Orissa High Court
Sandeep Mohanty vs Union Of India .... Opp. Party on 30 July, 2024
Author: A.K. Mohapatra
Bench: A.K. Mohapatra
IN THE HIGH COURT OF ORISSA AT CUTTACK
BLAPL No.3864 of 2024
An application under Section 439 of the Code of Criminal
Procedure, 1973.
Sandeep Mohanty .... Petitioner
Mr. Rudra Prasad Kar, Senior Advocate
along with
Ms. Itishree Tripathy, Advocate
-versus-
Union of India .... Opp. Party
Mr. Tushar Kanti Satapathy,
Senior Standing Counsel
for GST & Central Tax
CORAM:
JUSTICE A.K. MOHAPATRA
_____________________________________________________
Date of hearing : 15.05.2024 | Date of Order: 30.07.2024
______________________________________________________
A.K. Mohapatra, J. :
1. Assailing order dated 09.04.2024 passed by the learned 1st Addl. Sessions Judge, Rourkela passed in BLAPL No.129 of 2024 whereby the regular bail application of the petitioner was rejected, the petitioner has approached this Court by filing the present bail application under Section 439 Cr.P.C. Page 1 of 17
2. The prayer of the petitioner in the present bail application is for grant of regular bail in connection with 2(C) (CC) Case No.11 of 2024 pending in the Court of learned S.D.J.M., Panposh, Uditnagar, Rourkela for alleged commission of offence under Sections 132 (1)(b) and 132 (5) of the Central Goods and Services Tax Act, 2017 (hereinafter in short referred to as CGST Act).
3. The prosecution case in a nut shell is that a complaint was lodged on 06.03.2024 by the Additional Assistant Director, office of Directorate General of Goods and Services Tax Intelligence, (DGGI), Rourkela Regional Unit, Rourkela inter alia alleging that the accused-petitioner was engaged in sale/purchase of fake GST entities and, in some cases he was also involved in arranging GST invoices for recipient firms for fraudulently availing fake GST Input Tax Credit (ITC). It has also been alleged that the accused-petitioner has provided fake GST entities to some persons, namely, Somnath Sharma and Sunil Kumar and as such had arranged fake GST ITC for some firms like R.K. Mishra and Co., Gangadhar Jena, Parida Enterprises etc. The complaint further reveals that the accused- petitioner had provided the names of a few persons from whom Page 2 of 17 he had purchased fake firms. Primarily, the petitioner had acted as a middle man between the issuer of fake firms and the fraudulent beneficiaries of the fake GST ITC. Further, it has been alleged that in the process the petitioner has received a sum of Rs.40 lakhs till date and has dealt with around 30 entities since his release on bail from the learned Sessions Court, Bhubaneswar. The complaint further reveals that the petitioner used to collect GST registration documents from different parties for creating fake entities and for generating fake invoices and bills. In course of the investigation, the department has detected 19 such fake firms that were being operated by the petitioner in connivance with one Chandra Prakash Jaiswal.
On the basis of the aforesaid allegation, summons were issued under Section 70 of the CGST Act, 2017 to the petitioner to cause production of the documents in his possession in connection with the alleged offences as mentioned in the complaint petition. Thereafter, the petitioner was arrested and taken into custody on 06.03.2024 by following the provisions contained in Section 69 of the CGST Act, 2017.
Page 3 of 17
4. Heard Shri R.P. Kar, learned Senior Counsel along with Ms. Itishree Tripathy, learned counsel for the petitioner and Mr. T.K. Satapathy, learned Senior Standing Counsel for the GST and Central Tax. Perused all the materials on record.
5. Mr. Kar, learned Senior Counsel appearing for the petitioner, at the outset raised the following grounds in support of his contention to release the petitioner on regular bail:-
I) The Maximum Period of punishment prescribed under the alleged Sections is up to 5 years and those offences are all triable by magistrate.
II) Investigation has been concluded and final P.R. has been submitted.
III) Arrest of the petitioner is based on the confessional statement of Principal accused, namely Sri Chandraprakash Jaiswal and, that the said principal accused has not been arrested as of now.
IV) Issuer and receiver (i.e the Beneficiaries) have not made as accused in the present case and as such, they have neither been interrogated nor have they been taken into custody.Page 4 of 17
V) Certificate of Registration under the CGST Act has been issued by the competent authority after conducting due enquiry and investigation.
VI) Offences alleged are compoundable in nature in view of the provisions contained in Section 138 of CGST Act, 2017.
