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2015 DIGILAW 1091 (PNJ)

Rajender Singh v. Union of India

2015-05-29

G.S.SANDHAWALIA, S.J.VAZIFDAR

body2015
Gurmeet Singh Sandhawalia, J.:- 1. In the instant writ petition, the challenge is to the arrest memo dated 08.04.2015 (Annexure P6), issued by respondent No. 3-Superintendent (Anti-Evasion) Central Excise & Service Tax Commissionerate, Rohtak, Haryana and the orders of the Chief Judicial Magistrate, Rohtak, granting judicial remand to the petitioner on 17.04.2015 (Annexure P7) along with dismissal of the bail application orders by the Addl. Sessions Judge, Rohtak. Further challenge has also been raised to the amendments carried out in Sections 89 & 90 of the Service Tax (Chapter V of the Finance Act, 1994) (for short, the 'Act') which came into effect from 10.05.2013 whereby certain categories of offences have been treated as cognizable and non-bailable. 2. Vide the present interim order, we only propose to deal with the issue of interim bail which we feel, in the facts and circumstances of the case, the petitioner is entitled to during the pendency of the present case since he has already undergone incarceration since 08.04.2015, on account of having been arrested under Section 91 of the Act on the ground that there was reason to believe that he was liable for punishment under the provisions of Section 89(1)(i)(ii) of the Act. 3. Learned Senior Counsel for the petitioner has submitted that the petitioner is the Managing Director of M/s. Sanga Energy Pvt. Ltd. (SEPL), a company incorporated and registered with the Registrar of Companies. As per the objects of the company, it is carrying on business in all types of electrical and electric goods including manufacture and providing service of erection of towers, sub-station, solar panels etc. That summons had been issued to him on account of evasion of service tax, on 06.02.2014 by respondent No. 3, to appear on 19.02.2014 and he had put in appearance on 28.02.2014, 08.05.2014, 20.08.2014, 11.03.2015 etc. He had sought the benefit of a circular dated 24.05.2010 whereby the applicability of service tax of laying of cables along with the roads etc. and other electricity connected services had been exempted. But the officials were resorting to arm-twisting and he had deposited some amounts as part payment of the service tax. Accordingly, it was submitted that an amount of `36,82,685/- till 14.08.2014 had been deposited and even Service Tax Voluntarily Compliance Encouragement Scheme had been opted for which, however, was not as such adhered to apart from the deposit of 50% of the amount. Accordingly, it was submitted that an amount of `36,82,685/- till 14.08.2014 had been deposited and even Service Tax Voluntarily Compliance Encouragement Scheme had been opted for which, however, was not as such adhered to apart from the deposit of 50% of the amount. The petitioner's case is that the balance amount was not deposited on account of the respondents' default as they refused to fill in the recovery form. The arrest made on 08.04.2015 was in a high-handed manner and the orders rejecting the bail application were also not justified on account of the fact that there was no quantification of the amount at the time of his arrest and the show cause notice issued was of 23.04.2015 (Annexure P12) and he was liable to be released on interim bail during the pendency of the present petition. 4. Learned Senior Counsel for Union of India and for the Commissioner of the Central Excise & Service Tax, vehemently opposed the grant of any such relief by submitting that investigation was in progress and huge arrears to the tune of ` 4,09,70,016 towards service tax was due. It was submitted that the Courts below had rightly rejected the bail application and the petitioner had a remedy by filing a appropriate petition before this Court on the criminal side. Reliance was also placed upon the judgment of the Supreme Court in Kartar Singh v. State of Punjab 1994 (3) SCC 569 to submit that the power to grant bail should be exercised in only rare and appropriate cases and extreme circumstances, under Article226 of the Constitution of India. It was submitted that on account of huge outstanding against the petitioner and due to his non-cooperative attitude, no interim relief was liable to be granted and his detention was sought to be justified. 5. It was submitted that on account of huge outstanding against the petitioner and due to his non-cooperative attitude, no interim relief was liable to be granted and his detention was sought to be justified. 5. The matter was listed yesterday, after service upon the respondents and it was put to counsel for the respondents in categorical terms as to how the interest of the Revenue could be prejudiced in case the petitioner is to be granted the benefit of interim relief, as admittedly, at this stage, there is neither any adjudication order passed against him, quantifying the amount of arrears of service tax which he has alleged to have received nor any complaint has been filed against him under the provisions of the Act, for the violation of the provisions under which he has been arrested, mainly on the ground that the arrears are more than ` 50 lacs and therefore, there is a power to arrest. 6. We feel this attempt at justification of the action by the counsel for the respondents, prima facie at this stage, is unjustified as it amounts to putting the cart before the horse. There is no denying the fact that the petitioner has been called for enquiry and investigation time and again regarding the contracts he had entered into and the amount of service tax which he has received and which was payable. Counsel for the petitioner has argued that some of the work carried out by him pertains to manufacture and others of job workers/works contract, which in some cases, does not come within the ambit of service tax clause and secondly, different slabs are provided for the same. 7. A perusal of the show cause notice which was issued on 23.04.2015, i.e. after the date of arrest on 08.04.2015, would go on to show that the petitioner was carrying on the allied business since 2007. The said show cause notice also goes on to show that work had been done from the year 2009-10 onwards. The statements of various persons had been recorded and on the strength of the same, the show cause notice was issued subsequently, after arrest which is yet to be adjudicated upon. The hurry to arrest, in such circumstances prima-facie amounts to a punitive measure, prejudging the issue. The statements of various persons had been recorded and on the strength of the same, the show cause notice was issued subsequently, after arrest which is yet to be adjudicated upon. The hurry to arrest, in such circumstances prima-facie amounts to a punitive measure, prejudging the issue. It is also admitted by counsel for respondent No. 2 that after the arrest of the petitioner on 08.04.2015, the judicial remand had been ordered on 09.04.2015 and no effort, thereafter, has been made to seek any further information from the petitioner which goes contrary to the argument that investigation is in progress and his personal custody is required. Once such was the situation, the requirement of arrest for the arrears due for the last more than 4 years, of which, there was no quantification, prima facie, in our opinion, would only infringe on the fundamental rights of the petitioner, as the calculations on the basis of which, he is sought to be arrested, as per the arrest memo, was issued only at his back and without having given him appropriate opportunity to file reply to the show cause notice, which admittedly was issued on 23.04.2015, post his arrest. 