Sohan Singh Rao S/O Late Shri Daulat Singh Rao vs. Union Of INDIA

Facts

The petitioner, Sohan Singh Rao, a Director in M/s Miraj Products Private Limited, filed a bail application under Section 439 Cr.P.C. in connection with an investigation by the Directorate General of GST Intelligence (DGGI). The case relates to alleged offenses under Sections 132(1)(A), (F), (H), (I), and (L) of the Central Goods and Services Tax Act, 2017. The petitioner has been in custody since January 13, 2022. The petitioner argued that initial complaints did not implicate him, and subsequent allegations were based solely on his retracted statement. He also claimed the tax evasion amount of Rs. 869 Crores was based on surmises and conjectures. The petitioner highlighted that the maximum punishment is 5 years, the offense is triable by a Magistrate, and a significant amount of tax has been deposited. The respondent argued that the petitioner, as a Director, is responsible for the alleged tax evasion of Rs. 869 Crores through a fake firm. They contended that the petitioner's case is similar to Vinaykant Ameta, whose bail was dismissed by this Court and later granted by the Apex Court upon depositing Rs. 200 Crores. The respondent also noted that other individuals from the M/s Miraj Products Private Limited group had not appeared for investigation.

Held

The Court dismissed the bail application. It acknowledged the admitted position that the petitioner and Vinaykant Ameta were Directors in M/s Miraj Products Private Limited and that, as per the prosecution, they had evaded tax amounting to Rs. 869 Crores. The Court referred to pronouncements by the Hon'ble Apex Court emphasizing that economic offenders should not be treated as general offenders due to the serious threat they pose to the national economy. The Court found the petitioner's case to be similar to that of Vinaykant Ameta, whose bail application was previously dismissed by this Court and later granted by the Hon'ble Apex Court upon the deposit of Rs. 200 Crores. Considering the submissions of both parties, the facts and circumstances, and the seriousness of the alleged offenses, the Court concluded that it was not a fit case to enlarge the petitioner on bail under Section 439 Cr.P.C., without expressing any opinion on the merits of the case. The operative direction was the dismissal of the bail application.

Key Issues

1. Whether the petitioner is entitled to bail under Section 439 Cr.P.C. considering the alleged tax evasion of Rs. 869 Crores and the gravity of the offenses under the Central Goods and Services Tax Act, 2017? Petitioner's Arguments: The petitioner argued that he was falsely implicated, being merely a Director, and that the allegations were based on a retracted statement. He contended that the initial complaint did not name him and that the tax evasion figures were speculative. He also pointed to the relatively low maximum punishment, the compoundable nature of the offense, and the substantial deposit made towards tax liability. He relied on parity with cases where bail was granted, citing Dan Sanjay Singh Vs. Union Of India and the Apex Court's grant of bail to Vinaykant Ameta. He also argued that the department had not followed proper procedure for further investigation. Respondent's Arguments: The respondent argued that the petitioner, as a Director, was responsible for the significant tax evasion of Rs. 869 Crores. They asserted that the petitioner's case was similar to Vinaykant Ameta, whose bail application was dismissed by this Court and later granted by the Apex Court only upon depositing Rs. 200 Crores. The respondent also highlighted the non-appearance of other individuals from the company for investigation and the seriousness of economic offenses, which pose a threat to the national economy. They indicated no objection to bail if the petitioner was ready to deposit the evaded tax with penalty.