Orissa High Court

Ajaj Ahamad vs State Of Odisha (Cgst) on 4 April, 2022

      IN THE HIGH COURT OF ORISSA AT CUTTACK
                  BLAPL No.6498 of 2021
 (In the matters of application under Section 439, Criminal
 Procedure Code, 1973)

 Ajaj Ahamad                                    ....            Petitioner
                                 -versus-
 State of Odisha (CGST)                         ....           Opp. Party

Advocates appeared in both the cases through Hybrid Mode:
 For Petitioner          :    Mr. Asok Mohanty, Sr. Adv.
                          -versus-
 For Opp. Party              :       Mr. Choudhury Satyajit
                                     Mishra, SSC for CGST


                   CORAM:
                   JUSTICE S.K. PANIGRAHI

                DATE OF HEARING:-31.03.2022
               DATE OF JUDGMENT:-04.04.2022


   S.K. Panigrahi, J.

1. The present Petitioner, who is in custody since

12.01.2021, has filed the instant bail application under

Section 439 of Cr.P.C. corresponding to 2(C)CC Case No.51

of 2020 pending in the court of the Learned S.D.J.M.,

Panposh, Rourkela for commission of offences under

Sections 132(1)(C) and 132(1)(b) of the Central Goods and

Services Tax Act, 2017 (hereinafter referred to as "the

CGST Act, 2017" for brevity). Prior to the instant

application, the Petitioner had approached the learned 1st

Additional Sessions Judge, Rourkela, for Bail, but it was

rejected vide order dated 28.07.2021.

2. Shorn of unnecessary details, the prosecution's case is

that after a search enquiry conducted on M/S Pacific

Packing Industries, it was found that the firm of the

petitioner namely, M/S Sony Iron and Steel Trading Co.

was engaged in availing fraudulent ITC from the sham

subsidiaries of M/S Pacific Packing Industries.

Furthermore, ITC benefits to the tune of Rs.5,02,21,055

were acquired by the petitioner's firm and M/S Harihara

Enterprises, by way of fake bills without the actual supply

of goods.

3. Per contra, the learned counsel for the Petitioner

earnestly submitted that the allegations made against the

Petitioner in the prosecution report are bald allegations

which lack the backing of any substantial evidence. It was

contended that the Petitioner was held responsible for

availing a total GST amount to the tune of Rs. 5, 02, 21,

055 against M/S Sony Iron and Steel Trading Co and M/S

Harihara Enterprises. However, the petitioner is the

proprietor of only the former company and the later is

under the proprietorship of Dhanjaya Suna. The petitioner

has been arrayed as an accused for the acts and omission

of M/S Harihara Enterprises as well, but solely on the

basis of his own confession. Law is well settled that the

confession of the accused cannot be used against him. It

has been submitted that the investigation/enquiry officer

has wrongly calculated that date sheet details and has

thereby, erred in indicating the misappropriated tax

amount above the margin of Rs.5 crores. Further, the

payment of tax to the tune of Rs.19,29,972 by the

petitioner has been overlooked by the investigating officer.

It is submitted that the Petitioner has been duly

cooperating with the authorities and has on multiple

occasions appeared in the offices to assist the authorities

with the investigation, but despite his bonafide actions, he

was forwarded into custody on 12.01.2021. The Petitioner's

family is on the brink of starvation due to his absence.

Furthermore, the final charge sheet has been submitted

and the documentary evidences have been seized, leaving

no scope for the tampering of evidence. Learned counsel for

the Petitioner finally urged that there is no risk of the

Petitioner fleeing since he resides locally and he should be

released on bail as the trial has not commenced and the

petitioner has been advised by the doctor to undergo a

bypass surgery.

4. Heard learned counsel for both parties and perused the

records.

