Vishwa Jeet Verma vs. State Of Up And 2 Others

Held

The Court allowed the bail application. It noted that the alleged evasion of GST of Rs. 1,01,76,022/- is a bailable offense under Section 132(1)(iii) of the CGST Act. The Court also acknowledged that a significant amount of cash (Rs. 1,23,61,000/-) had already been seized from the premises. It was not disputed that the firm had a statutory right of appeal against any adjudication order upon pre-deposit of the disputed tax amount. Furthermore, the Court observed that the revenue had not yet quantified the total tax evaded, and the figure of over Rs. 5 crores was based on assumption. The applicant had been in custody since 01.10.2021 and had no criminal antecedents. Considering these factors, including the quantum of evasion, period of custody, and the bailable nature of the offense, the Court found a case for bail to be made out. The applicant was released on bail subject to furnishing personal bonds and sureties, and adhering to specific conditions including cooperation with the investigation, surrender of passport, not tampering with evidence, and not intimidating witnesses.

Facts

The Directorate General of Goods & Service Tax Intelligence (DGGSTI) conducted searches on 29.09.2021 concerning M/s Vikas & Company, seizing cash of Rs. 1,23,61,000/-. The prosecution alleged that the applicant, Vishwa Jeet Verma, controlled and managed the business of his deceased mother, Smt. Sushma Devi, who was the sole proprietor of the firm. The applicant claimed he was not involved in the business, resided separately, and had marital ties that estranged him from his family. He also argued that his brothers had initiated cancellation of one of the firm's GST registrations and attempted to cancel the other. The applicant was taken into custody from 29.09.2021 to 01.10.2021 and was allegedly tortured into providing a confessional statement. The DGGSTI summoned the applicant under Section 70 of the CGST Act, and his arrest was based on his statement admitting to being an authorized signatory and controlling the firm's activities.

Key Issues

1. Whether the arrest of the applicant, Vishwa Jeet Verma, was justified under Section 69 of the Central Goods and Services Tax Act, 2017, given that the alleged tax evasion is a bailable offense under Section 132(1)(iii) and a substantial amount of cash (Rs. 1,23,61,000/-) was already seized? - Petitioner's argument: The applicant contended that the arrest was illegal as the alleged offense (tax evasion of Rs. 1,01,76,022/-) is bailable under Section 132(1)(iii) of the CGST Act. He argued that no assessment or adjudication had been completed, and the allegations of massive suppression and clandestine clearance were premature. He also asserted he was not the proprietor, not involved in the business, and had not signed any documents for the firm, making the claim of him being an authorized signatory false. Reliance was placed on Jayachandran Alloys (P) Ltd. vs. Superintendent of GST and C.Ex., Salem, Akhil Krishan Maggu and Another vs. Deputy Director, Directorate General of GST Intelligence, and Daulat Samirmal Mehta vs. Union of India. - Revenue's argument: The State argued that searches revealed incriminating documents and that the applicant, as the eldest son of the deceased proprietor, controlled and managed the firm's activities since 2017. They claimed the applicant admitted to monthly unaccounted sales of Rs. 25-30 lakhs, leading to an estimated total GST evasion exceeding Rs. 5 crores. The investigation was ongoing, and voluminous documents supported the evasion.