Patna High Court
Rajesh PirogiwalversusThe State of Bihar
- Decided
- Disposal
- DISPOSED
- Bench
- PURNENDU SINGH
Holding
The court declined to grant bail and directed the district court to consider compounding the offence under Section 85 of the Bihar VAT Act within three weeks.
Summary
The petitioner, Rajesh Pirogiwal, director of Diksha Timber Pvt Ltd, was implicated in a 2017 case alleging tax evasion under the Bihar Value Added Tax Act, 2005 and several IPC offences. He claimed innocence, stating that he had supplied timber lawfully to M/s Saha Enterprises, that all taxes were paid in West Bengal, and that a civil suit for unpaid amounts was pending before the Calcutta High Court. He sought pre‑arrest bail and offered to deposit the assessed tax, while the State opposed the bail. The court examined the provisions of Section 85 of the Bihar VAT Act, which allows compounding of the offence by paying a prescribed sum, and held that the petitioner could pursue that remedy. Consequently, the district court's order was modified to direct it to consider compounding within three weeks, and the bail application was disposed of without granting bail.
Issues considered
- Whether the petitioner is entitled to pre‑arrest bail in the tax evasion case.
- Whether the petitioner may avail the compounding of offence under Section 85 of the Bihar Value Added Tax Act, 2005.
- Whether the pending civil suit affects the criminal proceedings.
Legislation cited
- Bihar Value Added Tax Act, 2005 — s. 81(1)(b), 81(2), 81(3)(b), 81(4), 85
- Indian Penal Code — s. 120B, 34, 420, 465, 467, 468, 471
Subjects
- tax evasion
- value added tax
- compounding of offences
- pre‑arrest bail
- civil suit pending
- commercial transaction
- Section 85
- Bihar VAT Act
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.2606 of 2026
Arising Out of PS. Case No.-762 Year-2017 Thana- BHAGALPUR KOTWALI District-
Bhagalpur
======================================================
Rajesh Pirogiwal S/O Late Om Prakash Pirogiwal R/O Mohalla- BG- 115,
Sector 2, Salt City, Bidhan Nagar (M), P.S- Bidhan Nagar East, District-
Kolkata, (West Bengal).
... ... Petitioner/s
Versus
The State of Bihar
... ... Opposite Party/s
======================================================
Appearance :
For the Petitioner/s : Mr.Ranjan Kumar Jha, Advocate
For the Opposite Party/s : Mr.Tapeshwar Sharma, APP
======================================================
CORAM: HONOURABLE MR. JUSTICE PURNENDU SINGH
ORAL ORDER
4 01-04-2026 Heard Mr. Ranjan Kumar Jha, learned counsel
appearing on behalf of the petitioner and Mr. Tapeshwar
Sharma, learned APP appearing on behalf of the State.
2. The petitioner apprehends his arrest in connection
with Kotwali P.S. Case No. 762 of 2017 registered under
Sections 420,467,468,471,465,120B,34 of the Indian Penal
Code and sections 81(1)(b),81(2),81(3)(b),81(4) of the Bihar
Value Added Tax Act, 2005.
3. As per the allegations made in the FIR, the
petitioner along with other accused have wilfully evaded tax
under the Bihar Value Added Tax Act, 2005, causing substantial
loss to the State of Bihar and M/s Saha Enterprises concealed
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significant transactions and evaded tax on inter-State purchases.
4. Learned counsel appearing on behalf of the
petitioner submitted that the petitioner is innocent and he has
falsely been implicated in the present case. The petitioner, being
the Director of M/s Diksha Timber Pvt. Ltd., had lawfully
supplied timber to co-accused M/s Saha Enterprises, out of
which a substantial amount remains unpaid, for recovery
whereof a civil suit is already pending before the Hon’ble
Calcutta High Court. All applicable taxes have duly been paid in
the State of West Bengal. The petitioner’s implication is based
merely on presumption due to alleged non-furnishing of
documents, despite having already provided relevant records to
establish his bona fides. However, the petitioner seeks to avail
remedy of appeal and in the meantime, he wants to deposit the
disputed amount of tax as assessed by the Commercial Tax
Department to get rid of the criminal prosecution.
