2021 (4) TMI 181 - HC - GST

Grant of regular bail - bogus firms - Tax evasion - vires of Section 69 and 132 of CGST Act - HELD THAT - In the instant case, the situation is different. The matter already stands investigated. The petitioners have been in custody since June, 2020. Trial of the case would take time to conclude. No useful purpose would be served by keeping the petitioners behind the bars. Thus, all the petitions are allowed and the petitioners are directed to be released on regular bail on execution of adequate personal/surety bonds amounting to ₹ 10 lakhs each to the satisfaction of concerned trial Court/Duty Magistrate. The petitioners would surrender their respective passports before the concerned Court and will not leave India without prior permission of the Court.

Summary

Issues:
Grant of regular bail in a case involving tax evasion and issuance of bogus bills under the Punjab Goods and Service Tax Act, 2017.

Analysis:
The judgment by the High Court of Punjab and Haryana pertained to petitions seeking regular bail in a case registered under Sections 132(1) (b) (c) of the Punjab Goods and Service Tax Act, 2017. The petitioners were accused of issuing bogus bills to show false Input Tax Credit through fake firms, causing substantial losses to the Government. The defense argued that the petitioners were falsely implicated as there was no evidence of generating fake invoices without GST payment or facilitating others to misuse Input Tax Credit. They contended that the matter was debatable and of a civil nature. The maximum sentence for the offense was up to five years of imprisonment. The defense also challenged the vires of certain sections of the Central Goods and Service Tax Act, highlighting that the arrest under the Punjab Goods and Service Tax Act was without jurisdiction.

The State counsel, on the other hand, emphasized the seriousness of the allegations, stating that the petitioners had caused significant losses through tax evasion and deliberate issuance of bogus bills. They expressed concerns about potential tampering with evidence if the petitioners were granted bail. The Court considered the arguments from both sides, reviewed past orders related to similar cases and challenges to the tax laws, and noted that the investigation in this case was complete, and the petitioners had been in custody for an extended period.

Ultimately, the Court decided to grant bail to the petitioners, acknowledging that keeping them in custody further would serve no useful purpose. The petitioners were directed to be released on regular bail upon furnishing adequate personal or surety bonds. They were also required to surrender their passports and seek court permission before leaving the country. Importantly, the Court clarified that its decision to grant bail should not be construed as an expression on the merits of the case, leaving the final judgment on the allegations for the trial proceedings.