Allahabad High Court
Navin Jain vs Union Of India on 13 August, 2024
HIGH COURT OF JUDICATURE AT ALLAHABAD Neutral Citation No. - 2024:AHC:133491 Court No. - 86 Case :- CRIMINAL MISC. BAIL APPLICATION No. - 26694 of 2024 Applicant :- Navin Jain Opposite Party :- Union of India Counsel for Applicant :- Manu Raj Singh,Nidhi Singh Counsel for Opposite Party :- Dhananjay Awasthi Hon'ble Nalin Kumar Srivastava,J.
1. Affidavits have been exchanged between the parties.
2. The present bail application has been moved on behalf of the applicant - Navin Jain with the prayer to release him on bail in Case Crime No. DGGI/INV/FUP/115/2024/Gr-c/LJU, under Section 132(1)(a)(i)(5) of C.G.S.T. Act, 2017, Police Station - DGGI, Gomti Nagar, Lucknow.
3. Heard Shri V.P. Srivastava and Shri Anoop Trivedi, learned Senior Counsels assisted by Shri Manu Raj Singh and Ms. Nidhi Singh, learned counsel for the applicant, Shri Dhananjay Awasthi, learned Advocate appearing for the CGST department and perused the record.
4. The prosecution story, in nutshell, as reveals from the record, is that accusation of the present applicant in the matter came on surface when based upon a specific intelligence and evidence regarding evasion of GST by way of clandestine supply of TMT Bars by M/s Shree Radhey Radhey Ispat Private Ltd. from its factory premises at Malwan, Fatehpur, Uttar Pradesh having its principal place of business at Fazalganj, Kanpur, searches were conducted at the premises of the aforesaid firm and residences of Navin Jain, the Director of the firm / present applicant including his dealers Rippan Kansal, who was the distributor of Ms. Kamdhenu and Kamdhenu Nxt brand TMT bars and had been creating business for M/s Shree Radhey Radhey Ispat Pvt. Ltd. owned by the present applicant as well as Sanjay Gupta, proprietor of M/s Jagdamba Steel Corporation, Jhansi, one of the dealers of Kamdhenu Brand TMT bars. During search it was discovered that the present applicant through his firm clandestinely supplied branded TMT bars of Rs. 344 crores and in this way evaded GST to the tune of Rs. 52 crores approximately during the period January, 2019 to the November, 2022. Subsequent to that the present applicant was arrested and sent to jail.
5. It is submitted by the learned Senior Counsels appearing for the applicant that the applicant is innocent and he has been falsely implicated in this case by the concerned department. Entire case of the prosecution is a bogus one and as a matter of fact there is no evasion of GST on the part of the present accused applicant and he never clandestinely supplied branded TMT bars of Rs. 344 crores and evaded GST to the tune of Rs. 52 crores during the period January, 2019 to November, 2022. The whole prosecution case is based upon the statement of Rippan Kansal and no incriminating article or evidence was discovered by the department from the search and inspection of the premises and office of the present applicant.
6. It is further submitted that the prosecution story is highly suspicious in view of the fact that Rippan Kansal, who, as per the prosecution case admitted his guilt before the Officers of the department, was not impleaded as an accused by the department so far. The prosecution also relies upon the statement of one Sanjay Gupta in order to falsely implicate the present applicant in this case but the said Sanjay Gupta has also not been arrayed as an accused in this case so far.
7. Further, questioning the fairness of the CGST Department it has been pointed out that if the incriminating evidence retrieved from the possession of Rippan Kansal was kept with the department since January, 2024, at the time of raid, why any notice was not given to the present accused promptly by the Department which shows that all the alleged recovered incriminating materials are fabricated piece of evidence.
8. It is further argued that the department has already recorded the statement of the present applicant and during recording of his statement and search and inspection of his corporate office as well he has been cooperative with the department. It is also submitted that the applicant has been named as repeat and habitual offender but the relevant matter wherein by sending show cause notice dated 31.3.2022 to M/s Shree Radhey Radhey Ispat Pvt. Ltd., M/s Sigma Casting Limited and M/s Kundan Casting Limited, a demand of Rs. 3.48 crores was made against M/s Shree Radhey Radhey Ispat Pvt. Ltd. against which the applicant Navin Jain, Director of the said Company, had deposited Rs. 50,00,000/- as a pre-deposit during investigation and not as acceptance of GST evasion and since the matter is still pending under adjudication and has not come to any logical end so far, the present applicant cannot be termed as repeat or habitual offender in view of the Circular No. 4/2022-23 dated 1.9.2022 and C.L. No. 1/2022-23 dated 25.5.2022 issued by the department itself. It is further submitted that in the first application for judicial remand moved by the department dated 26.6.2024 and in the subsequent application for extension of the same as well, the department never prayed for departmental custody of the accused which shows that the department never required any custodial interrogation from the accused applicant.