5. Per contra, learned counsel for the informant and
learned APP for the State vehemently opposed the prayer for
grant of pre-arrest bail.
6. Having heard the rival submissions made on behalf
of the parties, as well as, having considered the nature of
allegations made in the FIR, the materials available on record,
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and the fact that the dispute arises out of a commercial
transaction for which a civil suit is already pending before the
Hon’ble Calcutta High Court, between the petitioner and M/s
Saha Enterprises but at the same time the State should not be put
at revenue loss.
7. Under the scheme of Value Added Tax Act, 2005
under Section 85, there is provision of compounding of offence
before or after institution of proceeding under Section 81 which
inter-alia provides as under :
“81. Offences and penalties-(1) Whoever-
(a) carries on business as a dealer without being
registered in wilful contravention of Section 19, or
(b) fails without sufficient cause to furnish any
information required by Section 23, or
(c) fails, without sufficient cause, when directed so to do
under Section 59, to keep any accounts or record in
accordance with the directions, or
(d) fails, without sufficient cause, to furnish any return as
required by Section 24 by the date and in the manner
prescribed,
shall, on conviction, be punished with imprisonment, of
either description for a term which shall not be less than
one month but which may extend to three months and
with fine not exceeding one thousand rupees.
(2) Whoever-
(a) knowingly keeps false account of the value of the
goods bought or sold by him in contravention of sub-
section (1) of Section 52 or Section 53
or (b) wilfully attempts, in any manner whatsoever, to
evade any payment of any tax, penalty or interest,
shall, on conviction, be punished with imprisonment,
of either description, [for a term which shall not be less
than three months but which may extend to six
months] and with fine not exceeding two thousand
rupees.
(3) Whoever-
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(a) not being a registered dealer under Section 19.
falsely represents that he is or was a registered dealer at
the time when he sells or buys goods; or
(b) knowingly furnishes a false return; or
(c) knowingly produces before the prescribed authority,
false bill, tax invoice, cash-memorandum, voucher,
declaration, certificate or other document for any of the
purposes of this Act; or
(d) issues to any person a certificate or declaration
under this Act or the rules framed or notifications issued
thereunder, a bill, cash-memorandum, tax invoice,
voucher or other document which he knows or has
reason to believe to be false; or
(e) obstructs any officer making inspection or search or
seizure under Section 56 or Section 61 or Section 62,
shall, on conviction, be punished with imprisonment, of
either description, [for a term which shall not be less
than six months but which may extend to one year] and
with fine not exceeding three thousand rupees.
(4) Whoever aids or abets any person in the commission
of any offence specified in sub-section (1) or sub-
section (2) or sub-section (3) shall, on conviction, be
liable for punishment of the description specified in
respect of the offence in the commission of which he
has aided or abetted.
85. Compounding of offences. (1) The Commissioner
may, either before or after the institution of proceedings
under Section 81, accept from any person charged with
an offence under sub-section (1) or sub-section (2) or
sub-section (3) or sub-section (4) of the said Section by
way of composition of the offence, a sum not exceeding
ten thousand rupees and where the offence charged
was likely to cause or caused evasion of any amount of
tax payable under this Act, a sum not exceeding three
times of such amount, whichever is higher.
(2) On payment of such sum as may be determined by
the Commissioner under sub-section (1), no further
proceeding shall be taken against the accused person in
respect of the same offence.”
8. The petitioner if so advised may avail remedy
before the Commissioner for compounding of offences and after
determination of the sum by the Commissioner under sub-
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section (1), he may seek appropriate order in that regard.
9. In view of the specific provision contained under
section 85, the order of learned District Court is modified to the
above extent directing the learned District Court to pass
appropriate order in accordance with law after giving due
opportunity to the petitioner and all the affected parties
including the officers of the Tax Department well within a
period of three weeks.
10. The bail application stands disposed of.
(Purnendu Singh, J)
Ashishsingh/-
U T
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