that the “pointing finger of accusation” against the appellants is “the seriousness of the charge”. The offences alleged are economic offences which have resulted in loss to the State exchequer. Though, they contend that there is a possibility of the appellants tampering with the witnesses, they have not placed any material in support of the allegation. In our view, seriousness of the charge is, no doubt, one of the Bail Appln. 21/2022 Page 6 of 7 relevant considerations while considering bail applications but that is not the only test or the factor; the other factor that also requires to be taken note of is the punishment that could be imposed after trial and conviction both under the Penal Code and the Prevention of Corruption Act. Otherwise, if the former is the only test, we would not be balancing the constitutional rights but rather “recalibrating the scales of justice”. The applicant is in jail since 16.3.2022 and has no criminal history.
Let the applicant be released on bail on his furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned subject to following conditions. Further, before issuing the release order, the sureties be verified.
jurisdiction on criminal courts
ANALYSIS OF THE JUDGEMENT
By noticing the above order we analyse that the provision of Cr.P.C. confer discretionary jurisdiction on criminal courts to grant bail to the accused pending trial or in appeal against convictions; since the jurisdiction is discretionary, it has to be exercised with great care and caution by balancing the valuable right of liberty of an individual and the interest of the society in general. In our view, the reasoning adopted by the learned District Judge, which is affirmed by the High Court, in our opinion, is a denial of the whole basis of our system of law and normal rule of bail system. It transcends respect for the requirement that a man shall be considered innocent until he is found guilty. If such power is recognised, then it may lead to chaotic situation and would jeopardize the personal liberty of an individual.
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