9. Another limb of the argument is that the present applicant and his staff as well had been fully cooperative to the department and no hindrance of any kind was made on behalf of the firm of the accused and Jitendra Kumar Ojha, one official of the firm, himself arranged the inspection of all areas of the firm and extended his full cooperation to the department and accordingly panchnama dated 24/25.6.2024 was prepared by the department.
10. It is further submitted that a tally of physical stock available on the ground was made with the stock statement provided by Jitendra Kumar Jha by the department and the panchnama itself shows that a very meagre difference was found by the department which was negligible. It is also submitted that the inspection and search of the office and residence of Rippan Kansal is in no way concerned with the present applicant. The entire prosecution story is based upon the so-called statements of said Rippan Kansal and Sanjay Gupta which are not admissible till they are cross-examined by the accused applicant by virtue of the provisions of Section 136 of the CGST Act. The prosecution has based its story on the basis of material recovered from the possession of Rippan Kansal alleged to be a distributor of Kamdhenu Saria, which is not sustainable under law. As a matter of fact Rippan Kansal is a dealer of Kamdhenu Ltd. which is a business competitor of the applicant.
11. Learned counsel for the applicant further submitted that during the period 2018 - 2022 no notice was ever given to the present applicant by the department and the first notice was given only in the year 2022. It is also submitted that as a matter of fact Sanjay Gupta himself filed a Writ Petition before this Court as Writ Tax No. 669 of 2024 (M/s Jagdamba Steel Corporation vs. Senior Superintendent Director General of Goods and Service Tax Intelligence) against the department, which is still pending. It is also submitted that the GST returns filed by the accused applicant were accepted without any objection by the department every year continuously from the year 2018 to 2022 and he has been an honest and regular tax payee in respect of payment of G.S.T. Supplementing the submissions it is also urged that the grounds of arrest, which were intimated to the accused, were based upon the alleged confessional statements of Rippan Kansal, distributor of 'Kamdhenu' brand TMT bars and Sanjay Gupta, proprietor of M/s Jagdamba Steel Corporation, Jhansi and also upon the recovery of some incriminating evidence from the search of residential premises of Rippan Kansal, one of the dealers of the accused, and both of them, as prosecution claims, pointed out towards unaccounted clandestine supply of TMT bars by M/s Shree Radhey Radhey Ispat Pvt. Ltd., Malwan, Fatehpur and also the incriminating evidence was allegedly made available by Rippan Kansal from his residence.
12. It is vehemently argued that the entire prosecution case depends upon the confessional statement allegedly made by Rippan Kansal and Sanjay Gupta, but however law pertaining to the statement made by a third person cannot be made binding upon the person who is charged with the actual commission of the crime and it is submitted that the statements made by Rippan Kansal and Sanjay Gupta are in no way binding upon the present applicant.
13. It is further argued that merely on the basis of data alleged retrieved from a third party, tax cannot be demanded and the recovery of any alleged data and private records is being denied by the applicant strongly.
14. Emphasis has been laid upon a decision of this Court in Kumar Trading Company, Varanasi vs. Commissioner of Trade Tax, U.P. Lucknow, Trade Tax Revision No. 195 of 2007, decided on 24.9.2007, wherein it has been held that :
""................It is settled principle of law that in case, if the Revenue wants to rely upon the entries of the document seized from the premises of third party, the burden lies upon the Revenue Authority to prove the genuineness and authenticity of the said entry and to connect the said entry with the dealer, in case, if the dealer denies to have any connection with such entry...."
