Allahabad High Court, bail, tax evasion

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On 29.07.2022, Judge Siddharth of Allahabad HC granted bail to an accused who had been in continuous judicial detention for more than 150 days. DGGI alleged that the accused formed 75 bogus companies and prepared false documents/invoices evidencing financial transactions between various parties with no actual movement of goods; and as a result, an input tax credit of Rs.5,28,91,94,250/- (Rupees Five Hundred Twenty Eight Crores Ninety One Lakh Ninety Four Thousand Two Hundred Fifty Only) was passed on to various purchasers.

Mr. Ramakant Gaur, Counsel for the Accused challenged the arbitrary investigation mechanism of DGGI, GST, Ghaziabad Regional Unit, Meerut, Zonal Unit, Meerut. It was specifically argued that the Ministry failed to relieve the TPS claim under Article 74 of the CGST Law in the past 5 months, despite filing the complaint after the investigation was concluded.

The Court noted that the prosecution witnesses are the alleged beneficiaries of the evaded ITC. The defendant’s attorney argued that instead of making them co-accused, they were called as witnesses in the complaint despite not being asked for a pardon and making them an approver.

Resting on Sanjay Chandra vs. CBI, [2012 1 SCC 40], the Court observed that the seriousness of the offenses alone is not conclusive as to the applicant’s right to bail. The Court noted that the trial will take a considerable time and that it may happen, in the event of refusal of release on bail, that the applicant’s police custody may be extended beyond the legal duration of the sentence, which is five years.

The Court further observed that the defendant had been in jail since February 18, 2022 and that there was no allegation that he had a criminal history of economic or other offense against him.

In light of the above facts and circumstances, the Court held that

“Bearing in mind the nature of the offence, the argument put forward on behalf of the parties, the evidence on file regarding the complicity of the accused, the wider mandate of Section 21 of the Constitution of India and the dictum of Apex Court in Dataram Singh Vs. State of UP and recent judgment of 11.7.2022 of Apex Court in Satendra Kumar Antil Vs. CBI, adopted in SLP (CRL.) No. 5191 of 2021, the Court was pleased to allow the defendant’s bail application.”

That the applicant be released on bail if he furnishes a personal surety and two sureties each of a similar amount to the satisfaction of the court concerned subject to the following conditions. In addition, before issuing the release order, the bonds must be verified: –

1. The applicant will surrender their passport, if applicable, and will not leave the country without permission from the relevant magistrate court. In case he does not have a passport, he will file an affidavit to that effect in this court.

2. The applicant shall furnish a bank guarantee of Rs. 50 lacs in favor of the opposing party which shall be forfeited in favor of the opposing party upon breach of any of the conditions imposed in this order.

3. Applicant must not tamper with prosecution evidence by intimidating/coercing witnesses, during investigation or trial.

4. Applicant shall not engage in any criminal activity or commit any crime after being released on bail. 5. That the plaintiff shall not, directly or indirectly, make any inducement, threat or promise to any person familiar with the facts of the case so as to dissuade him from disclosing these facts to the Court or to any police officer;

6. The applicant must produce an undertaking to the effect that he will not request any adjournment to the dates fixed for the testimony and the presence of witnesses at the hearing.

If this condition is breached, it will be open to the trial court to treat it as a 9 out of 10 bail abuse and make orders as required by law to ensure the plaintiff’s attendance.

In case of violation of any of the above conditions, it will be grounds for cancellation of the deposit of the applicant and forfeiture of the amount of Rs. 50 lacs provided towards the bank guarantee.

COUNSEL FOR THE APPLICANT – Ramakant Gaur, Sneha Arya, Prerana Agarwal, Harshi Gaur – Team, Law Chambers of Ramakant Gaur.

Quote: 2022 LiveLaw (AB) 348

Click here to read/download the order


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