Kishore Wadhwani v. State of M.P
[Citation -2020-LL-0813-32]

Citation 2020-LL-0813-32
Appellant Name Kishore Wadhwani
Respondent Name State of M.P.
Court HIGH COURT OF MADHYA PRADESH AT INDORE
Relevant Act CGST
Date of Order 13/08/2020
Judgment View Judgment
Keyword Tags supporting documents • search and seizure • packing material • clandestine sale • cogent evidence • modus operandi • investigation • satisfaction • tax evasion


HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. Indore, Dated:- 13/08/2020 Heard with consent of parties through Video Conferencing. Shri Mukul Rohatgi, learned Senior Counsel with Shri J. P. Mishra and Shri Pranav Diesh, learned Counsel for petitioner Kishore Wadhwani. Shri Vikramjit Banerjee, learned Additional Solicitor General along with Shri Prasanna Prasad, learned senior counsel for respondent/Union of India. Shri P. C. Nair, learned Counsel for objector. file containing 107 pages is supplied by respondent in sealed cover ORDER 1. This is first application under section 439 of Cr.P.C. in crime no.23/2020 registered under section 132(1)(a) (i) of Goods and Services Tax Act (hereinafter referred to as GST Act ), Ss. 409, 467, 471, 120-B of IPC by Department of Revenue Intelligence and Directorate General of Goods and Services Tax Intelligence Central Excise Office, District Indore (here-in-after referred to as Department ). 2. learned Senior Counsel for petitioner began with arguments that only fault of petitioner is that he is landlord of premises where his tenant, who runs factory, allegedly evaded tax by clandestine sale of Pan Masala. petitioner is neither Partner of his tenant M/s Vishnu Essence nor in any other way concerned with it. But, he has been posed as if he is only responsible person for whatever has allegedly been done against law by his tenant, 2 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. while no document, what-so-ever it may be, has been produced by department to show his involvement in alleged tax evasion. 3. In reply, learned Additional Solicitor General submitted that petitioner is Director of Media Company, which publishes daily newspaper in name and style of Dabang Dunia . Several vehicles found indulged in clandestine removal/transportation of Pan Masala were having sticker of Dabang Dunia press and drivers of these vehicles were found carrying Identity Cards of Dabang Dunia. This shows that petitioner was well involved in alleged tax evasion. Apart from that, statements of co-accused persons recorded under Section 70 of G.S.T. Act have also been referred by learned ASG wherein authors have disclosed that actually petitioner is whole sole Owner/Proprietor/In-charge of entire business of M/s Vishnu Essence or Ellora Tobacco Co. Ltd or M/s. AAA Enterprises or M/s Namrata Impacs and so on. He is kingpin of entire empire of business or trade of all these firms. He had effective control over their factory operations and is ultimate financial beneficiary in this illicit Pan Masala trade. He is mastermind or key accused of alleged tax evasion, which otherwise runs in crores of rupees. Therefore, he is not entitled for bail. 4. To counter argument in respect of statements recorded under Section 70 of Act, learned Senior Counsel for petitioner pointed out that immediately after getting opportunity, petitioner as well as other co-accused persons have retracted their statements, which were otherwise 3 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. recorded involuntarily under threat and pressure of officials of department, therefore, they cannot be relied upon at this stage. Otherwise also, looking at provisions of Section 136 of Act itself, much weight can not be attached to such statements during life time or availability of author. Lastly, it is contented that these statements didn't lead to any recovery. No supporting evidence either documentary or oral could be collected during investigation. Therefore, on basis of such statements, no adverse inference can be drawn against petitioner at least at this stage. 5. Much time has been spent by both parties to convince Court or to counter that arrest of petitioner is contrary to powers and procedure prescribed by law. 6. It is not disputed that petitioner is one of Director of media company Dabang Duniya but it is contended that neither they are concerned nor are responsible for unauthorized use of any sticker or ID card by any vehicle or driver found indulged in clandestine transportation of any taxable goods. 7. Pendency of investigation is also taken as ground for dismissing petition, which is countered on ground that no further custodial interrogation is requested by department and respondent is bound to file charge- sheet within 60 days of arrest of petitioner and as per date of arrest i.e. 13.06.2020 sixty days have been completed on 12.08.2020. If still charge-sheet is not filed, petitioner is entitled for default bail under Section 167 of Cr.P.C. 8. It is averred that release of petitioner would hamper 4 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. investigation. To bolster this contention, learned ASG pointed out that group of persons assaulted officials when they tried to search of house of petitioner following due process of law. separate FIR is lodged against them. case is registered and is under