15. It is further urged that in the case in hand the prosecution has wholly and solely relied upon the third party pen drive recovered from the premises and possession of one Rippan Kansal. The alleged data retrieved from the pen drive pertains to the transactions between the applicant's Company SRRIPL and Rippan Kansal between the period 2018 - 22 and the other documents and the alleged confessional statement, which have been made the basis for arrest, are absolutely inadmissible under law particularly with reference to the provisions of Section 136(b) of CGST Act, 2017 and no inference can be drawn on the basis of said statements. Relying upon the decisions promulgated in Deepanshu Srivastava case (supra), Commissioner of Central Excise MeerutI vs. Parmarth Iron, 2010 (26) ELT 514 (All), Basudev Garg vs. CCE, 2013 (294) ELT 353 (Alld), J&K Cigarettes Limited vs. Collector of Central Excise, 2009 (242) ELT 189 (Del.) and Him Logistic Pvt. Ltd. vs. Principal Commissioner of Customs, 2016 (336) ELT 15 (Del.), it has been vehemently argued that unless the statement recorded under Section 70 of the CGST Act is testified during due process of cross examination it cannot be relied upon. Section 136 of the CGST Act will only come into play at the time when the trial commences and thus the admission made by a person before the revenue officials under the CGST Act would not be per se admissible in evidence unless it receives the approval of the Court. It is also submitted that the department itself has violated its own Circular dated 17.8.2022 regarding the arrest and bail in the matter of CGST Act, 2017.
16. It is also submitted that the case is triable by Magistrate and maximum punishment for the offence is only of five years and compounding provisions also prevail under the Act. The provisions of Section 41-A of CrPC have not been followed by the department. The present applicant is a person of clear credential and has never been accused in any matter and now is suffering from several diseases as well. No custodial interrogation from the accused applicant is now required. All incriminating articles and evidence, as the prosecution claims to be suspicious, have been seized and are under the authority of the department and panchnama thereof has already been prepared. There was no 'reason to believe' on the part of the Commissioner for the arrest of the applicant, as required by Section 69 of the CGST Act, 2017. In case applicant is released on bail, he promises not to misuse the liberty of bail and to extend his full cooperation with the trial. In support of his submissions, learned Senior Counsels appearing for the applicant has placed reliance on the following decisions :
(i) Satender Kumar Antil vs. Central Bureau of Investigation, (2022) 10 SCC 51.
(ii) Continental Cement Company vs. Union of India, MANU/UP/1995/2014.
(iii) Commissioner, Central Gst and Cx 117/7 Sarvaodaya Nagar vs. M/s Raghunath International Ltd., Kanpur, decided on 11.11.2022.
(iv) Commissioner of C. Ex. vs. Laxmi Engineering Works, MANU/PH/1082/2010.
(v) Sanjeev Agarwal vs. Union of India, (2024) 162 taxmann.com 369 (Allahabad).
(vi) Kumar Trading Company, Varanasi vs. The Commissioner, Trade Tax, U.P. Lucknow, decided on 24.9.2007.
(vii) Synergy Steels Ltd. vs. Commissioner of Central Excise, Alwar, 2020 (372) E.L.T. 129 (Tri. - Del.).
(viii) Basudev Garg vs. Commissioner of Customs, MANU/DE/ 1876/2013.
(ix) Commissioner of Central Excise vs. Parmarth Iron Pvt. Ltd.
(x) J and K Cigarettes Ltd. and others vs. Collector of Central Excise and others, MANU/DE/2136/2009.
(xi) HIM Logistics Pvt. Ltd. vs. The Principal Commissioner of Customs, MANU / DE/0455/2016.
(xii) Makemytrip (India) Pvt. Ltd. and ors. vs. Union of India and ors., MANU/DE/2284/2016.
(xiii) M/s Jayachandran Alloys (P) Ltd., Tamil Nadu vs. Superintendent of Gst and Central Excise and others, decided on 4.4.2019.
(xiv) Deepanshu Srivastava vs. Union of India, (2024) 163 axmann.com 186 (Allahabad).
17. Per contra, learned counsel appearing for the CGST department vehemently opposed the bail application. It is submitted that Rippan Kansal, who was the distributor of 'Kandhenu', 'Kandhenu NXT' brand TMT bars, had been creating business for M/s Shree Radhey Radhey Ispat Pvt. Ltd. during the period 2018-2022 and he was also making new dealers and was generating business for the firm of the accused and in this way he had been an integral part of the business of the firm M/s Shree Radhey Radhey Ispat Pvt. Ltd. belonging to the accused and as per their agreement the collection of payments from the dealers coming under Rippan Kansal was the responsibility of Rippan Kansal only. He was also getting his brokerage / commission @ Rs. 25 per ton and also maintaining the set of records in respect thereof and same were recovered from his residential premises during search made on 17.1.2024. The role of Rippan Kansal was also admitted by the present applicant in his statement dated 24/25.6.2024. The evidence resumed from the premises of Rippan Kansal was actually the subset of all supplies made by M/s Shree Radhey Radhey Ispat Pvt Ltd. during the aforesaid period i.e. January, 2019 to November, 2022. The statements made by Rippan Kansal and Sanjay Gupta were relevant which impose the GST liability upon the present applicant Navin Jain, who is the Director of M/s Shree Radhey Radhey Ispat Pvt Ltd.