5. The core concept and philosophy of bail was discussed

by the Hon'ble Supreme Court in Vaman Narain

Ghiya v. State of Rajasthan1, wherein it was observed

that:

"6. 'Bail' remains an undefined term in CrPC. Nowhere else has the term been statutorily defined. Conceptually, it continues to be understood as a right for assertion of freedom against the State imposing restraints. Since the UN Declaration of Human Rights of 1948, to which India is a signatory, the concept of bail has found a place within the scope of human rights. The dictionary meaning of the expression 'bail' denotes a security for appearance of a prisoner for his release. Etymologically, the word is derived from an old French verb 'bailer' which means to 'give' or 'to deliver', although another view is that its derivation is from the Latin term 'baiulare', meaning 'to bear a burden'. Bail is a conditional liberty. Stroud's Judicial Dictionary (4th Edn., 1971) spells out certain other details. It states:

'... when a man is taken or arrested for felony, suspicion of felony, indicted of felony, or any such case, so that he is restrained of his liberty. And, being by law bailable, offereth surety to those which have authority to bail him, which sureties are bound for him to the King's use in a certain sums of money, or body for body,

(2009) 2 SCC 281

that he shall appear before the justices of goal delivery at the next sessions, etc. Then upon the bonds of these sureties, as is aforesaid, he is bailed--that is to say, set at liberty until the day appointed for his appearance.' Bail may thus be regarded as a mechanism whereby the State devolutes upon the community the function of securing the presence of the prisoners, and at the same time involves participation of the community in administration of justice.

7. Personal liberty is fundamental and can be circumscribed only by some process sanctioned by law. Liberty of a citizen is undoubtedly important but this is to balance with the security of the community. A balance is required to be maintained between the personal liberty of the accused and the investigational right of the police. It must result in minimum interference with the personal liberty of the accused and the right of the police to investigate the case. It has to dovetail two conflicting demands, namely, on the one hand the requirements of the society for being shielded from the hazards of being exposed to the misadventures of a person alleged to have committed a crime; and on the other, the fundamental canon of criminal jurisprudence viz.

the presumption of innocence of an accused till he is found guilty. Liberty exists in proportion to wholesome restraint, the more restraint on others to keep off from us, the more liberty we have. (See A.K. Gopalan v. State of Madras [AIR 1950 SC 27).

8. The law of bail, like any other branch of law, has its own philosophy, and occupies an important place in the administration of justice and the concept of bail emerges from the conflict between the police power to restrict liberty of a man who is alleged to have committed a crime, and presumption of innocence in favour of the alleged criminal. An accused is not detained in custody with the object of punishing him on the assumption of his guilt."

6. In Moti Ram v. State of M.P.2 the Hon'ble Supreme

Court, while discussing pretrial detention, held:

"14. The consequences of pretrial detention are grave. Defendants presumed innocent are subjected to the psychological and physical deprivations of jail life, usually under more onerous conditions than are imposed on convicted defendants. The jailed defendant loses his job if he has one and is prevented from contributing to the preparation of his defence. Equally important, the burden of his detention frequently falls heavily on the innocent members of his family."

Furthermore, the Hon'ble Supreme Court in Sanjay

Chandra v. CBI3 , dealing with a case involving an

economic offence of formidable magnitude, touching upon

the issue of grant of bail, had observed that deprivation of

liberty must be considered a punishment unless it is

required to ensure that an accused person would stand his

trial when called upon. The courts owe more than verbal

respect to the principle that punishment begins after

conviction and that every man is deemed to be innocent

until duly tried and found guilty. It was underlined that the

object of bail is jurisprudentially neither punitive nor

preventive. Although the Hon'ble Supreme Court sounded a

caveat that any imprisonment before conviction does have

(1978) 4 SCC 47

(2012) 1 SCC 40

a substantial punitive content. It was elucidated therein

that the seriousness of the charge, is no doubt one of the

relevant considerations while examining the application of

bail but it was not only the test or the factor and that grant

or denial of such privilege is regulated to a large extent by

the facts and circumstances of each particular case. It was

also held that detention in custody of under-trial prisoners

for an indefinite period would amount to violation of Article

21 of the Constitution was highlighted.

7. It would also be apposite at this juncture to reproduce

the Hon'ble Delhi High Court's succinct elucidation of the

legal position in matters pertaining to bail as laid down

in Anil Mahajan v. Commissioner of Customs4 and H.B.