investigation. This shows that petitioner is non co-operative with investigation and only on this ground he is not entitled for bail. This is contested stating that at that time petitioner or any other male member was not at home. officials of department were trying to enter into house without disclosing their identity. When they were asked to show same, they misbehaved with women of house. FIR is lodged only to pressurized petitioner and now it cannot be used as tool to oppose his prayer for bail. 9. Other arguments of both parties are on similar lines, which were raised and considered earlier while deciding bail petitions of co-accused Amit Bothra and Ashok Daga. These arguments as well as facts of case can be borrowed from order dated 27.07.2020 passed in M.Cr.C. Nos.21628/2020 and 21618/2020, respectively. Relevant part of this order is being reproduced below:- 1. Both these petitions have arisen out of same crime number of same office/police station, therefore, they are heard together and are being decided by this common order. 2. These are first applications under section 439 of Cr.P.C. in crime no.23/2020 registered under section 132(1)(a)(i) of Goods and Services Tax Act (hereinafter referred to as GST Act ), Ss. 409, 467, 471, 120-B of IPC by Department of Revenue Intelligence and Directorate General of 5 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. Goods and Services Tax Intelligence Central Excise Office, District Indore (here-in-after referred to as Department ). 3. case of prosecution in brief is that officials of department received intelligence input that one Pakistani national Sanjay Matta is indulged in clandestine clearance of mouth freshener, commonly known as Pan Masala , without payment of GST. Acting on this information, several searches were conducted at various places between 30.05.2020 to 02.06.2020 and unaccounted goods worth Rs.2.59 crores were found in different godowns of Mr. Matta, which were seized. Subsequent information received during search led to search of premises of transporter M/s Ashu Roadlines, Indore. During this search 10 vehicles, unaccounted Pan Masala, its packing material and some raw material was seized. Pan Masala was found to be of Vimal brand manufactured by M/s Vishnu Essence, Sanwer Road, Indore. truck drivers also confirmed clandestine transportation of Pan Masala. Information extracted from mobile of employee of Aashu Roadlines Mr. Sameer Khan, indicated that firm M/s Vishnu Essence had procured large quantities of raw material and packing material from Ahmadabad clandestinely and had supplied finished goods in same manner to M/s AAA Enterprises, Indore. petitioners Amit Bothara and Ashok Daga are partners of firm M/s Vishnu Essence. They were called and interrogated. They confessed in their statements recorded under Section 70 of GST Act that their firm had supplied Vimal brand Pan Masala worth Rs.320 crores clandestinely and has evaded payment of GST to tune of Rs.225 crores. Subsequent search of various places and statements of various persons further confirmed aforesaid tax evasion. Following due process, petitioners were taken into custody and booked in aforementioned crime. 4. Refuting all allegations made by prosecution, it is submitted by learned senior 6 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. counsel for petitioners that firm M/s Vishnu Essence is duly registered with GST vide registration no.23AAQFV6401JIZZ. firm is honestly doing its business. It is paying GST to tune of Rs.7-8 crores per month on average on sales. Their product contains 85% betel nut (Supari) and 15% Sugandh, Kattha, Elaichi (essence, catechu, cardamom) etc. Supari is purchased from undertakings/ companies of government or from societies run by government; therefore, clandestine purchase is not possible. Rest of raw material is purchased from open market but only from traders duly registered under GST through invoices. Therefore, there has never been any scope to evade tax. 5. It is asserted that petitioners have never confessed anything before officials. Their statements were recorded under threat and pressure. They retracted them immediately after coming out of fear. 6. It is further averred that petitioners were doing their business honestly and were paying GST to tune of Rs. 7 crore per month regularly, but due to unprecedented circumstances of spread of COVID- 19 pandemic and complete lockdown pursuant thereto; there was some delay in paper work and submission of invoices etc. Taking advantage of this beyond control peculiar circumstance, officials of department abused their authority, presumed tax evasion and assessed amount only on basis of their conjecture and surmises as there was no production during period of lockdown. Nil electricity consumption establishes fact of closure of factory during this period. Therefore, allegation of evasion of tax is false and frivolous from it s very foundation. 7. It is also submitted that petitioners were earlier paying GST honestly and are also ready to pay same in future. Though under pressure, but they have already paid Rs. 7 crores and are still ready to pay deficit, if any, found due on final assessment. 7 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. 8. It is argued that dispute is only revenue matter. alleged evasion is assessed about Rs. 7 crores. Despite their right to challenge assessment by depositing 10% of amount assessed, they have deposited entire amount of Rs. 7 crores. 9. It is asserted that petitioners have no connection with Pakistani national Sanjay Matta or alleged main accused Kishore Wadhwani. 10. It is further argued that petitioners have been falsely implicated in case. officials have acted maliciously. allegation made against them is vague. There is no incriminating evidence or supporting documents qua petitioners. Details of alleged tax evasion have not been supplied to them. Their custody is illegal as there is no evidence to show that officials were having reasons to believe that their custody was necessary. department has not sought their police remand. This shows that there detention was unnecessary and illegal. sole basis of their arrest is their statements recorded by officials, but same were recorded under threat and pressure and have been retracted immediately. Procedure prescribed under Ss. 67, 69, 74, 134,136, 138 of GST Act and S.41A of Cr.P.C. for arrest, recording of statement, search and seizure has not been followed. dispute is entirely covered under Section 132 of G.S.T. Act. Initially offence was also registered under same Section. Offences under Sections 409, 467, 471 and 120-B IPC are not made out. Record shows that these offences have been added by officials at later stage merely with intent to harass petitioners. 11. It is also stated that petitioners are in custody since 11.06.2020 and are in jail since 13.06.2020. Their custodial interrogation is not required. nature of evidence is documentary and all documents are in custody of Department. Hence, there is no fruitful purpose to keep them in custody. They are paying around 70-80 crores G.S.T. per anum on average. Their detention would cause 8 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. loss of this amount to State exchequer. About 150 workers are working in firm of petitioners. In case of their detention, work of firm will be at halt and hence, affect survival of families of those 150 workers. offence is punishable with maximum 5 years imprisonment and is triable by Judicial Magistrate First Class. petitioners are ready to abide by terms and conditions to be imposed by this Court, therefore, it is prayed that they be granted bail. 12. petitioners have relied upon Joti Prasad Vs. State of Haryana 1993 supp. SCC 497, P. Chidambaram Vs. Directorate of Enforecement 2019 Lawsuit (SC) 1947, D.K. Sethi Vs. Central Bureau of Investigation, Prasanta Kumar Sarkar Vs. Ashis Chatterjee and Anr (2010) Vol.14 SCC 496, Sandeep Kumar Bafna Vs. State of Maharashtra and Anr (2014) 16 SCC 623, C. Pradeep Vs. Commissioner of GST and Central Excise Selman and Anr SLP 6834/2019, Madhav Gopaldas Shah Vs. State of Gujarat, Prasad Purshottam Mantri Vs. UOI and Ors, Sanjay Kumar Bhuwalka Vs. UOI 2018 SCC Online Cal 4674, Mohit Vijay Vs. UOI (Rajasthan High Court), Lalit Kumar Gandhi Vs. State of MP and Make My Trip Vs. UOI and Ors Delhi High Court WP (c) 525/2016 and C.M.2153/2016. 13. Stand taken by department is that petitioners have very proximate nexus to entire syndicate involved in clandestine manufacturing of pan masala and have caused huge loss to sovereign exchequer. Acting on intelligence information, when several persons were interrogated and search of several places was conducted, tax evasion of crores of rupees was detected. Still investigation is going on. As many as 11 searches and 14 statements have been recorded after arrest of petitioners. In all possibilities magnitude of offence would increase in many folds. Release of petitioners would hamper investigation, 9 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. which is at very crucial stage, therefore, it is prayed that they be not granted bail. 14. It is submitted that during course of investigating very clinching and cogent evidence has been unearthed which indicates that in connivance with each other, petitioners as well as other wrongdoers have adopted peculiar modus operandi for clandestine manufacturing and sale of pan masala. petitioners are not merely benefactors of illegal activities, but had very proximate nexus with entire band of persons involved in said syndicate. Investigation revealed that Mr. Vijay Kumar Nair of M/s. AAA Enterprises is front man of Kishore Wadhwani. Kishore Wadhwani is kingpin of entire illegal procurement, production and supply chain of pan masala clandestinely. Investigation has further revealed that petitioners had procured raw materials of pan masala and packing material from Ahmadabad and various other cities in Gujarat in clandestine manner and supplied manufactured pan masala to M/s. AAA Enterprises without invoices and payment of G.S.T. 15. Sale and distribution of pan masala has been completely banned across country due to pandemic induced lockdown from 25th March, 2020 considering its risk in spread of Covid-19 infection. In spite of strict restriction, petitioners' firms took undue benefit of this emergent situation and supplied their finished goods clandestinely in State of Madhya Pradesh in connivance with M/s. AAA Enterprises. In view of seriousness of offence committed by petitioners, they were arrested under Section 69 of G.S.T. Act, 2017. As per Section 132(5), since G.S.T. evasion detected is more than five crores rupees, offence is cognizable and non-bailable. There is every likelihood of petitioners affecting investigation and tampering with witness. officials of DGGI were assaulted when they tried to search house of Kishore Wadhwani for which FIR is lodged with Police Station Juni, Indore. 