The Rajasthan High Court has cancelled the bail of GST Evader and held that statement recorded under section 70 of GST Act not hit by section 25 of Indian Evidence Act, 1872.
The bench of Justice Praveer Bhatnagar has observed that the statement recorded by the concerned authority under section 70 of the CGST could not be utilised and read at the time of enquiry or for bringing out the prima facie opinion for indulgence in the crime is likewise not conceivable on two grounds.
Firstly, the authority recording the statement under section 70 is not a police officer, thus not hit by section 25 of the Evidence Act.
Secondly, section 136 (2) of the CGST applies to the court regarding admitting the statement under section 70 of the witness or witnesses who aspired to be examined by the prosecution in the trial.
The Pr. Additional Director General Of Gst Intelligence filed the application for cancellation of bail filed under Section 439(2) of Cr.P.C. as the Apex Court in Criminal Appeal No.316/2024 (arising out of SLP (Crl) No.10864/2024), directed this Court to provide reasonable opportunity to both the parties for advancing their arguments on the application filed under Section 439 (2) of the Cr.P.C.. The Apex Court also directed the counsel for the respondent/accused to present on the next date and not to procrastinate the matter again.
The department contended that the court below committed an error while granting bail to the present respondent-Gautam Garg. The Court below has observed that the statement of respondent-Gautam Garg was not recorded under normal circumstances. There was no evidence that Gautam Garg is a Manager in Firm M/s Gurbax Rai Cotton Industries, M/s Gurbax Rai & Sons and M/s Gurbax Rai Praveen Kumar. No electronic evidence was found on the residential premises of Gautam Garg. The department could not produce the reasons for believing in the arrest memo of Gautam Garg. The State Goods and Services Tax Department of Rajasthan has issued a summons to Gautam Garg. Two proceedings cannot run simultaneously. Lastly, the evasion of Goods and Services Tax is only Rs.7.48 crores.
The petitioner contended that respondent Gautam Garg, in his statement recorded under Section 70 of the CGST Act, has clearly stated that he and his uncle Lovkesh Kumar collected fake bills from fake and non-existent firms based in Sirsa Haryana without supplying any goods for the three companies. The facts also disclose that in a search conducted by the Department, Rs.4.00 lacs were found in the residence of respondent Gautam Garg.
Apart from the evidence of petitioner under Section 70 of the CGST Act, pre-signed chequebooks, weighbridge receipts, details of jeans brokers, purchase invoices and raw slips related to the firm were also recovered from the residence of Gautam Garg and Lovkesh Kumar.
Further, two WhatsApp groups were found on the mobile of Gautam Garg, in which Gautam Garg and Lovkesh Kumar were members, and evidence of GST evasion by the said firms was found in the said WhatsApp group. The search was conducted under Section 67(2) of CGST Act.
Gautam Garg in his statement, has also stated that recovered cash is related to the business activity of M/s Gurbax Rai Cotton Industries, M/s Gurbax Rai and Sons & M/s Gurbax Rai Praveen Kumar. The respondent also made available the cash books to the said firms. In the statement, respondent Gautam Garg has also stated that firms, namely M/s Gurbax Rai Cotton Industries, M/s Gurbax Rai and Sons & M/s Gurbax Rai Praveen Kumar did not receive any goods, and only the bills received from the firms are from the fake firms.
The court held that the analysis of the Court below suffers from perversity as it is not the condition precedent for prosecuting a person under section 132 of the CGST Act.
The court noted that The provisions explicitly state that whoever commits or causes to commit and retain the benefits arising from any supplies, goods, or both without the issue of any invoice or without supplying the goods avails input tax credit is liable to prosecution. Thus, the absence of material indicating the accused petitioner as the manager of the three firms is not essential. The Court below did not assess the consequence and spirit of the provision under section 132 of the CGST Act.
The court cancelled the bail granted to respondent-Gautam Garg.
Case Details
Case Title: Union Of India Versus Gautam Garg
Case No.: S.B. Criminal Bail Cancellation Application No. 168/2023
Date: 03/12/2024
Counsel For Petitioner: Kinshuk Jain
Counsel For Respondent: Jitendra Mitrucka
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