Tuesday, March 28, 2023

Allahabad High Court grants bail to Kanpur trader Peeyush Kumar Jain

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The Allahabad High Court has granted bail to Kanpur-based perfume trader Peeyush Kumar Jain.

A single-judge bench of Justice Subhash Vidyarthi passed this order while hearing a Criminal Misc Bail Application filed by Peeyush Kumar Jain.

By means of the application, the applicant is seeking his release on bail in Criminal Case in the Court of the Special Chief Judicial Magistrate (Economic Offences) / Additional Metropolitan Magistrate-III, Kanpur Nagar, arising out of a complaint filed in respect of offence under Section 132 (1) (a) read with Section 132 (1) (i) and 132 (5) of the Central Goods and Services Tax Act, 2017.

The facts of the case are that on 22-12-2021, officers of the Directorate General of Goods and Services Tax Intelligence (DGGI) started making a search on the residential and official premises of the applicant at Kannauj and Kanpur, which continued till 28-12-2021.

Cash amounting to Rs 196.57 crore was seized from the applicant’s premises besides recovery of 23 kg gold, which was handed over to the officers of the Directorate of Revenue Intelligence. The applicant was arrested on 26-12-2021.

On 22-02-2022, the DGGI filed a complaint before the Special Chief Judicial Magistrate (Economic Offences) / Additional Metropolitan Magistrate-III, Kanpur Nagar against the applicant seeking his prosecution and punishment for committing the aforesaid offences.

It has been stated in the complaint that the applicant is one of the partners in the firm M/S Odochem Industries and he used to operate and manage two proprietorship concerns namely Odosynth Inc, (of which the applicant’s wife Smt Kalpana Jain is the proprietor) and M/S Flora Naturale (of which Smt Vijay Laxmi Jain, wife of Ambrish Kumar Jain is the proprietor) and it was revealed during investigation that the aforesaid firms operated by the applicant along with his brother Ambrish Kumar Jain were collectively engaged in illicit supply of finished goods, namely perfumery compounds, without issuing any tax invoice and without payment of GST.

It has further been stated in the complaint that in his voluntary statement recorded on 25-26.12.2021, 06-07-08.01.2022 and 05.02.2022 under Section 70 of the CGST Act, 2017, the applicant had admitted having made illicit supply of perfumery compounds by the aforesaid firms and he had offered to pay Rs 52 crore towards his tax liability along with the applicable interest and penalty and that he has managed purchase of raw materials required for manufacturing of perfumery compounds without accounting for in the books and without payment of GST, but he has not disclosed the names and particulars of the buyers and sellers of the aforesaid firms.

On 02-03-2022, the applicant filed an application before the Trial Court for being released on bail and on 05-02-2022, the Trial Court passed an order rejecting the bail application on the ground that the applicant is an active partner in all the three firms; that more than Rs 196.58 crores cash was seized from the applicant’s premises; that the financial records of the firms showed different liability of tax than seized amount of cash and no reasonable explanation was provided for the huge amount of cash seized; that the applicant has neither denied the ownership of the searched premises nor did he deny possession of the huge amount of the cash; that the matter is serious in nature and is very harmful to the economic health of the country and granting bail in such a matter would be likely to promote such type of modus operandi in evasion of tax.

On 04-04-2022, the applicant filed an application before the Sessions Judge seeking his release on bail, and the Sessions Judge rejected the bail application by means of an order dated 28-04-2022 on similar grounds.

The DGGI has filed a counter affidavit stating that during the searches conducted at the business and residential premises of the firms operated by the applicant along with his family members, unaccounted cash of Rs 196,57,02,539 has been seized; that the applicant has admitted that the amount seized is the sales proceed of the goods clandestinely supplied by him without payment of tax and the applicant has paid Rs 54.09 crore towards GST liability along with interest and penalty as per his own calculation, but as the investigations are still in progress, DGGI is yet to ascertain the final tax liabilities under Section 74 (7) of the CGST Act, 2017.

It has further been stated in the counter affidavit that the department has recovered several fake invoices and fictitious LRs (transport documents) evidencing clandestine supplies of taxable goods. Additionally, 23 kg gold bullion, believed to be with foreign origin markings, have also been recovered from the residential premises of the applicant and separate proceedings have been initiated against the applicant in respect thereof under the provision of the Customs Act, 1962.