16. In case of P. V. Ramana Reddy Vs. UOI 10 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. W.P. No.4764 of 2019 at paras 56 and 57, Telangana High Court has observed that object of arrest is to prevent person from committing any offence or from causing evidence of offence to disappear or tempering with such evidence in any manner or to prevent such person from any inducement, threat or promise to any person acquainted with facts of case and to do proper investigation or inquiry. Hon'ble Supreme Court in SLP (Crl.)4430/2019 has upheld this observation of High Court of Telangana. 17. Hon'ble Supreme Court in Cr.A. No.730/2013 decided on 9th May, 2013 in case of Y. S. Jagan Mohan Reddy Vs. Central Bureau of Investigation has observed in para 34 that Economic Offences constitute class apart and need to be visited with different approach in matter of bail. economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offence affecting economy of country as whole and thereby posting serious threat to financial health of country. Therefore, petitioners be not granted bail. 18. Reliance has also been placed on State of Gujrat Vs. Mohanlal Jitamalji Porwal and others reported in AIR 1987 SC 1321. 19. Provisions of section 69, 70, 131, 133, 135, 136 of GST Act have been referred by learned counsel for respondent/UOI. 20. I have heard learned senior counsels at length and have perused record supplied by department. 21. On careful consideration of nature and gravity of allegation made against petitioners and specific evidence collected in respect of these allegations, elaborate discussion of which would not be apt as it may adversely affect interest of either party, specific facts put-forth by learned senior counsels for petitioners and their reply and other facts and circumstances of case, in considered opinion of this court, case for granting 11 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. bail is made out. Therefore, without commenting on merits of case, both petitions stand allowed. 22. It is directed that petitioners Amit S/o Shri Shubhkaran Ji Bothara and Ashok Daga S/o Shri Ghawarchand Daga be released from custody on their furnishing personal bond in sum of Rs.5,00,000/- (Rupees Five Lakhs Only) each with separate sureties to satisfaction of Trial Court for their appearance before it as and when required further subject to following conditions :- (i) petitioners shall co-operate with trial and shall not seek unnecessary adjournments on frivolous grounds to protract trial.; (ii) petitioners shall not directly or indirectly allure or make any inducement, threat or promise to prosecution witnesses, so as to dissuade him from disclosing truth before Court; (iii) petitioners shall not commit any offence or involve in any criminal activity; (iv) In case of their involvement in any other criminal activity or breach of any other aforesaid conditions, bail granted in this case may also be cancelled. (v) petitioners shall submit their passports, if any, before Trial Court and shall not leave India without prior permission of this Court. 10. I have carefully gone through documents produced before Court as well as statements recorded under Section 70 of G.S.T. Act. Elaborate discussion of all this evidence, which is otherwise confidential, would not be appropriate as it may affect case of either party. But on careful consideration of evidence on record, I am of considered opinion that it would be appropriate to allow petition, therefore, without commenting on merits of case, petition is allowed. 11. It is directed that petitioner Kishore 12 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE M.Cr.C. No.26653 of 2020 Kishore Wadhwani Vs. State of M.P. Wadhwani S/o Shri Khanchand Wadhwani be released from custody on his furnishing personal bond in sum of Rs.10,00,000/- (Rupees Ten Lakhs Only) with one solvent surety to satisfaction of Trial Court for his appearance before it as and when required further subject to following conditions :- (i) petitioner shall co-operate with trial and shall not seek unnecessary adjournments on frivolous grounds to protract trial.; (ii) petitioner shall not directly or indirectly allure or make any inducement, threat or promise to prosecution witnesses, so as to dissuade him from disclosing truth before Court; (iii) petitioner shall not commit any offence or involve in any criminal activity; (iv) In case of his involvement in any other criminal activity or breach of any other aforesaid conditions, bail granted in this case may also be cancelled. (v) petitioner shall submit his passport, if any, before Trial Court and shall not leave India without prior permission of this Court. 12. All pending IAs, if any, stand closed. 13. Index of file supplied by respondent be retained in record and file be returned in sealed cover. (Virender Singh) Judge Pankaj Digitally signed by Pankaj Pandey Date: 2020.08.14 13:29:51 +05'30' Kishore Wadhwani v. State of M.P
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