VII) The nature of the case is such that the prosecution is to rely upon documentary evidence stored in electronic mode, which are already in possession of the opposite parties and, there exists no possibility of tampering with such evidence.
VIII) Since the case is based on documentary evidence no further custodial interrogation of the petitioner is required in connection with the present case.
IX) All the witnesses are official witnesses and as such there exists no chance of influencing, inducing or gaining over such official witnesses.
X) Since the petitioner is a permanent resident of State of Odisha, there is no chance of him absconding or fleeing away from justice.
6. Mr. Kar, learned Senior Counsel appearing for the petitioner, in course of his argument emphatically argued that the Page 5 of 17 maximum punishment prescribed under the alleged sections is imprisonment extendible up to a maximum period of 5 years and, the same are to be tried summarily by a Magistrate. In such view of the matter, learned Senior counsel for the petitioner, referring to the judgment of the Hon'ble Supreme Court in Satender Kumar Antil vs. CBI & Anr. reported in (2021) 10 SCC 733 and Arnesh Kumar vs. State of Bihar and anr. reported in (2014) 8 SCC 273, contended before this Court that the I.O. has committed an illegality by not following the mandatory procedural requirement under Section 41(a) of Cr.P.C. On the contrary, it was argued that the I.O. has taken the petitioner into custody by violating the provisions of the Cr.P.C and by ignoring the guidelines of the Hon'ble Supreme Court as laid down in the above noted two cases. He further submitted that since the detention of the petitioner is contrary to the Section 41(a) of the Cr.P.C. and the principles laid down by the Hon'ble Supreme Court in the above noted two judgments, therefore any further detention of the petitioner in custody is highly illegal and violative of Article 21 of the Constitution of India.
7. Mr. Kar, learned Senior Counsel further submitted that no further custodial interrogation of the petitioner is required in Page 6 of 17 the present case. Further, referring to the nature of the case, learned Senior counsel for the petitioner submitted that the entire prosecution case is based on documentary evidence. Therefore, the custodial interrogation of the accused-petitioner is not at all required. He further submitted that if any custodial interrogation was ever felt necessary, the same must have been done by now by the Investigating Agency, especially since the petitioner has been in custody for more than four months as of now and, in the meantime the final P.R. has also been filed.
8. Furthermore, in the course of his argument, the learned Senior counsel for the petitioner emphatically argued that the petitioner has been implicated in the present case on the basis of the confessional statement of the co-accused, who happens to be the principal accused, namely one Chandraprakash Jaiswal. Although the final P.R. has been submitted indicating the fact that the investigation has come to an end, the above named principal accused has not been arrested either during the investigation or as of now. Therefore, keeping the aforementioned factual position in mind, any further detention of the petitioner in custody would be highly illegal and the same Page 7 of 17 would be contrary to the underlying principle contained in Article 21 of the Constitution of India.
9. With regard to the antecedent of the present petitioner, learned senior counsel for the petitioner submitted that, no doubt the petitioner is having one similar criminal antecedent, however, the same is not in any way conclusive in proving the guilt of the present petitioner in the present case. He further contended that the petitioner has already been sufficiently punished by his pre- trial detention in custody for nearly four months. In the aforesaid context, learned senior counsel for the petitioner also submitted that the petitioner is ready and willing to abide by any terms and conditions that would be imposed by this Court in the event he is enlarged on bail. It was also contended that the above named Chandraprakash Jaiswal, who is the principal accused in the present case, is the master mind behind the present crime and he operates a racket to commit GST frauds in the country. Despite such serious allegation against the above named principal accused, the CGST authorities have never apprehended the said accused in connection with the present case. On the contrary, on the basis of the confessional statement of the aforesaid principal accused- Chandraprakash Jaiswal, the present petitioner has been Page 8 of 17 taken into custody and he has been suffering incarceration for more than four months as of now.
10. In course of his argument, Mr. Kar, learned senior counsel for the petitioner referred to the CBIC Circular dated 17.08.2022. In the said Circular certain guidelines have been framed which are to be followed by the CGST authorities. In the aforesaid guidelines, reference has been made to the judgment of the Hon'ble Supreme Court dated 16.08.2021 in Criminal Appeal No.838 of 2021, wherein the Hon'ble Apex Court has observed as follows:-
"We may note that personal liberty is an important aspect of our constitutional mandate. The occasion to arrest an accused during investigation arises when custodial investigation becomes necessary or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond. Merely because an arrest can be made because it is lawful does not mandate that arrest must be made. A distinction must be made between the existence of the power to arrest and the justification for exercise of it. If arrest is made routine, it can cause incalculable harm to the reputation and self-esteem of a person. If the investigating officer has no reason to belief that the accused will abscond or disobey summons and has, in fact, throughout cooperated with the investigation we fail to Page 9 of 17 appreciate why there should be compulsion on the officer to arrest the accuse."
11. Learned Senior counsel for the petitioner further referred to the conduct of the CGST authority. In the said context, Mr. Kar, learned Senior Counsel for the petitioner submitted that although a notice was issued on 05.03.2024 under Section 70 of the CGST Act, 2017 for production of documents, the petitioner was arrested on the very next day, i.e. on 06.03.2024. In such view of the matter, learned senior counsel for the petitioner submitted that the provisions contained under Section 70 of the CGST Act, 2017 became nugatory and that such a provision in the act has become otiose. Once the authorities issued a summons under Section 70, they should have given reasonable time to the petitioner to produce the documents and, in the event of failure of the petitioner to produce the required documents, the eventual step of arrest of the petitioner should have been resorted to. He further contended that despite notice to produce documents, the petitioner was immediately arrested and the prosecution report was submitted on the date of arrest itself before the learned S.D.J.M., Panposh. Therefore, it was contended that the authorities had already determined to implicate the petitioner in Page 10 of 17 the present crime without giving the ample opportunity to produce the required documents called for. Ergo, it was contended that the conduct of the authorities in arresting the present petitioner is allegedly a pre-meditated one.
12. In course of his argument, learned Senior Counsel for the petitioner also referred to the observation of the Hon'ble Supreme Court in para-6 of the judgment in Ratnambar Kaushik vs. Union of India bearing SLP (Crl.) No.10319 of 2022 decided on 05.12.2022, the relevant portion is quoted herein below:-
"In considering the application for bail, it is noted that the Petitioner was arrested on 21.07.2022 and while in custody, the investigation has been completed and the charge sheet has been filed. Even if it is taken note the alleged evasion of tax by the Petitioner is to the extent as provided under section 132(1)(I)(i), the punishment provided is, imprisonment which may extend to 5 years and fine. The Petitioner has already undergone incarceration for more than four months and completion of trial, in any event, would take some time. Needless to mention that the petitioner of released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Further, in a case of present nature, the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witness, due to which there can be no apprehension of Page 11 of 17 tampering, intimidating or influencing. Therefore, keeping all these aspects in perspective, in the facts and circumstances of the present case, we find it proper to grant the prayer made by the Petitioner."
Following the aforesaid judgment of the Hon'ble Supreme Court, this Court in Nitin Kapoor vs. State of Odisha in BLAPL No.9999 of 2023 reported in 2023(III)-ILR-CUT-1145 has been pleased to grant bail to the accused.
13. On the strength of such aforementioned grounds, learned Senior Counsel for the petitioner submitted that the petitioner be released on bail on any terms and conditions as would be deemed just and proper by this Court by taking note of the judgment of the Hon'ble Supreme Court in Ratnambar Kaushik's case (supra).
14. Mr. T.K. Satapathy, learned Senior Standing Counsel for the GST and Service Tax on the other hand contended that the learned Trial court, after perusal of the record, was prima facie satisfied with regard to the existence of a case under the alleged sections against the present petitioner and his involvement in the alleged crime. He further submitted that the alleged occurrence in the complaint reveals an economic offence of grave magnitude. Page 12 of 17 Thus, he supported the observation of the learned Trial court that the release of the petitioner on bail at this stage would lead to an overwhelming probability of tampering with the prosecution evidence and influencing the witnesses and, that the petitioner might also commit similar offences again. Moreover, considering the gravity and seriousness of the allegation made against the present petitioner and, that the fact that the alleged occurrence gives rise to an economic offence involving huge government revenue, the learned Senior Counsel for the Opposite Party supported the order passed by the learned Trial court whereby the bail application of the petitioner was rejected.
15. In course of his argument, learned senior counsel for the Opposite Party led much emphasis on the fact that the petitioner is a habitual offender and he is having a similar criminal antecedent. The petitioner was earlier arrested on 31.12.2020 in connection with a case of similar nature bearing 2(c) C.C. Case No.82 of 2020. Although the petitioner was released on bail in the previous case, however, his involvement in the present case is tantamount to violation of the bail condition imposed in the earlier order. Learned Senior counsel for the Opposite Party further reiterated the allegations made in the complaint petition Page 13 of 17 and emphatically argued that the present case being an economic offence and involving huge loss of government revenue, no leniency should be shown to the present petitioner. He further expressed his serious apprehension that in the event the petitioner is released on bail there is every likelihood that the petitioner might indulge in similar criminal offences once again.