8. Counsel for the petitioner has submitted that that there is no denying the fact that a sum of `36,82,685/- has been paid by the petitioner-company and there was a dispute regarding the quantification and that he is voluntarily willing to deposit a sum of ` 20 lacs immediately and another sum of ` 20 lacs within a period of 20 days, so that the interest of the Revenue is protected, during the pendency of the adjudication proceedings. He also made further statements to establish the petitioner's bonafides which we will incorporate in our order. 9. The said offer, which came up yesterday, is also not acceptable to the respondents, after instructions. It is, thus, apparent that the respondents have presumed that it is proved that an offence has been committed and have already adjudicated on the criminal liability of the petitioner. It was put to the counsels for the respondents as to whether any time-frame could be indicated as to when the investigation process would be completed or when the adjudication order could be passed or a formal complaint alleging the violations of the provisions of the Act, which admittedly is a non-cognizable offence, would be filed. It was put to the counsels for the respondents as to whether any time-frame could be indicated as to when the investigation process would be completed or when the adjudication order could be passed or a formal complaint alleging the violations of the provisions of the Act, which admittedly is a non-cognizable offence, would be filed. Even after seeking instructions, counsels for the respondents could not confirm as to when the said process will be completed so that this Court prima facie could go into the question as to whether the offence has been made out or not which is, now, sought to be contended on the basis of alleged admissions made by the petitioner with the respondent-authorities. 10. Accordingly, we are of the opinion that further detention of the petitioner, in such facts and circumstances, amounts to taking away his liberty in the absence of any complaint having been filed against him and it would be a fit case where the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India is liable to be exercised. The interest of the Revenue can be safeguarded by imposing certain conditions which the petitioner will adhere to. Counsel for the respondents could not and do not object, as such, to the jurisdiction of this Court to grant the relief, power of which has been time and again left to the Court, to be exercised in appropriate cases. We can fall back on the principles laid down by the Supreme Court in Arnesh Kumar v. State of Bihar & another (2014) 8 SCC 273 , wherein it has been noticed that 'the attitude to arrest first and then proceed with the rest is despicable.' The principles which have been laid down to police authorities also talk about the applicability to offences which are punishable and which can extend upto 7 years which is the case under the provisions of this Act also. 11. Accordingly, the petitioner is granted interim bail subject to the satisfaction of the Chief Judicial Magistrate/Illaqa Magistrate, Rohtak, on the following conditions, which were suggested on behalf of the petitioner himself:-- "i) The petitioner shall not leave the country during the pendency of the investigation. 11. Accordingly, the petitioner is granted interim bail subject to the satisfaction of the Chief Judicial Magistrate/Illaqa Magistrate, Rohtak, on the following conditions, which were suggested on behalf of the petitioner himself:-- "i) The petitioner shall not leave the country during the pendency of the investigation. ii) The petitioner shall report before respondent No. 3, on every alternate working day at 10 am to 2 pm, at Rohtak, till the next date on which the petition is taken up for hearing by the Court; iii) The deposit of ` 20 lacs in favour of respondents No. 2 & 3 shall be made at the time of release before the Chief Judicial Magistrate/Illaqa Magistrate, Rohtak. iv) The undertaking to deposit an additional sum of ` 20 lacs with respondent Nos. 2 and 3 by period of 4 weeks from the release is accepted; v) The petitioner will ensure that his wife and the other officer of the company furnish all the documents demanded and queries raised by the respondents within three days of written request or requests by the respondents. The petitioner's undertaking to do so himself as well is accepted. vi) The petitioner ensures that the company permits the respondents to take full and free inspection of all the records of the company especially the books of account including vouchers, challans, bills and bank books-records. vii) The petitioner and his wife agree to disclose their assets on affidavit on or before 15.06.2015 and to file an undertaking in this Court not to dispose of, alienate, encumber part with possession of or create any third party right, title or interest, in, to, upon on or in respect thereof. They shall, however, be permitted to withdraw and utilize cash for the day to day expenses and in the normal course only. They shall, however, be permitted to withdraw and utilize cash for the day to day expenses and in the normal course only. viii) The petitioner shall procure on affidavit an undertaking of the company, namely, M/s. Sanga Energy Pvt. Ltd. (SEPL) not to dispose of the immovable properties, any of its assets; that it will only make payments of statutory dues and dues of its workers and that it will incur any other expenses only after obtaining written permission of the respondents or with the leave of the Court." We also make it clear that it shall be open to the respondents to pass appropriate orders on the basis of the record, which they have and will receive during the pendency of further investigation. To come up for further proceedings on 01.07.2015. A copy of the order be given dasti to the parties under the signatures of the Bench Secretary.