One single circumstance can’t be treated as of universal validity to either grant or refuse bail: Odisha High Court

HIGH COURT OF ORISSA: CUTTACK BLAPL No.4125 OF 2020 In the matter of an application under Section 439 Criminal Procedure Code 1973) Pramod Kumar Sahoo State of Odisha For petitioner For the Opp. Party: … Opposite Party Shri Ravi Shankar Samal S. Mishra S.N. Kanungo S.P.Jena & R. Mohanty Shri Sunil Kumar Mishra Additional Standing Counsel THE HONOURABLE SHRI JUSTICE S.K. PANIGRAHI Date of Hearing: 16.10.2020 Date of judgment: 23.12.2020 1. The present petition arises out of a written arrest memo bearing No. 104 CT & GST issued by the Enforcement Unit Bhubaneswar dated 13.03.2020 U s. 132(I)(b)(c)(i) of OGST Act 2017 whereunder the Petitioner has been arrested on 12.03.2020 and has since been in custody. 2. The brief facts of the case as alleged by the informant the CT & GST Enforcement unit Bhubaneswar by the Deputy Commissioner of Sales Tax CT& GST Enforcement Unit BBSR is that the petitioner is the proprietor of M s. Sahoo Traders having GSTIN 21BSWP549B7B1ZH. The said firm is carrying out business at Plot No. 309 1825 Sailashree Vihar Bhubaneswar. The allegation is that during the period between July 2017 to December 2019 the said firm has availed utilized bogus input tax creditof Rs. 2.48 crores on the strength of fake purchase invoices issued in the name of 21 fictitious entities. It has also allegedly been found to have passed on bogus Input Tax Credit of 2.48 crores to the tax payers within and outside the state of Odisha in the name of the firm of the Petitioner. It has also been alleged that the Petitioner in collusion with others has been found to have created and operated 6 fictitious firms to avail utilize bogus Input Tax Credit ITC) of Rs.34.23 crores in their names on the strength of fake purchase invoices without physical receipt of goods and has passed on the same to recipients both within and outside the 3. The learned Counsel for the Petitioner has contended that the petitioner has always made genuine sale and purchase of goods using genuine GSTN and has paid Tax accordingly. He further submitted that the petitioner has been in custody since the month of 12.3.2020 and in the meantime charge sheet has been filed on 07.05.2020 U s.132(1)(b)(c)(i) of OGST Act 2017. The fact that an earlier bail application has been rejected by the learned Addl. Sessions JudgecumSpecial Judge CBI Court No.1 BBSR vide its order dated 25.03.2020 has been brought on record. The investigation has been kept pending for a long time and no purpose would be solved by keeping the petitioner in custody since he has been examined and all the relevant evidences required for adjudication are now on record. He further submitted that the petitioner is willing to co operate with the prosecution as and when required. He also undertakes to produce the Audit report for the relevant period i.e. financial year from 2017 to 2019. 4. The learned Counsel for the State on the other hand has made detailed submissions and has painstakingly taken us through the records of the case to demonstrate the alleged manner in which the bogus ITC has been claimed and passed on to other persons. He has taken us through the relevant rules to show that mere grant of a registration under the Act does not ipso facto grant a license to the accused person to abuse the process of law. He has contended that the Petitioner received invoices and E waybills through his mail from the other accused persons i.e. Vikash Sarawagi and Ankit Agarwal of M s. Utsav Enterprises M s. Blenders Iron & Steel and M s. Shree Shyam Enterprises which is evidenced from the mail of the Petitioner. 5. He further contends that the Petitioner has allegedly admitted that he has purchased goods worth of Rs.2 96 10 354 from M s. Blenders Iron & Steel bearing during the period from August 2018 to October 2018. However as per the Bank statement belonging to M s. Sahoo Traders an amount of Rs.3 34 31 625 seems to have been paid to M s. Blenders Iron & Steel for the period from 31.08.2018 to 19.01.2019. Similar connivance has been attributed to other accused persons namely Ankit Agarwal and Bhabagrahi Manik to contend that they have effected fictitious transactions with these fake firms to commit offences under the Act. Lastly the learned counsel for the petitioner has placed strenuous reliance on the order passed by this Court in case of Amit Beriwal v. State of Odisha1 decided on 27.7.2020. 