16. While opposing the bail application of the present petitioner, Mr. Satapathy, learned Senior counsel for the Opposite Party relied upon the judgment of the Hon'ble Supreme Court in Y.S. Jagan Mohan Reddy vs. Central Bureau of Investigation reported in (2013) 7 SCC 439, State of Gujarat vs. Mohanlal Jitamaliji Porwal & anr. reported in (1987) 2 SCC 364, Nimmagadda Prasad vs. C.B.I., Hyderabad reported in (2013) 7 SCC 466, Shailesh Rajpal vs. Commissioner reported in 2020 (32) G.S.T.L. 336 (M.P.), P. V. Ramana Reddy vs. UOI W.P. No.4764 of 2019 (Telangana High Court), Bharat Raj Punj vs. Commissioner of Central Goods Service Tax, Sanjay Dhingra vs. Director General of Goods & Service Tax Intelligence (Criminal Misc.-M-50256 of 2019).
17. Learned senior counsel for the Opposite Party further specifically submitted that this Court should particularly take into Page 14 of 17 consideration the larger interests of the public and the state, as well as, the huge amount of government revenue involved in the present case and, also the fact that further investigation is currently on to unearth even more revenue fraud. Therefore, it was submitted that it would be prejudicial to the Investigating Agency to release the petitioner at this juncture. He also referred to the seriousness and gravity of the allegation made against the petitioner, and strongly objected to the grant of bail to the petitioner in the present case. On such grounds, learned Senior counsel for the Opposite Party submitted that the present bail application is devoid of merit and, the same should be dismissed.
18. Having heard the learned counsels appearing for the respective parties, on a careful conspectus of the attending circumstances as well as materials on record and, on a careful reading of the judgment cited by both sides, this Court is of the considered view that, so far as the grant of bail to the accused persons is concerned, the law laid down by the Hon'ble Supreme Court in Ratnambar Kaushik's case (supra) and Satendra Kumar Antil's case (supra) holds the field and the same is also applicable to the facts of the present case. Keeping in view the principle laid down by the Hon'ble Supreme Court in the above noted two Page 15 of 17 judgments, this Court observes that the maximum period of punishment prescribed is up to 5 years and that the petitioner, at his point, has been in custody for more than four months. It is also seen that the offence alleged is based on documentary evidence and that the investigation has been concluded and the final P.R. has been submitted. In such view of the matter, this Court is persuaded to release the petitioner on bail on stringent terms and conditions.
19. Accordingly, it is directed that the Petitioner be released on bail on furnishing a bail bound of Rs.50,000/- (Rupees Fifty Thousands only) with two local solvent sureties each of the like amount to the satisfaction of the court in seisin over the matter. The release of the Petitioner shall also be subject to the following conditions:-
I) shall not indulge in similar criminal offences while on bail and as such shall not misuse the liberty of bail granted by virtue of this order;
II) shall appear before the I.O. as and when his presence is required for further investigation of the case and shall cooperate with the I.O. by producing whatever materials are required by the I.O. and which are in the possession of the present petitioner;Page 16 of 17
III) shall appear before the trial court on each and every date fixed without fail if not prevented by any sufficient cause;
IV) shall not leave the jurisdiction of the trial court without prior permission of the trial court;
V) shall not tamper with prosecution evidence in any manner whatsoever and shall not make any attempt to influence, induce or threaten any of the prosecution witnesses;
VI) shall surrender his all travel documents, including passport, before the trial court. In the event the Petitioner does not have any travel documents like passport, then he shall file a specific affidavit in that regard.
Violation of any of the aforesaid conditions shall entail an automatic cancellation of the bail granted to the petitioner.
20. With the aforesaid terms and conditions, the bail application of the Petitioner stands allowed.
(A.K. Mohapatra) Judge Orissa High Court, Cuttack The 30th July, 2024/ Anil, Jr. Steno Signature Not Verified Digitally Signed Signed by: ANIL KUMAR SAHOO Page 17 of 17 Reason: Authentication Location: High Court of Orissa, Cuttack Date: 31-Jul-2024 15:23:47