18. It is further submitted that the statements made by Rippan Kansal and Sanjay Gupta supported with the incriminating evidence are sufficient to prove the claim of the department about the tax liability for making clandestine supplies of TMT bars valuing Rs. 344 crores having GST implication of Rs. 52 crores and thereby causing a huge loss to the government exchequer by the accused applicant. The applicant in his statement has not denied the statements of Sanjay Gupta, Anurag Shah and Gyan Prakash Jaiswal corroborating the prosecution version and he at the same time mentioned that they were the dealers appointed by Rippan Kansal, who was making business for his company M/s Shree Radhey Radhey Ispat Pvt Ltd. by way of generating orders from the dealers and informing them to get the orders delivered to the respective dealers from where the orders were received and in lieu of the same he was getting the payments realized. It is also submitted that the applicant has a history of non-cooperation with the department and if he is granted bail in all possibility he may influence the investigation, which is being carried out against his company. The statements of key persons or the dealers are still to be recorded. It is further submitted that no deviation in the stock of the factory premises of the accused can immune him from the GST liability on the clandestine supplies of TMT bars valuing Rs. 344 crores during he period January, 2019 to November, 2022 having GST implication amounting to Rs. 52 crores approximately which was never disclosed by the accused to the department.
19. It is next submitted that the department has collected reliable oral evidence supported with the documentary evidence, forensic data and electronic evidence as well. There are all possibilities for misuse of bail, if granted to the applicant, who has caused huge monitory loss to the department. The present applicant has played key role in the tax evasion and his role in the commission of the crime has been elaborately explained in the demand cum show cause notice (DRC-01) which was sent to the accused and his firm and others under the provisions of Section 74(1) of CGST Act, 2017 read with Section 74(1) of the U.P. GST Act, 2017 read with Section 20 of the IGST Act, 2017. On these grounds prayer has been made for rejection of the bail application. In support of his submissions, learned counsel appearing for the department has placed reliance upon the following decisions :
(i) Collector of Customs, Madras and others vs. D. Bhoormull, 1983 (13) E.L.T. 1546.
(ii) Mohanlal Jitamal Ji Porwal vs. State of Gujarat, 1987 (2() E.L.T. 483 (S.C.).
(iii) Nimmagadda Prasad vs. Central Bureau of Investigation, (2013) 7 SCC 466.
(iv) Ayodhya Prasad Mishra vs. State of U.P., MANU/UP/0909/2020.
(v) Amit Beriwal vs. State of Odisha, 2020 (4) GSTL 451 (Ori.)
(vi) State of Gujarat ETC vs. Choodamani Parmeshwaran Iyer & another, 2023 LiveLaw (SC) 552.
(vii) Y.S. Jagan Mohan Reddy vs. C.B.I., MANU/SC0487/2013.
(viii) P. Chidambaram vs. Directorate of Enforcement, (2019) 9 SCC 24.
(ix) K.I. Pavunny vs. Asstt. Collr. (HQ), (C.E.), MANU/SC/2303/1997.
(x) Zaki Ishrati vs. Commissioner of Customs and Central Excise, Kanpur, MANU/UP/1614/2012.
20. I have considered the rival submissions made by the learned counsel for the parties and have gone through the entire record including the case laws cited in the matter carefully.
21. A co-joint reading of the case laws relied upon by the learned counsel for the applicant promulgates the legal position that in the cases wherein grant of bail is in question in the matters of economic offences, there is no express or implied bar in granting bail to the accused persons, who are charged with the tax evasion by the government department whereas on the other hand a co-joint reading of the case laws relied upon by the CGST department shows that in a case of huge monetary loss by way of fraud to the government and a massive tax evasion on the part of an accused causing loss to the government exchequer, the Court should be slow in granting bail to the accused and it must be borne in mind that a different approach is required in the cases relating to the economic offences, as they constitute a different class.