Chaturvedi v. CBI5, whereinthe Hon'ble High Court after

considering the judgments, inter alia, in Gurcharan

Singh v. State (Delhi Administration)6 and Gudikanti

Narasimhulu v. Public Prosecutor7, observed as follows:

"14. The legal position emerging from the above discussion can be summarised as follows:

(a) Personal liberty is too precious a value of our Constitutional System recognised under Article 21 that the crucial power to negate it is a great

84 (2000) DLT 854

CRL.M (BAIL) 459/2010

(1978) 1 SCC 118

(1978) 1 SCC 240

trust exercisable not casually but judicially, with lively concern for the cost to the individual and the community. Deprivation of personal freedom must be founded on the most serious considerations relevant to the welfare objectives of society specified in the Constitution.

(b) As a presumably innocent person the accused person is entitled to freedom and every opportunity to look after his own case and to establish his innocence. A man on bail has a better chance to prepare and present his case than one remanded in custody. An accused person who enjoys freedom is in a much better position to look after his case and properly defend himself than if he were in custody. Hence grant of bail is the rule and refusal is the exception.

(c) The object of bail is to secure the attendance of the accused at the trial. The principal rule to guide release on bail should be to secure the presence of the applicant to take judgment and serve sentence in the event of the Court punishing him with imprisonment.

(d) Bail is not to be withheld as a punishment. Even assuming that the accused is prima facie guilty of a grave offence, bail cannot be refused in an indirect process of punishing the accused person before he is convicted.

(e) Judges have to consider applications for bail keeping passions and prejudices out of their decisions.

(f) In which case bail should be granted and in which case it should be refused is a matter of discretion subject only to the restrictions contained in Section 437(1) of the Criminal Procedure Code. But the said discretion should be exercised judiciously.

(g) The powers of the Court of Session or the High Court to grant bail under Section 439(1) of Criminal Procedure Code are very wide and unrestricted. The restrictions mentioned in Section 437(1) do not apply to the special powers of the High Court or the Court of Session to grant bail under Section 439(1). Unlike under

Section 437(1), there is no ban imposed under Section 439(1) against granting of bail by the High Court or the Court of Session to persons accused of an offence punishable with death or imprisonment for life. However while considering an application for bail under Section 439(1), the High Court or the Court of Sessions will have to exercise its judicial discretion also bearing in mind, among other things, the rationale behind the ban imposed under Section 437(1) against granting bail to persons accused of offences punishable with death or imprisonment for life.

(h) There is no hard and fast rule and no inflexible principle governing the exercise of such discretion by the Courts. There cannot be an inexorable formula in the matter of granting bail. The facts and circumstances of each case will govern the exercise of judicial discretion in granting or refusing bail. The answer to the question whether to grant bail or not depends upon a variety of circumstances, the cumulative effect of which must enter into the judicial verdict. Any one single circumstance cannot be treated as of universal validity or as necessarily justifying the grant or refusal of bail.

(i) While exercising the discretion to grant or refuse bail the Court will have to take into account various considerations like the nature and seriousness of the offence; the circumstances in which the offence was committed; the character of the evidence; the circumstances which are peculiar to the accused; a reasonable apprehension of witnesses being influenced and evidence being tampered with; the larger interest of the public or the State; the position and status of the accused with reference to the victim and the witness; the likelihood of the accused fleeing from justice; the likelihood of the accused repeating the offence; the history of the case as well as the stage of investigation, etc. In view of so many variable factors the considerations which should weigh with the Court cannot be

exhaustively set out. However, the two paramount considerations are: (i) the likelihood of the accused fleeing from justice and (ii) the likelihood of the accused tampering with prosecution evidence. These two considerations in fact relate to ensuring a fair trial of the case in a Court of justice and hence it is essential that due and proper weight should be bestowed on these two factors.

(j) While exercising the power under Section 437 of the Criminal Procedure Code in cases involving non-bailable offences except cases relating to offences punishable with death or imprisonment for life, judicial discretion would always be exercised by the Court in favor of granting bail subject to Sub-section (3) of Section 437 with regard to imposition of conditions, if necessary. Unless exceptional circumstances are brought to the notice of the Court which might defeat proper investigation and a fair trial, the Court will not decline to grant bail to a person who is not accused of an offence punishable with death or imprisonment for life.

(k) If investigation has not been completed and if the release of the accused on bail is likely to hamper the investigation, bail can be refused in order to ensure a proper and fair investigation.

