2020 (9) TMI 426 - DSC - GST

Grant of Bail - pre trial detention of accused - abatement as provided under section 132 (1) (k) (I) of CGST Act - operating of various firms - HELD THAT - Apart from the question of prevention being the object of a refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an accused person for the purpose of giving him a taste of imprisonment as a lesson. While considering an application for bail either under Section 437 CrPC, it must be kept in mind that the principle that grant of bail is the rule and committal to jail an exception. Refusal of bail is a restriction on personal liberty of the individual guaranteed by Article 21 of the Constitution. Seriousness of the offence should not to be treated as the only ground for refusal of bail. But, the liberty of an individual is not absolute. The Society by its collective wisdom through process of law can withdraw the liberty that it has sanctioned to an individual when an individual becomes a danger to the societal order. A society expects responsibility and accountability from the member, and it desires that the citizens should obey the law, respecting it as a cherished social norm. Therefore, when an individual behaves in a disharmonious manner ushering in disorderly thing which the society disapproves, the legal consequences are bound to follow - Further discretionary jurisdiction of courts u/s 437 CrPC should be exercised carefully and cautiously by balancing the rights of the accused and interests of the society. In view of the allegations of creating fake firms and claiming such fraudulent input tax credit and routing them through various fake firms shows the propensity and wherewithal of accused in committing such crimes. I am satisfied if released on bail at this stage, the accused Amit Kumar Jain most likely will make an attempt to influence the proprietors / partners of the firms involved. The plea that accused has no previous criminal antecedents is humbly rejected as it may also point out that similar crime of accused if any, committed previously remained undetected. The pre trial detention of accused Amit Kumar Jain is necessary at this stage as if released on bail, he will not only try to won over the public witness but may make an attempt to erase the money trail of the alleged crime, hence no ground for bail is made out at this stage. Bail application dismissed.

Summary

Issues Involved:
1. Application for bail by the accused.
2. Allegations against the accused under the CGST Act.
3. Arguments by the defense regarding the nature of the offense and applicability of the CGST Act.
4. Opposition by the prosecution and the need for judicial custody.
5. Judicial considerations for granting or refusing bail.

Issue-wise Detailed Analysis:

1. Application for Bail by the Accused:
The accused, Amit Kumar Jain, sought bail, arguing that the allegations against him pertain to being a commission agent and not being registered with GST. The defense claimed that at most, the accused could be charged with abatement under Section 132(1)(k) & (l) of the CGST Act, which are bailable offenses. The defense further argued that Section 127 of the Finance Act, 2020, which amends Section 132(1) of the CGST Act, is not yet in force and should not be applied retrospectively. The accused has been in judicial custody since 26.08.2020, and no custodial interrogation or further recovery is required. The defense cited judgments from the Commission of Customs Vs. M/s. Spice Telecom and Union of India & Ors Vs. M/s. Ganesh Das Bhojraj to support their arguments.

2. Allegations Against the Accused Under the CGST Act:
The prosecution opposed the bail application, alleging that Amit Kumar Jain is the mastermind behind operating various non-existing firms and issuing fraudulent GST invoices. It was argued that the accused deleted WhatsApp chats and contact details to tamper with evidence. The accused admitted to passing on fraudulently availed input tax credit to his buyers through goods-less GST invoices. The investigation is at an initial stage, and there is a tax fraud of around ?5.67 Crores, which may increase as the investigation progresses. Granting bail would jeopardize the investigation and recovery of government dues.

3. Arguments by the Defense Regarding the Nature of the Offense and Applicability of the CGST Act:
The defense argued that the accused is neither a proprietor nor a partner in any of the firms and has not received the alleged input tax credit in his account. Therefore, he cannot be termed a "beneficiary" of the fraudulent input tax credit. The defense contended that the allegations do not fall under any subsection of Section 132(1) of the CGST Act and that the accused can only be charged with abatement, a bailable offense. The defense also emphasized that the documentary evidence is available on the GST Portal, reducing the risk of tampering.

4. Opposition by the Prosecution and the Need for Judicial Custody:
The prosecution highlighted the accused's modus operandi of generating goods-less invoices and rotating the amount through various companies before withdrawing cash. The prosecution argued that the accused's actions show a propensity for committing such crimes and that releasing him on bail would likely result in influencing witnesses and tampering with evidence. The prosecution emphasized the need for pre-trial detention to prevent the accused from erasing the money trail and influencing the investigation.

5. Judicial Considerations for Granting or Refusing Bail:
The court considered the object of pre-trial detention, which includes preventing the accused from tampering with evidence, influencing witnesses, and committing similar offenses. The court acknowledged the importance of personal liberty but emphasized that it is not absolute and can be withdrawn when an individual poses a danger to societal order. The court referred to various Supreme Court judgments outlining considerations for granting or refusing bail, such as the nature of the accusation, gravity of the offense, likelihood of the offense being repeated, and the balance between the rights of the accused and the interests of society.

The court concluded that the accused's actions of creating fake firms and claiming fraudulent input tax credit show a propensity for committing such crimes. The court rejected the defense's argument that the offenses are bailable and emphasized the need for pre-trial detention to prevent the accused from influencing witnesses and tampering with evidence. The bail application was dismissed, and the court directed the GST Department to take appropriate action against the beneficiaries and facilitators of such sham transactions.

Conclusion:
The bail application of the accused Amit Kumar Jain was dismissed due to the serious nature of the allegations, the potential for tampering with evidence, and the risk of influencing witnesses. The court emphasized the need for pre-trial detention to ensure a fair investigation and prevent further fraudulent activities.