Directorate General Of GST Intelligence vs. Chaman Goel

Facts

The Directorate General of GST Intelligence (DGGI) intercepted 21 containers of smoking mixtures from Mundra Port, which were found to be spurious and unfit for human consumption. Investigations revealed that M/s Radiant Traders supplied the mixture to M/s Harsha International for export. The proprietor of Radiant Traders admitted to acting at the behest of Chirag Goel. Manish Goyal, proprietor of Radiant Traders, was arrested under the CGST Act. During a search of Chaman Goel's premises, unaccounted cash of Rs. 99,95,000/- was found, and Chaman Goel was observed to have absconded. Subsequently, Chaman Goel and Chirag Goel were granted anticipatory bail by the Additional Sessions Judge (ASJ), subject to conditions, including not leaving the country. Chaman Goel later attempted to leave the country, leading to the cancellation of his anticipatory bail by the ASJ. The DGGI filed petitions challenging the initial grant of anticipatory bail, while Chaman Goel filed a petition challenging the cancellation of his bail.

Held

The Court held that Section 438 of the CrPC is not applicable to offences under the CGST Act, referencing the Supreme Court's decision in State of Gujarat v. Choodamani Parmeshwaran Iyer. The Court found that the ASJ erred in granting anticipatory bail to Chirag Goel and Chaman Goel. The lab test report, while having some queries unanswered, conclusively stated that the seized sample was not 'smoking tobacco' as declared. The Court reasoned that this finding was sufficient to establish that the product was spurious and not fit for human consumption, making the remaining queries irrelevant for bail purposes. The Court also noted the large corpus of the economic fraud, the beneficiaries being the accused, and their evasion of summons. Furthermore, Chaman Goel's attempt to flee the country in violation of bail conditions was a significant factor. Consequently, the anticipatory bail granted to Chirag Goel and Chaman Goel was cancelled. The DGGI's petitions were allowed, and Chaman Goel's petition was dismissed.

Key Issues

1. Whether Section 438 of the Code of Criminal Procedure, 1973 (CrPC) is applicable for granting anticipatory bail in cases involving offences under the Central Goods and Services Tax Act, 2017 (CGST Act), in light of the Supreme Court's order in State of Gujarat v. Choodamani Parmeshwaran Iyer? The DGGI argued that Section 438 CrPC is not applicable to CGST Act offences, citing the Supreme Court's order. The respondents (Chaman Goel and Chirag Goel) contended that the Supreme Court's order was distinguishable as they had a genuine apprehension of arrest due to a co-accused's arrest, and the order should not have retrospective operation. 2. Whether the Additional Sessions Judge erred in granting anticipatory bail to Chirag Goel and Chaman Goel, considering the nature of the alleged economic offence and the lab test report? The DGGI argued that the accused were involved in a serious economic offence involving GST evasion of Rs. 218 crores, and the lab report confirmed the seized product was spurious. The respondents argued that the lab report was inconclusive and that GST on cigarettes was paid, and it was not proven that the seized products were not made from cigarettes.