6. The facts in issue here are that the present petitioner is having a business entity in the name and style of M s. Sahoo Traders office and stationed at Bhubaneswar since last 10 years. It has been contended that the petitioner being a genuine business man has always paid the tax due for which he has been awarded by the concerned Department in the past. The records of GST paid have been produced for the financial years from 2017 to 2018 2018 to 2019 and 2019 to 2020. It has been 1BLAPL No. 22120 submitted that the petitioner has been maintaining the records as required in law. It was further stated that the petitioner is a genuine businessman who prior to start the above iron and steel material products had availed a cash credit loan by mortgaging all his personal parental property with the City Union Bank for an amount of Rs.1 22 26 269 . 7. This Court while dealing with the contention of the counsels for the parties has taken note of the fact that in such matters the evidence is largely based on documentary evidence. Once the charge sheet has been filed unless antecedents to the contrary can be demonstrated the presence of the accused may not be required to take the prosecution to its logical conclusion. 8. The object of the law in question is to act as a deterrent in blocking loopholes in an otherwise nascent law which concerns itself with the collection of revenue for the State. Section 132(1) i)of the Act provides that in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees with imprisonment for a term which may extend to five years and with fine. Similarly Section 132(ii) of the Act provides a punishment with imprisonment for a term which may extend to three years and with fine when the amount in question is greater than Rs.2 crores but does not exceed Rs. 5 crores. Likewise the punishment prescribed under Section 132 1)(iii) for amount between one crore to two crores the maximum imprisonment can be for a maximum period of one year. In cases where the amount is less than one crore of rupees the same has been made compoundable. It may also be noted that the present proceedings are still at a teething stage and may if the parties choose be subject to the rigours of law as prescribed under the Statute i.e. assessment appeal and revision etc. Till such time the guilt of the accused person would not have crystallized and it would difficult to pre judge at the stage of hearing an application for bail what the ultimate punishment imposed would be. In such circumstances keeping an accused in custody might not ultimately achieve the ends of justice. 9. While deciding the controversy at hand this Court was taken through the view taken by other High Courts in such matters with an endeavour to impress upon the fact that the Courts are gradually becoming more lenient and alive to the fact that the assessment in such matters is largely based on documents or documentary records and also that generally the completion of proceedings has become tedious and time taking. It is these factors including the fact that the proceedings do not attain finality till the time the person in default or accused has availed all these remedies available to him under the act in question. Such a view can be seen in the cases of Rakesh Kumar Khandelwal v UOI2 Kishor Wadhwani v State of M.P.3 Vijay Kumar Nair v State of M.P.4 Lalit Kumar Gandhi v State of M.P.5 and Nitesh Wadhwani v State of MP.6Considering the fact that the nature of the offence under the Act compoundable in nature the bail has been granted in the case of Sanjay Kumar Bhuwalka v.Union of India7 and Sanjay Kumar Bhuwalka v.Union of India8. 10. However the most cogent reasoning has been adduced by the Madras High Court in the case of Jayachandran AlloysLtd. Vs. Superintendent of GST & C. Ex. Salem9it has been aptly held that “38. Though the discussions and conclusions therein have been rendered in the context of Chapter V of the Finance Act 1994 levying service tax I am of the view that they are equally applicable to the provisions of the CGST Act as well. Section 132 of the Act as extracted earlier imposes a punishment upon the Assessee that ‘commits’ an offence. There is no dispute whatsoever that the offences set out under to of the provision refer to those items that 22019 SCC OnLine Raj 6711 32020 SCC OnLine MP 1734 42020 SCC OnLine MP 1731 52020 SCC OnLine MP 836 62020 SCC OnLine MP 1732 72018 SCC OnLine Cal 4674 82018 SCC OnLine Cal 9774 92019G.S.T.L. 321constitute matters of assessment and would form part of an order of assessment to be passed after the process of is complete and taking into account the submissions of the Assessee and careful weighing of evidence found and explanations offered by the Assessee in regard to the same. 39. The use of words ‘commits’ make it more than amply clear that the act of committal of the offence is to be fixed first before punishment is imposed. The allegation of the revenue in the present case is that the petitioner has