[GST Evasion] Tax collection the lifeblood of economy, prevails over personal liberty: P&H HC rejects bail plea by accused tax officer

Dismissing an excise officer's plea for anticipatory bail in a case where he has been accused of facilitating GST-evasion, Justice Avneesh Jhingan of the Punjab and Haryana High Court recently remarked:."There is no quibble that the liberty of a person is of utmost importance. But when personal liberty is pitted against a sovereign function i.e. collection of tax which is life blood of the economy, the latter would prevail."Punjab and Haryana High Court.Emphasizing on the need for a deeper probe in the case, Justice Jhingan remarked that the any wrongdoing in the GST chain would have huge ramifications. He observed,."Under the GST, there is an inter-connected chain of sellers and purchasers as the purchaser gets the credit of tax paid or suffered by seller. The chain can be within the State or PAN-India. One link in the chain being ingenuine, doctored or nonexistant (sic), would impact the entire chain.".The Judge noted further that, "There are far reaching ramifications which may vary from allowing of input credit/ MODVAT of tax not paid to the Government to an eventuality that the credit of tax paid on some other product is used for something else. Not only this, someone later in chain in spite of being a bona fide purchaser not aware of the earlier misdeed in the chain yet will have to suffer the consequences.".The case involved allegations of a person paying large sums of money to officials in the Tax and Excise Department to evade paying taxes on goods he transported to and from the State of Punjab. .The amounts ensured that no checking or verification of the documents or goods were carried out, information received by the Vigilance Bureau revealed. .After tracing the calls made by a certain Shiv Kumar and another person named Pawan Kumar, the names of several officers came to light. .Incidentally, Pawan Kumar was the bail applicant's driver. Pawan is also supposed to have bribed the officers accused. Phone call data showed over forty phone calls between Pawan and the bail applicant, the High Court's order narrates. The State informed, however, that information received was still incomplete and in the process of being gathered..Pursuant to the receipt of information, an FIR was registered and the bail applicant was booked, among others accused. Apprehending his arrest, the applicant moved the High Court for anticipatory bail, contending that he had no part to play in the tax evasion chain. .The 40 phone calls between him and Pawan did not evidence any wrongdoing, the applicant averred. He asserted that a supposed register maintained by the businessperson and Shiv Kumar containing details of payments to tax officials could not be relied upon since it had no evidentiary value..He additionally stated that he himself had not been accused of forging bills or documents in the scam, that Pawan was a substitute driver, and that he was not presently holding the Excise and Taxation Officer post..The State, on the other hand, submitted in Court that GST collection levels within the State had dropped. The Court was also informed that as per a register seized by the authorities, the applicant had been paid an amount of Rs 8,25,000 between 2017 and July this year. This registered is alleged to contain the details of amounts paid to various excise and tax officials. .Taking note that the investigation was in the preliminary stages, Justice Jhingan commented that the material unearthed may merely be 'the tip of the iceberg'..Because the allegations against the applicant very serious, the Judge added:"Merely the fact that the name of the petitioner did not figure in the telephonic conversation or its transcript would not be a reason to conclude that custodial investigation of the petitioner is not required.".Matters such as the evidentiary value of the register and the like were not significant at this stage, considering the other material recovered such as various discrepancies found by the authorities and the way in which detained vehicles were being dealt with by the applicant. .There were other indicators, apart from these, that the minor penalties imposed and recovered in cash by the applicant were not even not deposited in the Government Treasury, Justice Jhingan's order records..The submission that the applicant was not active in service at the beginning of the year was not relevant since the Vigilance Bureau is studying material gathered for the last year or so, the Court added..With these observations, the officer's bail plea was dismissed. .Read the Order: