Prakash Sankhla @ Prakash Jain vs. Directorate Of Revenue Intelligence Bhopal

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MCRC/29331/2021HC Madhya Pradesh19 July 2021Author: HON'BLE SHRI JUSTICE PRAKASH SHRIVASTAVA4 pages
For Respondent: Advocate General
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the bail applications. The Court noted that the investigation was pending and no challan had been filed. Having regard to the nature of the material on record, the Court was of the opinion that releasing the applicants during the pendency of the investigation would not be proper, as the prosecution was in the process of collecting further evidence. The Court did not decide the legal arguments regarding the bailability of the offence or the admissibility of statements under Section 108 of the Customs Act, as the primary reason for dismissal was the ongoing investigation. The applicants were granted liberty to renew their prayer after the investigation is complete and the challan is filed. No specific finding was made on the arguments concerning the GST invoices or the impact of the 2013 amendment on the bailability of the offence.

What were the facts?

The applicants, Prakash Sankhla and Vaibhav Jain, sought bail under Section 439 Cr.P.C. They are in custody for offences under Sections 104 and 135 of the Customs Act, 1962, registered by the Directorate of Revenue Intelligence (DRI), Bhopal. The case involves the recovery of 79 bars of foreign origin gold, valued at Rs. 3,89,60,220, from a vehicle. The occupants of the vehicle stated the gold belonged to Vaibhav Jain and was brought on instructions from Prakash Sankhla. A subsequent search of Prakash Sankhla's premises yielded 75 foreign origin gold bars (1500 gms), valued at Rs. 75,60,000, and cash of Rs. 64,85,100. The applicants have been in custody since May 27, 2021. The investigation is ongoing, and no challan has been filed.

What were the issues?

1. Whether the offences under Sections 104 and 135 of the Customs Act, 1962, are bailable, entitling the applicants to bail, particularly in light of the Supreme Court's judgment in Om Prakash & Anr. Vs. Union of India & Anr. (2011) and subsequent amendments to the Act. 2. Whether the statements recorded under Section 108 of the Customs Act are admissible and can be relied upon for refusing bail, considering the prohibition under Section 25 of the Evidence Act. 3. Whether the production of GST invoices from Saheli Jewellers, suggesting purchase of gold, negates the offence. Assessee's Arguments: Shri Anil Khare (for Prakash Sankhla) argued that the primary recovery was not from his client, nor was the vehicle his. He contended that the offence under Section 135 of the Customs Act is punishable with a sentence of 7 years or less, making it bailable, citing Arnesh Kumar Vs. State of Bihar and Arnab Goswami Vs. State of Maharashtra. He also argued that offences under the Customs Act are bailable, referencing Om Prakash Vs. Union of India, and that these are distinct from IPC offences, aiming to recover duty, citing Sayyed M. Masud Vs. Union of India. He also referred to Noor Aga Vs. State of Punjab regarding the scope of Sections 108 and 138 of the Customs Act. The applicant is in custody since May 27, 2021. Shri Hardik Modh (for Vaibhav Jain) adopted Shri Khare's arguments and further submitted that GST invoices from Saheli Jewellers indicate the bars were purchased, citing Patna High Court in Commissioner of Central Excise, Customs and S.T. Patna Vs. Gopal Kishan. He also referred to Kerala High Court in Anob T.R. Vs. Union of India, where anticipatory bail was granted in a similar case. Revenue's Arguments: Shri Amit Seth (for DRI) argued that the applicants' explanations are unacceptable. He contended that statements under Section 108 of the Customs Act are admissible, as Customs officers are not police officers, citing K.I. Pavunny Vs. Assistant Collector (HQ), Central Excise Collectorate, Cochin and Union of India Vs. Padam Narain Aggarwal. He argued that after the 2013 amendment, the offence is non-bailable and Om Prakash's judgment is no longer relevant, citing a Gujarat High Court order in Sundeep Mahendrakumar Sanghavi Vs. Union of India. He also submitted that the GST invoices are irrelevant as the seizure involves prohibited smuggled items (Swiss gold bars).

Which sections of the Income-tax Act were involved?

