Madhya Pradesh HC grants Bail to persons accused of GST evasion of Rs. 225 Crores [Read Order]

GST evasion - GST - Bail - Taxscan

The Madhya Pradesh High Court has granted bail to the accused persons in case of GST evasion, for alleged evaded payment of the GST to the tune of Rs.225 crores.

An application for bail was made by the applicant under Section 439 Cr.P.C. for grant of bail during trial which provides special powers to the High Court or Court of Session to grant bail. It states that a high court or sessions court can release any person accused of an offence on bail and also impose conditions based on which the order will be granted.

The applicant is facing trial for offences punishable under section 132(1)(a)(i) of the GST Act and under Section 409, 467, 471, 120-B of the IPC.

The applicant, Sanjay Matta who is a Pakistani national faces an allegation that he is indulged in clandestine clearance of mouth freshener, commonly known as “Pan Masala”, without payment of GST.

As per the statements recorded under Section 70 of the GST Act that their firm had supplied Vimal brand Pan Masala worth Rs.320 crores clandestinely and has evaded payment of the GST to the tune of Rs.225 crores.

Consequently, search of various places and statements of various persons further confirmed the aforesaid tax evasion. Following the due process, the petitioners were taken into custody and booked in the aforementioned crime.

The Counsel for the applicant prayed for bail being granted to the applicant on the grounds that the petitioners were earlier paying GST honestly and are also ready to pay the same in future. However, due to unprecedented circumstances of spread of COVID-19 pandemic and complete lockdown pursuant thereto; there was some delay in paperwork and submission of the invoices etc.

It was further contended that though under pressure, they have already paid Rs. 7 crores and are still ready to pay the deficit, if any, found due on the final assessment.

However, the department while praying that the applicant must not be released said that as many as 11 searches and 14 statements have been recorded after the arrest of the petitioners. In all possibilities, the magnitude of the offence would increase in many folds. Release of the petitioners would hamper the investigation, which is at a very crucial stage.

The Single Judge Bench of Justice Virendra Singh without commenting on the merits of the case granted the bail to both the accused on furnishing a personal bond in the sum of Rs.5 Lakhs each with separate sureties to the satisfaction of the Trial Court for their appearance before it as and when required.

The court imposed various conditions on the accused so as to ensure the smooth investigation to meet the ends of justice.

Firstly, the petitioners shall cooperate with the trial and shall not seek unnecessary adjournments on frivolous grounds to protract the trial.

Secondly, the petitioners 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.

Thirdly, the petitioners shall not commit any offence or involve in any criminal activity.

Fourthly, in case of their involvement in any other criminal activity or breach of any other aforesaid conditions, the bail granted in this case may also be cancelled.

Lastly, the petitioners shall submit their passports, if any, before the Trial Court and shall not leave India without prior permission of this Court.

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