ORDER

1. This matter is taken up by video conferencing mode.

2. Heard learned counsel for the petitioner and learned counsel for the State.

3. The petitioner being in custody in connection with 2 (C) CC Case No.51 of 2020 pending in the Court of the learned S.D.J.M., Rourkela for the alleged commission of offences under Sections 132(1)(b) 7 (c) of CGST Act, 2017.

4. It is alleged that on 29.2.2020 a search conducted at the office premises of one Santosh Kumar Gupta, Proprietor of M/s. Pacific Packaging Industries. In course of search, it was found that 10 fake firms operated by Santosh Gupta which were non-existent and are not making any business. On further investigation, it was found involvement of two intermediary firms namely M/s. Sony Iron and Steel Trading Co. and M/s. Harihar Enterprisers who have availed fraudulent ITC (Input Tax Credit) from the above non-existence firms. The petitioner happens to be the proprietor of M/s. Sony Iron and Steel Trading Co. and managing both the firms. It is further alleged that during scrutiny of various documents, it came to light that the present petitioner has actively participated in passing of fake ITC to the above firms without supply of goods and has availed ineligible ITC by using the fake invoices/bills without receipt of goods. It is alleged that the present petitioner is responsible for causing the huge loss to the State exchequer to the tune of ₹ 5.2 crores approximately.

5. Learned counsel for the petitioner submits that the petitioner has been falsely implicated in the present case and the accused-petitioner has no relation with Sri Santosh Kumar Gupta or M/s Pacific Packaging Industries. It is also submitted that there is no evidence against the petitioner in the alleged crime. The grounds of arrest are contrary to the material evidences on record.

6. Learned counsel for the State vehemently objected to the prayer of the petitioner for release on bail. He further submitted that the present offence is a part of an organized tax fraud syndicate and a proper investigation will unearth the entire syndicate. As seen from record, during search, several incriminating materials containing such business transactions of such business entities were unearthed and seized with due acknowledgment.

7. The accusation against the petitioner relates to the commission of economic offences which are considered grave and therefore it must be viewed seriously. Offences of this nature affect the heart of the economy and usually involve a deep-rooted conspiracy to cause huge loss of public funds.

8. Although this Court is cognizant of the fact that some accused persons in some similar cases have been enlarged on bail but every case turns on its own facts and circumstances.

9. The law relating to bail in cases of economic offences is more settled in view of the decision of the Hon’ble Supreme Court of India in Nimmagadda Prasad vs Central Bureau of Investigation which held that:  

“23. Unfortunately, in the last few years, the country has been seeing an alarming rise in whitecollar crimes, which has affected the fiber of the country’s economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat v. Mohanlal Jitamalji Porwal and Anr. (1987) 2 SCC 364 this Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under:

5… The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest….

24. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. It has also to be kept in mind that for the purpose of granting bail, the Legislature has used the words “reasonable grounds for believing” instead of “the evidence” which means the Court dealing with the grant of bail can only satisfy it as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt.

25. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”

Furthermore, in the case of Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation (2013) 7 SCC 439, the Hon’ble Supreme Court opined that;

“35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.”

10. It is also observed that while investigation has begun, more and more evidence is being unearthed. There have been instances where the petitioner has rendered inconsistent statements and therefore, securing his presence is essential so that he does not try to sabotage the investigation. In Adri Dharan Das v. State of W.B.(2005) 4 SCC 303, the Hon’ble Supreme Court opined that;

“19. Ordinarily arrest is a part of the process of investigation intended to secure several purposes. The accused may have to be questioned in detail regarding various facets of motive, preparation, commission and aftermath of the crime and the connection of other persons, if any, in the crime. There may be circumstances in which the accused may provide information leading to discovery of material facts. It may be necessary to curtail his freedom in order to enable the investigation to proceed without hindrance… .For these or other reasons, arrest may become an inevitable part of the process of investigation. … The role of the investigator is well defined and the jurisdictional scope of interference by the court in the process of investigation is limited. The court ordinarily will not interfere with the investigation of a crime or with the arrest of the accused in a cognizable offence. …”

11. Thus, as the law stands, in such type of offences, while granting bail, the Court has to keep in mind, inter alia, the larger interest of the public and State. The accused is active in creation and operation of the nonexistent business entities for availing and passing of bogus ITC thereby defrauding the state exchequer.

12. Considering the nature and gravity of the accusation, the nature of supporting evidence, availability of prima facie case against the petitioner, coupled with the fact that a huge amount of public money has been misappropriated and also the fact that further investigation of the case is under progress and taking into account the apprehension of the petitioner in tampering with the evidence, in the larger interest of society, I am not inclined to release the petitioner on bail.

13. Accordingly, the bail application lacks merit and hence stands rejected.

14. Before parting, it is clarified that the observations made hereinabove are only for the purposes of the present application and that the learned Trial Court seisin over the matter shall proceed with the case uninfluenced by the observations made hereinabove.

15. As the restrictions due to the COVID-19 situation are continuing, learned counsel for the parties may utilize a soft copy of this order available in the High Court’s website or print out thereof at par with certified copy in the manner prescribed, vide Court’s Notice No.4587, dated 25th March 2020.