Bail was granted for offences punishable under Section 132(1)(a) where amount of tax evaded is still under consideration.

Case Title: Vishwa Jeet Verma v. State of U.P.

Court: High Court of Allahabad

Petition Number: Criminal Misc. Bail Application No. 48631 of 2021

Category of Dispute: Bail Application – Allegation of GST Evasion under CGST Act

Date of Judgement: November 16, 2021

Relevant Sections: Sections 132(1)(a), 132(1)(iii), 132(5), 69, 70, 73, 74 & 93 of the CGST Act, 2017; Section 100(4) of CrPC, 1973

Takeaway: Tax evasion allegations under GST—bail granted where evasion not conclusively quantified

Facts of the Case [¶2, ¶3]

1. The applicant, Vishwa Jeet Verma, was arrested for allegedly controlling M/s Vikas & Company (proprietor: late Smt. Sushma Devi, applicant’s mother) engaged in clandestine manufacture and supply of branded chewing tobacco.
2. DGGI conducted searches on 29.09.2021, seized ₹1.23 crore in cash and incriminating documents. It was alleged that applicant managed business operations post his mother’s death (28.04.2021) under Section 93 of the CGST Act.
3. The applicant denied involvement, citing estrangement from family and relocation to New Delhi. He claimed no operational control, and that he neither signed any documents nor filed returns for the firm.
4. The applicant’s counsel argued that the arrest was based solely on his coerced confessional statement under Section 70 CGST Act, without any prior adjudication or tax quantification.
5. The DGGI alleged evasion of ₹1.01 crore GST and ₹31.9 lakh Central Excise for Jan–Apr 2021 and suggested cumulative evasion exceeding ₹5 crore based on applicant’s admission of monthly unaccounted sales.

Question(s) in Consideration

• Whether the arrest of the applicant under Sections 132(1)(a) and 132(5) CGST Act, 2017 is legally sustainable in absence of final adjudication and proper quantification of tax dues?
• Whether the applicant is entitled to bail considering the nature of offence, period of custody, and evidence presented?

Observation of Court [¶4–7]

1. The Court acknowledged that the seizure of ₹1.23 crore and prima facie tax evasion of ₹1.01 crore (GST) and ₹31.9 lakh (Excise) made the case fall under bailable category per Section 132(1)(iii) CGST Act [¶6].
2. The Court cited Nitin Verma v. State of U.P., reiterating that arrest should be exercised with restraint, and bail should be granted where tax liability is not conclusively determined [¶4].
3. It was noted that the alleged ₹5 crore evasion was speculative, based on extrapolation rather than assessed evidence [¶6].
4. Since the investigation was ongoing and the applicant had no criminal antecedents, personal liberty weighed in favour of granting bail [¶7].

Judgement of the Court [¶7–9]

• Bail was granted to Vishwa Jeet Verma on furnishing personal bond and sureties subject to conditions including:
  • Cooperation with investigation,
  • Passport surrender,
  • Non-tampering of evidence,
  • No intimidation of witnesses, and
  • Appearance before the trial court as required.
• The Court held that in absence of quantification and assessment, and given the bailable nature of offence under Section 132(1)(iii), the arrest lacked sufficient legal basis for continued detention.

Between Fine Lines

• Bail was granted as tax evasion amount fell within bailable limits.
• No final adjudication of tax liability had occurred.
• Applicant’s custodial interrogation was not justified without quantification.
• Court reiterated that arrest should be a last resort.
• Applicant’s lack of criminal record and cooperation favored bail.

Summary of Referred Cases