(l) If there are sufficient reasons to have a reasonable apprehension that the accused will flee from justice or will tamper with prosecution evidence he can be refused bail in order to ensure a fair trial of the case.

(m) The Court may refuse bail if there are sufficient reasons to apprehend that the accused will repeat a serious offence if he is released on bail.

(n) For the purpose of granting or refusing bail there is no classification of the offences except the ban under Section 437(1) of the Criminal Procedure Code against grant of bail in the case of offences punishable with death or life imprisonment. Hence there is no statutory support or justification for classifying offences into different categories such as economic

offences and for refusing bail on the ground that the offence involved belongs to a particular category. When the Court has been granted discretion in the matter of granting bail and when there is no statute prescribing a special treatment in the case of a particular offence the Court cannot classify the cases and say that in particular classes bail may be granted but not in others. Not only in the case of economic offences but also in the case of other offences the Court will have to consider the larger interest of the public or the State. Hence only the considerations which should normally weigh with the Court in the case of other non- bailable offences should apply in the case of economic offences also. It cannot be said that bail should invariably be refused in cases involving serious economic offences.

(o) Law does not authorise or permit any discrimination between a foreign National and an Indian National in the matter of granting bail. What is permissible is that, considering the facts and circumstances of each case, the Court can impose different conditions which are necessary to ensure that the accused will be available for facing trial. It cannot be said that an accused will not be granted bail because he is a foreign national."

8. This court has also had the prior occasion of dealing

with a similar application for grant of bail in a case relating

to prosecution under the provisions of the OGST Act, 2017

the case of Pramod Kumar Sahoo v State of Odisha8

wherein this court had the occasion to elaborately deal

with the view taken by various other High Courts in such

matters.

BLAPL No. 4125 of 2020

9. Bail, as it has been held in a catena of decisions, is not

to be withheld as a punishment. Bail cannot be refused as

an indirect method of punishing the accused person before

he is convicted. Furthermore, it has to be borne in mind

that there is as such no justification for classifying offences

into different categories such as economic offences and for

refusing bail on the ground that the offence involved

belongs to a particular category. It cannot, therefore, be

said that bail should invariably be refused in cases

involving serious economic offences. It is not in the interest

of justice that the Petitioner should be in jail for an

indefinite period. No doubt, the offence alleged against the

Petitioner is a serious one in terms of alleged huge loss to

the State exchequer, that, by itself, however, should not

deter this Court from enlarging the Petitioner on bail when

there is no serious contention of the Respondent that the

Petitioner, if released on bail, would interfere with the trial

or tamper with evidence.

10. Having regard to the entire facts and circumstances of

the case, especially the fact that the bread earning son of a

family has been in custody for over a year now I do not find

any justification for detaining the Petitioner in custody for

any longer. As a side note, it is observed that more and

more such cases are brought to the fore where the mere

pawns who have been used as a part of larger conspiracy of

tax fraud have been brought under the dragnet by the

prosecution. It is perhaps time that the prosecution will do

well to follow the trial upstream and bring the "upstream"

parties who are the ultimate beneficiaries who are the

gainers in these evil machinations.

11. In view of the above discussion, it is directed that the

Petitioner be released on bail by the court in seisin over

the matter in the aforesaid case on such terms and

conditions as deemed fit and proper by him/ her with the

following conditions:

(i) The Petitioner shall co-operate with the trial and

shall not seek unnecessary adjournments on

frivolous grounds to protract the trial;

(ii) The Petitioner shall not directly or indirectly

allure or make any inducement, threat or promise to

the prosecution witnesses so as to dissuade them

from disclosing truth before the Court;

(iii) In case of his involvement in any other criminal

activities or breach of any other aforesaid conditions,

the bail granted in this case may also be cancelled.

(iv) The Petitioner shall submit his passports, if any,

before the learned trial court and shall not leave

India without prior permission of this Court.

(v) Any involvement in similar offences of under the

GST Act will entail cancellation of the bail.

12. With the above directions, the instant bail application

is allowed. However, expression of any opinion hereinbefore

may not be treated as a view on the merits of the case and

that the assessment of the tax liability of the Petitioner

shall be carried out strictly in accordance with the

applicable provisions of applicable law.