Supreme Court grants bail to accused in GST evasion case involving alleged clandestine transportation of unmanufactured tobacco.

Case Name:

Ratnambar Kaushik Vs. Union Of India (GST SC Case)

Key Takeaways:

- The Supreme Court emphasized that it cannot direct the government to exempt certain goods or services from taxation, as it is a policy decision to be taken by the government.

- The court considered the completion of the investigation, the filing of the charge sheet, the potential punishment, and the nature of the evidence in deciding to grant bail to the petitioner.

- The court directed the trial court to impose conditions, including the deposit of the petitioner's passport, to secure his presence and participation in the trial.

Issue:

Should the Supreme Court grant bail to the petitioner, who was accused of evading GST and customs duty by allegedly transporting unmanufactured tobacco clandestinely?

Facts:

- The petitioner, Ratnambar Kaushik, was accused of clandestinely transporting raw, unmanufactured tobacco from Gujarat to Delhi by 7 trucks weighing 90,520 kgs.

- It was alleged that the tobacco was cleared in the name of M/s Maa Ambey Enterprises but was delivered to M/s Galaxy Tobacco in Delhi.

- The petitioner was accused of using the unmanufactured tobacco for the clandestine manufacture and supply of chewing tobacco without paying the required duties and taxes.

- The petitioner was arrested on July 21, 2022, and the investigation was completed, and the charge sheet was filed while he was in custody.

Arguments:

- The petitioner contended that even if the tax was levied at 28%, the value would be around Rs. 10,30,824/-, while the respondent claimed the total tax, duty, and cess involved would be Rs. 15,57,28,345/-.

- The petitioner argued that the allegations made by the respondent were far-fetched and that the higher tax amount was based on projected manufacture of zarda pouches without proof.

- The respondent further alleged that during the investigation, it was found that 287 more trucks loaded with raw, unmanufactured tobacco had been transported, as per the toll/RFID data.

Key Legal Precedents:

The judgment does not explicitly cite any legal precedents.

Judgement:

The Supreme Court allowed the special leave petition and granted bail to the petitioner, subject to conditions imposed by the trial court, including:

1. The petitioner must deposit his passport with the trial court.

2. The trial court shall impose other conditions to secure the petitioner's presence and participation in the trial.

3. The petitioner must be produced before the trial court forthwith to ensure compliance with the order.

The court held that since the investigation was complete, the charge sheet had been filed, and the potential punishment was imprisonment up to 5 years and a fine under Section 132(1)(l)(i) of the Central Goods and Services Tax Act, 2017, it was appropriate to grant bail to the petitioner.

FAQs:

Q1: What was the basis for granting bail to the petitioner?

A1: The court granted bail to the petitioner primarily because the investigation was complete, the charge sheet had been filed, and the potential punishment was imprisonment up to 5 years and a fine. The court also considered that the petitioner had already undergone incarceration for more than four months and that the trial would take some time.

Q2: Can the petitioner appeal the court's decision?

A2: The judgment does not mention the possibility of an appeal. However, in general, parties have the right to appeal a decision of the Supreme Court through a review petition or a curative petition, subject to certain conditions.

Q3: What conditions were imposed on the petitioner while granting bail?

A3: The court directed the trial court to impose conditions, including the deposit of the petitioner's passport, to secure his presence and participation in the trial. The trial court was also directed to impose other necessary conditions.

Q4: What was the significance of the court's decision?

A4: The court's decision reinforced the principle that it cannot direct the government on policy matters related to taxation or customs duty, as these are decisions to be taken by the government based on various factors. However, the court considered the circumstances of the case and granted bail to the petitioner.

Q5: Does the court's decision affect the trial proceedings?

A5: No, the court's decision does not affect the trial proceedings. The court granted bail to the petitioner but did not make any observations on the merits of the case. The trial will proceed based on the evidence presented by both parties.

1. The petitioner is before this Court, assailing the order dated 21.10.2022, passed by the High Court of Judicature at Rajasthan, Bench at Jaipur in S.B. Criminal Miscellaneous Bail Application No.12475 of 2022. Through the said order the High Court has dismissed the application filed by the petitioner hereunder under Section 439 of Code of Criminal Procedure seeking bail in the proceedings for the offence alleged against him under Section 132(1)(a),(h),(k) and (l) read with Section 132(5) of the Central Goods and Services Tax Act , 2017.

