Can Non-issuance of show cause notice become solitary ground for grant of bail; Read Order of Punjab HC

Punjab High Court in the matter of Rajan Arora versus State of Punjab has said that non issuance of show cause notice for adjudication of the evaded tax under Section 74 of the PGST Act cannot be a solitary ground for grant of bail. The Court added that in the present case, this fact has assumed significance in the background of the conduct of the agency having failed to lead pre-charge evidence for 06 months. Considering the cumulative effect of all these circumstances, the Court finds that the petitioner cannot be kept behind bars for indefinite period.

Relevant Text:

13. Coming to the facts of the present case the investigation stands concluded and the challan stands presented. Thus, there cannot be any apprehension that the petitioner shall tamper with the evidence. The maximum sentence prescribed under the Act for the offence, the petitioner has been booked is 05 years. Though non issuance of show cause notice for adjudication of the evaded tax under Section 74 of the PGST Act cannot be a solitary ground for grant of bail, but in the present case, this fact has assumed significance in the background of the conduct of the agency having failed to lead pre-charge evidence for 06 months. Considering the cumulative effect of all these circumstances, the Court finds that the petitioner cannot be kept behind bars for indefinite period.

14. Consequently, the present petition is allowed. Petitioner is ordered to be released on regular bail on his furnishing bail/surety bonds to the satisfaction of the Ld. Trial Court/Duty Magistrate, concerned.

Present petition has been filed under Section 439 Cr.P.C. for grant of regular bail to the petitioner in case bearing Criminal Complaint No.CMA-867 of 2022 dated 07.05.2022 titled as “State of Punjab through Sh. Arvind Sharma, State Tax Officer Vs. Rajan Arora” registered for the offence punishable under Section 132(1)(a)(b)(c) of Punjab Goods and Service Tax Act (hereinafter referred to as ‘PGST Act’).

As per the allegations levelled, the petitioner is accused of having contravened the provision of PGST Act, 2017 and evaded tax. It has been alleged that the petitioner created a network of around 16 firms. The said firms were either dealing with scrap of iron and steel or were trading in supply of manufactured items. The modus operandi of the complainant was that in order to contravene the provision of the Act with an intent to evade tax, there were multiple transactions inter se between the said firms controlled and owned by a single person i.e. the petitioner- accused. It has been further alleged that the aforesaid fact of cyclic transactions was tracked in Business Analytics and Fraud Analysis module BIFA.

In a detailed complaint, it was further alleged that owing to these cyclic transactions, the firms were involved in evasion of tax running into crores. The allegations qua the petitioner further got corroborated by the Commodity-wise Harmonised System of Nomenclature Code (HSN) analysis of the inward and outward supplies made by the aforesaid firms.

Learned senior counsel appearing for the petitioner submits that the petitioner in is custody since 09.03.2022. The investigation already stands concluded. Challan stands presented on 07.05.2022. He further submits that as per the bare provision of law before accusing the petitioner guilty of having evaded the tax, the authorities were required to determine the evasion in terms of Section 74 of the GST Act. He submits that till such adjudication is effected upon, the authorities cannot be said to be certain w.r.t. the evasion of the tax at the hands of the petitioner. He further relies upon ‘Manoranjana Singh @ Gupta vs. Central Bureau of Investigation’ 2017(2) SCC (Cri) 520 to submit that the detention in custody of an undertrial person cannot be extended to an indefinite period as that would be in the teeth of Article 21 of the Constitution of India. He further reads Manorajana Singh’s case (supra) to hammer forth his contention that though seriousness of the charge is one of the relevant considerations while examining the application of bail, but it cannot be the solitary test. Further reliance is placed upon judgment passed by Coordinate Bench of this Court in CRM-M-24033- 2021 titled as ‘Maninder Sharma vs. State Tax Officer, State Tax, Mobile Wing, Jalandhar, Punjab’ decided on 31.08.2022.

He further submits that there is a peculiar circumstance to the present case. Even after passing of almost 06 months, the prosecution has not been able to lead any pre-charge evidence against the complainant and the same is evident from the order dated 11.11.2022 passed by the trial Court.

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