22. No doubt on the basis of the law laid down in the cases cited by the CGST department and apart from those from other decisions viz. Tarun Kumar vs. Assistant Director Directorate of Enforcement, 2023 SCC OnLine SC 1486, Serious Fraud Investigation Office vs. Nittin Johari and another, (2019) 9 SCC 165 and Nimmagadda Prasad vs. CBI, (2013) 7 SCC 466 it can be said that the Court should proceed with a different approach while dealing with applications for grant of bail in the cases relating to economic offences and tax evasion but at the same time the Court should also keep in mind that grant of bail in such matters is not absolutely barred.
23. The attention of the Court is also drawn to a relevant pronouncement made by Hon'ble Apex Court in Satender Kumar Antil case (supra) wherein dealing specifically with the economic offences, it has been held by the Hon'ble Apex Court that (paragraph 90 of the said judgment):
"90. What is left for us now to discuss are the economic offences. The question for consideration is whether it should be treated as a class of its own or otherwise. This issue has already been dealt with by this Court in P. Chidambaram v. Directorate of Enforcement [P. Chidambaram v. Directorate of Enforcement, (2020) 13 SCC 791 : (2020) 4 SCC (Cri) 646] , after taking note of the earlier decisions governing the field. The gravity of the offence, the object of the Special Act, and the attending circumstances are a few of the factors to be taken note of, along with the period of sentence. After all, an economic offence cannot be classified as such, as it may involve various activities and may differ from one case to another. Therefore, it is not advisable on the part of the court to categorise all the offences into one group and deny bail on that basis. Suffice it to state that law, as laid down in the following judgments, will govern the field."
24. Also in P. Chidambaram case (supra), the Hon'ble Apex Court held as under (paragraph 23 of the said judgment) :
"23. Thus, from cumulative perusal of the judgments cited on either side including the one rendered by the Constitution Bench [Gurbaksh Singh Sibbia v. State of Punjab, (1980) 2 SCC 565 : 1980 SCC (Cri) 465] of this Court, it could be deduced that the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of "grave offence" and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration will have to be on case-to-case basis on the facts involved therein and securing the presence of the accused to stand trial."
25. In Sanjay Chandra v. CBI, (2012) 1 SCC 40, the Hon'ble Apex Court noticed that it was a case of fraud wherein by cheating and dishonestly inducing delivery of property by using as genuine a forged document was involved but the punishment for the offence was imprisonment for a term which may extend to seven years. The Hon'ble Apex Court held that it is, no doubt, true that the nature of the charge may be relevant but at the same time the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration. It was further held that :
"40. The grant or refusal to grant bail lies within the discretion of the court. The grant or denial is regulated, to a large extent, by the facts and circumstances of each particular case. But at the same time, right to bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the court, whether before or after conviction, to assure that he will submit to the jurisdiction of the court and be in attendance thereon whenever his presence is required."
26. In view of the above discussions and considering the entire facts and circumstances of the case and keeping in view the fact that in the instant matter trial has not started even yet and the complicity of the accused applicant is yet to be determined in trial and everything relevant to the matter is under control of the department itself and there is probably nothing on record to demonstrate that the applicant, if enlarged on bail, would in any way adversely affect the trial; further no final verdict of any Court / Authority for any criminal liability to the credit of the applicant has been brought to the notice of this Court and noticing that the alleged offence is punishable with the maximum period of imprisonment of five years, the applicant is in jail since 20.6.2024, without commenting upon the merits of the case, I am of the opinion that the applicant has made out a case for bail.
27. Accordingly, the bail application of the accused-applicant is allowed.
28. Let the applicant - Navin Jain involved in Case Crime No. DGGI/INV/FUP/115/2024/Gr-c/LJU, under Sections 132(1)(a)(i)(5) of C.G.S.T. Act, 2017, Police Station - DGGI, Gomti Nagar, Lucknow be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to following conditions. Further, before issuing the release order, the sureties be verified.
(i). The applicant will appear before the trial court on the date fixed, unless personal presence is exempted.
(ii). The applicant shall not commit an offence similar to the offence of which he is accused, or suspected, of the commission of which he is suspected.
(iii). The applicant shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to any police officer or tamper with the evidence.
(iv). The applicant shall not indulge in any criminal and anti-social activity.
(v). The applicant shall surrender his passport, if any, to the concerned Trial Court forthwith and shall not leave the country without previous permission of the Court.
29. In case of breach of any of the above conditions, the prosecution shall be at liberty to move bail cancellation application before this Court.
Order Date :- 13.8.2024 safi