2. Heard Shri Mukul Rohatgi, Shri C.S. Vaidyanathan, Shri Maninder Singh learned senior counsel for the petitioner and Shri Balbir Singh learned Additional Solicitor General for the respondent. In that light, we have perused the petition papers as also the counter affidavit filed on behalf of the respondent.

3. The gist of the allegations against the petitioner in the prosecution initiated against him is that the petitioner had clandestinely transported raw unmanufactured tobacco brought from Gujarat by 7 trucks weighing 90,520 kgs. It is alleged that raw tobacco was cleared in the name of M/s Maa Ambey Enterprises, Bakoli from M/s Arihant Traders, Kheda, Gujarat but the said trucks went to Patparganj Area to M/s Galaxy Tobacco in Delhi. It is further alleged that the said quantity of unmanufactured tobacco has been apparently used in the clandestine manufacture and supply of chewing tobacco without payment of leviable duties and tax. The petitioner contends that even if the tax is levied at 28%, the value would be around Rs.10,30,824/-. However, as per the case of the respondent, the total tax/duty and cess involved would be Rs.15,57,28,345/-. The said contention has been raised on the basis of the projected manufacture of zarda pouches from the said quantity of unmanufactured tobacco. Thus on the projected number of pouches, the tax amount if taken into consideration, would be to that extent. It is further contended on behalf of the respondent that in the course of the investigation it has also come to light, apart from the 7 trucks, 287 more trucks loaded with raw unmanufactured tobacco has been transported as per the details obtained from the Toll/RFID data of NHAI, which shows the movement of the trucks.

4. Insofar as the allegations made against the petitioner are concerned, learned senior counsel for the petitioner while rebutting the same would contend that at this juncture, such allegations made by the respondent against the petitioner are far-fetched. Even if one accepts as correct, the allegation on which the proceedings is predicated, wherein 90,520 kgs. of raw/unmanufactured tobacco in 7 trucks is taken note of, the GST, if reckoned, comes to only Rs.1,93,26,020/-. It is contended that the sum of Rs.11,04,34,400/-shown as cess by the respondent is even without the proof of manufacture of zarda and it has been done only to indicate the projected value of more than Rs.15 Crores. Learned senior counsel for the petitioner therefore disputed the allegations and contended that such allegations have been made only to allege cognizable and non-bailable offence against the petitioner so as to deny bail and take him into custody.

5. Though allegations and counter allegations are made, at this stage, it would not be necessary for us to advert to the details of the rival contentions, since the matter in any event is at large before the trial court and any observations on merits herein would prejudice the case of the parties, therein. However, for the limited purpose of answering the prayer for the grant of bail, the contentions are taken note of. It is no doubt true, that an allegation is made with regard to the transportation of unmanufactured tobacco and it is alleged that such procurement of unmanufactured tobacco is for clandestine manufacture and supply of zarda without payment of leviable duties and taxes. Though it is further contended that in the process of the investigation, the transportation of a larger quantity of unmanufactured to baccoweighing about 35,57,450 kgs. is detected, these are all matters to be established based on the evidence, in the trial.

6. 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 that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132(1)(l)(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 if released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Further, in a case of the present nature, the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses, due to which there can be no apprehension of 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.

7. Hence, it is directed that the petitioner be released on bail subject to the conditions to be imposed by the trial Court, which among others, shall also include the condition to direct the petitioner to deposit his passport. Further, such other conditions shall also be imposed by the trial Court to secure the presence of the petitioner to diligently participate in the trial. It is further directed that the petitioner be produced before the trial Court forthwith, to ensure compliance of this order.8. The special leave petition is allowed accordingly.

9. Pending applications, if any, shall stand disposed of.

Hon’ble Ms. Justice Hima Kohli pronounced the order of the Bench comprising Hon’ble Mr. Justice A. S. Bopanna and Her Ladyship.

The special leave petition is allowed in terms of the signed reportable order concluding as follows:

“7. Hence, it is directed that the petitioner be released on bail subject to the conditions to be imposed by the trial Court, which among others, shall also include the condition to direct the petitioner to deposit his passport. Further, such other conditions shall also be imposed by the trial Court to secure the presence of the petitioner to diligently participate in the trial. It is further directed that the petitioner be produced before the trial Court forthwith, to ensure compliance of this order.

8. The special leave petition is allowed accordingly.

9. Pending applications, if any, shall stand disposed of.”