In the rejoinder affidavit filed on behalf of the applicant it has been stated that the alleged ‘voluntary statement’ of the applicant had been obtained by the DGGI under duress and coercion and it was not voluntary and that the applicant is a person of clean antecedents and he is not a habitual offender.

The rejoinder affidavit further contains an averment that after the applicant’s firm paid the tax and interest, the DGGI has released the goods that had been seized from the applicant’s premises.

The rejoinder affidavit further contains that the prosecution complaint had been filed way back on 22-02-2022 and yet even the charges have not been framed till date and there appears to be no likelihood that the trial will commence soon.

Anurag Khanna, the Senior Advocate for the applicant, has submitted that the offences allegedly carry a minimum punishment of six months’ imprisonment and a maximum of five years’ imprisonment and the offence is compoundable, which indicates that the offence is not grave. Moreover, the mere gravity of the offence cannot be a ground to deny bail.

The Court observed,

The position of law regarding grant of bail, is that the basic jurisprudence relating to bail in economic offences remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. It is not advisable to categorize all the economic offences into one group and deny bail on that basis. One of the circumstances to consider the gravity of the offence is the term of sentence that is prescribed for the offence the accused is alleged to have committed. Even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. While considering the prayer for grant of bail in any offence, including an economic offence, the Court has to consider: –

(i) the nature of accusation and the severity of the punishment to which the party may be liable in the case of conviction and the nature of the materials relied upon by the prosecution;

(ii) reasonable apprehension of tampering with the witnesses or apprehension of threat to the complainant or the witnesses;

(iii) reasonable possibility of securing the presence of the accused at the time of trial or the likelihood of his abscondence;

(iv) character, behaviour and standing of the accused and the circumstances which are peculiar to the accused;

(v) larger interest of the public or the State and similar other considerations. A prayer for bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the court, whether before or after conviction, to assure that he will submit to the jurisdiction of the court and be in attendance thereon whenever his presence is required.

The Court further observed,

(i) the offences alleged carry a minimum punishment of six months’ imprisonment and a maximum of five years’ imprisonment and that the offences are compoundable, which indicates that the offences are not grave;

(ii) The applicant has already paid a sum of Rs 54.09 crore towards tax, interest and penalty and he has undertaken to deposit the amount of any additional liability;

(iii) the Department is yet to ascertain the applicant’s tax liability;

(iv) the amount of Rs 196,57,02,539 seized by the DGGI from the applicant’s premises is still lying with the Department and, therefore, the interest of the Revenue as well as that of the public at large is protected;

(v) the applicant has already spent more than 8 months in jail and during this period the department has not sought his custodial interrogation, which shows that his custody is not at all required;

(vi) the trial is yet to commence;

(vii) the applicant has no previous criminal history and he has already been granted bail in the case under the Customs Act;

(viii) the applicant does not hold a passport and, therefore, he is not at a flight risk;

(ix) Besides a mere vague allegation that the applicant may tamper with the evidence, no material is there to give rise to a reasonable apprehension that the applicant will misuse his liberty to subvert justice or tamper with the evidence or witnesses;

The Court finds it a fit case to exercise the Court’s discretion of granting bail to the applicant.

The Court ordered,

Let the applicant Peeyush Kumar Jain be released on bail in Criminal Case in the Court of the Special Chief Judicial Magistrate (Economic Offences) / Additional Metropolitan Magistrate-III, Kanpur Nagar, arising out of the complaint filed by DGGI in respect of offence under Section 132 (1) (a) read with Section 132 (1) (i) and 132 (5) of the Central Goods and Services Tax Act, 2017, on his furnishing a personal bond of Rs 10,00,000 and two reliable sureties each of the like amount to the satisfaction of the court concerned subject to following conditions:-

(i) The applicant will not tamper with the evidence during the trial.

(ii) The applicant will not influence any witness.

(iii) The applicant will appear before the trial court on the date fixed, unless his personal presence is exempted, in which case he will appear through his Counsel.

(iv) The applicant will not, directly or indirectly, make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court to any police officer or tamper with the evidence.

In case of breach of any of the above conditions, the prosecution shall be at liberty to move an application before the Court seeking cancellation of the order bail.

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