contravened the provisions of Section 16(2) of the Act and availed of excess ITC in so far as there has been no movement of the goods in the present case as against the supplier and the Petitioner and the transactions are bogus and fictitious created only on paper solely to avail ITC. The manner of recovery of credit in cases of excess distribution of the same is set out in Section 21 of the Act. This section provides that where the Input Service Distributor distributes credit in contravention of the provisions contained in Section 20 resulting in excess distribution of credit to one or more recipients the excess credit so distributed shall be recovered from such recipients along with interest and the provisions of Section 73 or Section 74 as the case may be shall mutatis mutandis apply for determination of amount to be 40. Thus ‘determination’ of the excess credit by way of the procedure set out in Section 73 or 74 as the case may be is a prerequisite for the recovery thereof. Sections 73 and 74 deal with assessments and as such it is clear and unambiguous that such recovery can only be initiated once the amount of excess credit has been quantified and determined in an assessment. When recovery is made subject to ‘determination’ in an assessment the argument of the department that punishment for the offence alleged can be imposed even prior to such assessment is clearly incorrect and amounts to putting the cart before the horse.” 11. In so far as the reliance is placed on the case of Amit Beriwal supra) is concerned it is to be borne in mind that each case depends on the facts of that case. The position regarding bail in such offences as provided by the Delhi High Court in the case of H. B. Chaturvedi vs C.B.I10: Para 9. In Anil Mahajan v. Commissioner of Customs & Anr.11 this court after considering the judgments inter alia in Gurcharan Singh & Others v. State 459 2010. 1184DLT 854 12AIR 1978 SC 179. 13Air 1978 SC 729. circumstances the cumulative effect of which must enter into the judicial verdict. Any one single circumstance cannot be treated as of universal validity or as necessarily justifying the grant or refusal of bail. For the purpose of granting or refusing bail there is no classification of the offences except the ban under Section 437(1) of the Criminal Procedure Code against grant of bail in the case of offences punishable with death or life imprisonment. Hence there is no statutory support or for classifying offences into different categories such as economic offences and for refusing bail on the ground that the offence involved belongs to a particular category. When the Court has been granted discretion in the matter of granting bail and when there is no statute prescribing a special treatment in the case of a particular offence the Court cannot classify the cases and say that in particular classes bail may be granted but not in others. Not only in the case of economic offences but also in the case of other offences the Court will have to consider the larger interest of the public or the State. Hence only the considerations which should normally weigh with the Court in the case of other non bailable offences should apply in the case of economic offences also. It cannot be said that bail should invariably be in cases involving serious economic offences. Similarly the Supreme Court in the case of Sanjay Chandra vs CBI14 iterated the importance position of bail in criminal jurisprudence: Para 26. The trial may take considerable time and it looks to us that the appellants who are in jail have to remain in jail longer than the period of detention had they been convicted. It is not in the interest of justice that accused should be in jail for an indefinite period. No doubt the offence alleged against the appellants is a serious one in terms of alleged huge loss to the State exchequer that by itself should not deter us from enlarging the appellants on bail when there is no serious contention of the respondent that the accused if released on bail would interfere with the trial or tamper with evidence. We do not see any good reason to detain the accused in custody that too after the completion of the investigation and filing of the charge sheet. This Court in the case of State of Kerala Vs. Raneef15 has stated: 15. In deciding bail applications an important factor which should certainly be taken into consideration by the court is the delay in concluding the trial. Often this takes several years and if the accused is denied bail but is ultimately acquitted who will restore so many years of his life spent in custody Is Article 21 of the Constitution which is the most basic of all the fundamental rights in our Constitution not violated in such a case Of course this