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2015 (6) TMI 85 - HC - Service TaxDefault in payment of service tax - punishable office u/s 89 & 90 - Arrest under Section 91 - Interim bail - punishment under the provisions of Section 89(1)(i) (ii) - Held that - 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. 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. 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. - petitioner is granted interim bail subject to the satisfaction of the Chief Judicial Magistrate/Illaqa Magistrate, Rohtak, on the certain conditions - Interim bail granted subject to conditions.
Issues:
Challenge to arrest memo and judicial remand orders, Amendments in Sections 89 & 90 of the Service Tax Act, Interim bail eligibility, Justification for arrest, Adjudication process, Detention legality, Interest of Revenue protection, Conditions for interim bail. Analysis: 1. Challenge to Arrest Memo and Judicial Remand Orders: The writ petition contested the arrest memo dated 08.04.2015 and the judicial remand orders issued by the Chief Judicial Magistrate. The petitioner sought interim bail during the case's pendency, arguing for entitlement due to prior incarceration since the arrest. The petitioner's role as the Managing Director of a company, evasion of service tax allegations, and compliance efforts were detailed to support the bail plea. 2. Amendments in Sections 89 & 90 of the Service Tax Act: The challenge extended to the amendments in Sections 89 & 90 of the Service Tax Act, effective from 10.05.2013, treating certain offenses as cognizable and non-bailable. The petitioner's defense highlighted compliance attempts, reliance on circulars, and disputes regarding the service tax amount, emphasizing the need for interim bail. 3. Interim Bail Eligibility: The Court considered the petitioner's plea for interim bail, focusing on the need to safeguard fundamental rights amidst ongoing investigations. The petitioner's willingness to deposit sums to protect the Revenue's interest was noted, contrasting with the opposition's stance based on pending investigations and outstanding service tax amounts. 4. Justification for Arrest: The Court scrutinized the justification for the petitioner's arrest, emphasizing the lack of quantification of arrears at the time of arrest and the timing of the show cause notice post-arrest. The rush to arrest without completing investigations raised concerns of prejudging the issue and infringing on the petitioner's rights. 5. Adjudication Process and Detention Legality: The Court highlighted discrepancies in the investigation process, including the absence of a filed complaint or completed adjudication. The petitioner's detention without a clear timeline for investigation completion or adjudication order was deemed unjustified, leading to the grant of interim bail under Article 226 of the Constitution. 6. Interest of Revenue Protection and Conditions for Interim Bail: To protect the Revenue's interest, the Court imposed conditions for the petitioner's interim bail, including reporting requirements, financial deposits, document disclosures, asset declarations, and restrictions on asset disposal. The Court emphasized the need for ongoing investigations and reserved the right for the respondents to take appropriate actions based on received records during further proceedings. In conclusion, the judgment granted the petitioner interim bail based on the outlined conditions, stressing the importance of balancing individual liberties with the investigative process and Revenue protection.
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