Sandeep Kumar Agrawal vs. Union Of INDIA
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The petitioners, Sandeep Kumar Agrawal and Ram Kumar Singh, filed bail applications under Section 439 of the Cr.P.C. They were arrested for offences under Sections 132(1)(b)(c)(d) of the Central Goods and Service Tax Act, 2017. The petitioners contended they were arrested without notice, that the offence is compoundable, and that statements obtained by authorities are inadmissible under Section 136 of the CGST Act. They also argued they are not required for further investigation. The Union of India opposed the bail, alleging the petitioners, in collusion with Pankaj Khandelwal, created fake firms and made fictitious entries, claiming input tax credit of Rs. 20,00,00,000/- each, causing significant financial loss. The respondent also highlighted a prior detention of Ram Kumar Singh during demonetization with a large cash deposit.
Held
The Court rejected the bail applications of the petitioners. The Court considered the contentions of both sides, including the allegations of creating fictitious firms and claiming input tax credit amounting to Rs. 20,00,00,000/- each. The Court also noted that the investigation is ongoing in different states where these fake firms were allegedly created and input tax credit was claimed. The Court was guided by the principle laid down in State of Gujarat vs. Mohan Lal Jitamal Ji Porwal (AIR 1987 SC 1321), emphasizing that courts should not be liberal in granting bail in economic offences due to their serious impact on the country's economy. The Court found the statements recorded under Section 70 of the Act and the departmental documents to be significant. Therefore, considering the gravity of the alleged economic offence and the ongoing investigation, the Court was not inclined to grant bail.
Key Issues
1. Whether the petitioners are entitled to bail under Section 439 of the Cr.P.C. given the allegations of creating fictitious firms and claiming input tax credit of Rs. 20,00,00,000/- each, constituting offences under Sections 132(1)(b)(c)(d) of the Central Goods and Service Tax Act, 2017? Petitioner's Arguments: The petitioners argued that they were arrested without prior notice, that the offences under the GST Act are compoundable, and that statements recorded by authorities are inadmissible in light of Section 136 of the CGST Act. They also contended that they are not required for further investigation and that the offence is punishable with imprisonment of five years. Revenue's (Union of India) Arguments: The Union of India contended that the petitioners, in collusion with Pankaj Khandelwal, created fake firms using names of tea vendors, dead persons, neighbours, and employees. They allegedly made fake entries and claimed input tax credit without genuine sale or purchase, causing substantial financial loss. The respondent also cited the judgment in State of Gujarat vs. Mohan Lal Jitamal Ji Porwal (AIR 1987 SC 1321) regarding economic offences and stated that statements recorded under Section 70 of the Act are admissible, being pari-materia to Section 108 of the Customs Act.
Sections Cited
Section 132, Section 136, Section 70, Section 439, Section 108, Section 193
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Judgment / Order 05/07/2018
Petitioners have filed these bail applications under Section 439 of Cr.P.C.
File No.DGGI/JZU/INV/GST/2/18-19 dated 21.05.2018 for offence under Sections 132(1)(b)(c)(d)Central Goods and Service Tax Act, 2017. (2 of 3) [CRLMB-7499/2018]
It is contended by counsel for the petitioners that without issuing notices to the petitioners, they have been arrested. Offence under the GST Act is compoundable. Petitioners were not afforded any opportunity to explain the bills. It is also contended that the statement obtained by the Authorities cannot be read against the petitioners and the same is not relevant in view of Section 136 of the Central Goods and Service Tax Act, 2017. It is also contended that the offence is punishable with imprisonment of five years. Petitioners are in custody and are not required for further investigation.
Learned Additional Solicitor General appearing for Union of India has vehemently opposed these bail applications. His contention is that petitioners have made fake firms in collision of Pankaj Khandelwal and they have made fake entries and have obtained tax input credit to the tune of Rs.20,00,00,000/- each. It is also contended that statement recorded in pursuance of notice under Section 70 can be read against the accused as the same is pari-materia to Section Section 108 of the Customs Act and giving of false evidence in such enquiry is an offence under Section 193 of IPC.
It is also argued that petitioners in collision with Pankaj Khandelwal have created fictitious firms in names of tea vendors, dead persons, neighbours and employees and have made fake entries causing huge financial loss to the exchequer by claiming tax input credit without there being any sale or purchase. It is also argued that one of the accused Ram Kumar Singh was also detained by the police during demonetization when Rs.2.67 Crores
(3 of 3) [CRLMB-7499/2018] was deposited by him.
My attention has been drawn towards the judgment “State of Gujarat vs. Mohan Lal Jitamal Ji Porwal “ AIR 1987 SC 1321 where in the Apex Court has held that in economic offences, Court should not be liberal as it has serious effect on the economy of the country.
I have considered the contentions and have perused the statement of the accused recorded in pursuance of notice issued under section 70 of the Act and also perused the document of the Department.
Considering the contentions of learned Additional Solicitor General and also taking note of the fact that petitioners have created fictitious firms and have claimed tax input credit to the tune of Rs.20,00,00,000/- each. The matters are still at the stage of investigation in different States and at different places where fake firms have been created and tax input credit has been claimed, hence I am not inclined to entertain the bail application.
The criminal misc. bail applications are, accordingly, rejected.
A copy of this order be placed in connected file. (PANKAJ BHANDARI),J Arti/115-116
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.