GST Evasion Prosecution Does Not Depend Upon Completion Of Assessment: Kerala High Court

The Kerala High Court has held that prosecution for offences under Section 132 of the CGST Act does not depend upon the completion of the assessment.

The bench of Justice Mohammed Nias C.P. refused to grant bail on the grounds that there is an alleged evasion of more than Rs. 6.5 crore against the petitioner. A serious allegation is made, which warrants a thorough investigation. When the investigation is going on, no bail can be granted to the petitioner.

The petitioner is the accused in the crime registered based on the complaint of the department under Section 132(1) of the Kerala State Goods and Service Act, 2017. The accused is a dealer under the GST Act. He has two offices, one at Pulimoodu Junction, Kottayam, and an additional business place at Kochar Road, Pazhavangadi, Trivandrum. He is a wholesale distributor of mobile accessories and electronic items, which are taxable with 18% GST.

It was alleged that he is supplying goods without issuing invoices, evading the tax payment due from 2018 onwards. The accused is involved in tax evasion estimated at 6.14 crores. A raid was conducted in the office of the accused on November 9, 2023, and he was arrested on November 13, 2023.

The petitioner contended that the petitioner is a registered dealer regularly paying returns from 2018 to 2023. The department wrongly included the income of two other concerns conducted by the petitioner's brother's sons, who have separate GST registrations. The total income had been arrived at by wrongly taking the income of all three concerns. The department has already seized documents, electronic records, and other accompanying material, so further custodial interrogation is not necessary. The remand report does not state that continued custody of the petitioner is necessary. There is no scope for influencing the witnesses, as they are officials. The petitioner is innocent and has not committed any offence. All the transactions are done based on invoices and bills, and all the transactions are recorded on the computer that was seized during the search.

The department contended that the inquiry revealed that he supplied goods without issuing invoices, evading tax due to the government exchequer. The accused was involved in large-scale tax evasion by suppressing his actual outward taxable supplies. He absconded after the search and said that the investigation was only at the preliminary stage, and releasing the petitioner at this stage would certainly affect a proper investigation. The allegation that he supplied goods without issuing any invoice is not answered even now.

The court held that once the ingredients of the offence are made out, the commissioner or competent authority can determine if the offender is to be arrested or not. If it is to ensure a proper investigation and prevent the possibility of tampering with evidence or intimidating or influencing the witnesses, the power can certainly be exercised.

The court dismissed the bail application.

Counsel For Petitioner: C.S.Manilal, S.Nidheesh

Counsel For Respondent: Mohamed Rafiq

Citation: 2023 LiveLaw (Ker) 738

Case Title: Badha Ram Versus Intelligence Officer

Case No.: Bail Appl. No. 10492 Of 2023

Click Here To Read The Order