Section 104,Section 135,Section 108,Section 25

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
M.Cr.C.No.29331/2021 M.Cr.C.No.29664/2021 1 HIGH COURT OF MADHYA PRADESH M.Cr.C.No.29331/2021 (Prakash Sankhla @ Prakash Jain Vs. Directorate of Revenue Intelligence Bhopal) M.Cr.C.No.29664/2021 (Vaibhav Jain Vs. Directorate of Revenue Intelligence, Bhopal) JABALPUR : 19/07/2021 Shri Anil Khare, learned Senior counsel with Smt.Manjit P.S.Chuckal, Advocate for the applicant in M.Cr.C.No.29331/2021. Shri Hardik Modh, learned counsel with Shri V.V.Jain, Advocate for the applicant in M.Cr.C.No.29664/2021. Shri Amit Seth, learned counsel for the respondent. Shri Sandeep Patel, Investigating Officer from the Directorate of Revenue Intelligence, Bhopal is also present through video conferencing. Heard through video conferencing. Case diary perused. These are first applications filed by the applicants (accused) under Section 439 Cr.P.C. for grant of bail. The applicants are in custody for the offence punishable under Sections 104 and 135 of the Customs Act registered with the Directorate of Revenue Intelligence, Bhopal, District Bhopal, in Crime No.I.N.T.13/E.N.Q9/2021. The allegation in the present case is that on 24.5.2020 a Maruti Swift Vehicle No.MP-15-CA-9382 was intercepted at Chitora Toll, Sagar, and from the secret cavity beneath the driver’s seat of that vehicle 79 bars of Foreign Origin (FO) Gold were recovered. The three persons occupying the vehicle were Dheeraj Rai, Satyam Saini and Nathan Singh Thakur. The gold bars were weighing 7800 gms. and of the value of Rs.3,89,60,220. The occupants of the vehicle had disclosed that the recovered bars M.Cr.C.No.29331/2021 M.Cr.C.No.29664/2021 2 belong to Vaibhav Jain, resident of Sagar and on his instructions they had brought it from the applicant Prakash Sankhla, resident of Durg. The statements of Dheeraj Rai, Satyam Jain and Nathan Singh Thakur were recorded under section 108 of the Customs Act, 1962, wherein they had accepted their involvement. Further case of the Customs Department is that a search was conducted in the residential premises of Prakash Sankhla at Durg and during the search 75 Foreign Origin bars weighing 1500 gms. were found and these bars were valuing Rs.75,60,000/-. Along with the bars cash of Rs.64,85,100/- were also found. Shri Anil Khare, learned senior counsel for the applicant Prakash Sankhla @ Prakash Jain submits that the recovery of 79 gold bars has been made from the three accused namely Dheeraj Rai, Satyam Saini and Nathan Singh Thakur. He submits that the applicant was not present on the spot when the bars were seized nor the vehicle belongs to the present applicant. He also submits that as per the statements of Dheeraj Rai, Nathan Singh Thakur and Satyam Saini these bars were brought for supplying it to Vaibhav Jain. He has also submitted that since the offence under section 135 of the Customs Act is punishable with sentence of 7 years or less, therefore, the applicant is entitled to the benefit of judgment of the Supreme Court in the matter of Arnesh Kumar Vs. State of Bihar, reported in (2014)8 SCC 273 and Arnab Goswami Vs. State of Maharashtra and others, reported in (2021)2 SCC 427. He has also submitted that in view of the judgment in the case of Om Prakash and another Vs. Union of India and another, reported in (2011)14 SCC 1, the offence under the Customs Act is a bailable offence. He has referred to paragraphs 64 to 68 of the judgment and has also submitted that even after the amendment of 2013 making the offence cognizable, the legal position will not change and the offence will remain a bailable offence. He also submitted that these offences under the M.Cr.C.No.29331/2021 M.Cr.C.No.29664/2021 3 Customs and Excise Act cannot be equated with the offence under the I.P.C. as their object is to recover duty. In support of his submission he has also referred to the judgment of the Supreme Court in the matter of Sayyed M. Masud Vs. Union of India and another, reported in (2012)13 SCC 746. He has also submitted that the applicant is in custody since 27.5.2021. Shri Khare has also referred to the judgment in the matter of Noor Aga Vs. State of Punjab and another, reported in (2008)16 SCC 417, para 66, 68 and 84, in respect of scope of section 108 and 138 of the Customs Act. Shri Modh, learned counsel for the applicant in M.Cr.C.No.29664/2021 pressing the bail application at the instance of Vaibhav Jain has adopted the main arguments which are advanced by Shri Khare. He has further submitted that the GST invoice issued from Saheli Jewellers were produced before the respondent and there is material available that the bars were purchased from Saheli Jewellers. Placing reliance upon the

judgment M.Cr.C.No.29331/2021 M.Cr.C.No.29664/2021

4 4.8.2020 in Civil application No.8669/2020 and has submitted that after the Amendment of 2013, the judgment of the Supreme Court in the case of Om Prakash is no longer relevant and the Customs officers are not the Police Officers, therefore, statement made to them are not inadmissible under section 25 of the Evidence Act and that in view of the Amendment in the year 2013, the offence is now non-bailable offence. He has also placed Date: 2021.07.26 14:41:27 +05'30'

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