is not the only factor but it is certainly one of the important factors in deciding to grant bail. the present case respondent has already spent 66 days in custody 1 SCC 784 stated in Para 2 of his counter affidavit) and we see no reason why he should be denied bail.” 12.In view of the above discussion it is directed that the petitioner be released on bail on furnishing a bail bond of Rs.5 00 000 Rupees five lakhs) with one surety for the like amount to the satisfaction of the learned trial court with the following conditions: i) The petitioner shall co operate with the trial and shall not seek unnecessary adjournments on frivolous grounds to protract the trial ii) The petitioner shall not directly or indirectly allure or make any inducement threat or promise prosecution witnesses so as to dissuade him disclosing truth before the Court iii) The involvement of the petitioner in any other similar nature of offence under the GST Act would entail cancellation of bail iv) In case of his involvement in any other criminal activities or breach of any other aforesaid conditions the bail granted in this case may also be cancelled. v) The petitioner shall submit his passports if any before the learned trial court and shall not leave India without prior permission of this Court. It is also clarified that the discussions hereinabove are only limited to the purpose of the instant application and that the assessment of the tax liability of the petitioner and his firm process. shall be carried out strictly in accordance with the applicable provisions of law uninfluenced by the observations as aforesaid. It is further stipulated that in such matters the adjudicating authority shall do well to expeditiously complete the assessment The bail application is accordingly disposed of. S. K. Panigrahi J. Orissa High Court Cuttack. The 23rd. day of December 2020 AKK LNB 

Summary: “Once the charge-sheet has been filed unless antecedents to the contrary can be demonstrated, the presence of the accused may not be required to take the prosecution to its logical conclusion.”, this remarkable stand was forwarded by Hon’ble Odisha High Court, in a single judge bench chaired by Hon’ble Justice Mr. S.K. Panigrahi, where a common judgment was advanced in the Bail Application case of Pramod Kumar Sahoo V. State of Odisha, [BLAPL No.4125 OF 2020]. The present petition arises out of a written arrest memo bearing No. 104/CT &amp; GST issued by the Enforcement Unit Bhubaneswar dated 13.03.2020 U/s. 132(I)(b)(c)(i) of OGST Act 2017 where under the Petitioner has been arrested on 12.03.2020 and has since been in custody. The allegation against the petitioner is that during the period between July 2017 &amp; December 2019, the said firm has availed/utilized bogus input tax credit (ITC) of Rs. 2.48 crores on the strength of fake purchase invoices issued in the name of 21 fictitious entities. It has also been alleged that the Petitioner in collusion with others has been found to have created and operated 6 fictitious firms to avail/utilize bogus Input Tax Credit (ITC) of Rs.34.23 crores in their names on the strength of fake purchase invoices without physical receipt of goods and has passed on the same to recipients both within and outside the state. The petitioner has been in custody since the month of 12.3.2020 and in the meantime charge sheet has been filed on 07.05.2020 u/s 132(1)(b)(c)(i) of OGST Act 2017. The fact that an earlier bail application has been rejected by the learned Addl. Sessions Judge–cum–Special Judge CBI, Court No.1, BBSR vide its order dated 25.03.2020 has been brought on record. After examining all the submissions, arguments and evidences forwarded by the councils, the Hon’ble HC observed that, “it is directed that the petitioner be released on bail on furnishing a bail bond of Rs.5,00,000/- (Rupees five lakhs) with one surety for the like amount to the satisfaction of the learned trial court with the following conditions: (i) The petitioner shall co-operate with the trial and shall not seek unnecessary adjournments on frivolous grounds to protract the trial; (ii) The petitioner shall not directly or indirectly allure or make any inducement, threat or promise to the prosecution witnesses so as to dissuade him from disclosing truth before the Court; (iii) The involvement of the petitioner in any other similar nature of offence under the GST Act would entail cancellation of bail; (iv) In case of his involvement in any other criminal activities or breach of any other aforesaid conditions, the bail granted in this case may also be cancelled. (v) The petitioner shall submit his passports, if any, before the learned trial court and shall not leave India without prior permission of this Court.”