2021 (11) TMI 717 - HC - GST

Seeking grant of Bail - availment of irregular input tax credit - there was neither any purchase nor sale of goods and that the transactions were made only on paper with a view to illegally avail ITC - offence punishable under Section 132(1)(i) of Odisha Goods and Services Tax Act, 2017 - HELD THAT - Investigation ought to be completed within 60 days as per Section 167 Cr.P.C. Of course, Section 173(8) Cr.P.C. permits the investigating agency to keep the investigation open. But the same, if not concluded for an indefinite period, cannot obviously be cited as a ground to detain the accused in custody. As is seen, the initial prosecution report was filed way back on 09.10.2020 and till date further investigation is said to be in progress. Thus, more than a year has elapsed from the date of submission of initial P.R.. This cannot be a ground to detain the accused in custody indefinitely. Without expressing any opinion on this point, this Court is of the considered view that since the transactions in question were basically one and the same involving the present petitioner and the co-accused Atul Bansal, there is hardly any justification to treat the petitioner differently than him. Coming to the apprehension of the prosecution that the present petitioner may tamper with the evidence, this Court is unable to accept the same for the reason that a bare perusal of the prosecution report would suggest that the same was submitted after thorough investigation during which several documents and records were verified and statements collected from different persons. The report of further investigation also suggests that the same has been/is being conducted in different States whereby, several incriminating materials have supposedly been discovered - the apprehension expressed by the prosecution does not appear to be reasonable for being considered as a ground to refuse bail to the petitioner. This Court finds that the petitioner has been successful in making out a good case for his release on bail. On the other hand, the prosecution has failed to satisfy the court as to how it would be prejudiced by grant of bail to the petitioner - It is directed that the petitioner shall be released on bail by the court in seisin over the matter on such terms and conditions as may be imposed by it. The application for bail is allowed.

Summary

Issues:
- Bail application for the accused in connection with an alleged offence under Section 132(1)(i) of the Odisha Goods and Services Tax Act, 2017.
- Grounds for granting bail based on the duration of custody, nature of the offence, ongoing investigation, and potential tampering with evidence.
- Arguments presented by the petitioner's counsel and the Additional Standing Counsel for CT & GST.
- Legal precedents cited by both parties to support their arguments.

Detailed Analysis:

Issue 1: Bail Application for the Accused
The accused, a director of a fictitious company, is in custody since 17.08.2020 for alleged fraudulent activities involving availing and passing on Input Tax Credit (ITC) worth crores. The prosecution alleges that the accused defrauded the exchequer by creating fictitious firms and engaging in illegal transactions. The accused filed a bail application based on the duration of custody, nature of the offence, and the possibility of being treated similarly to a co-accused who was granted bail previously.

Issue 2: Grounds for Granting Bail
The petitioner's counsel argued that the accused had already spent more than a year in custody, exceeding the potential punishment duration for the offence. It was contended that the accused, being a permanent resident, posed no flight risk and was willing to cooperate with the investigation. The prosecution opposed the bail application, citing ongoing investigation, potential tampering with evidence, and the accused's lack of cooperation during the investigation.

Issue 3: Arguments Presented
The petitioner's counsel emphasized the need for bail based on the accused's clean record, the mastermind's bail approval in a similar case, and the electronic storage of evidence making tampering unlikely. The prosecution argued against bail, highlighting the accused's non-cooperation during investigation, the impact of the fraud across multiple states, and the risk of evidence tampering post-release.

Issue 4: Legal Precedents
Both parties cited legal precedents to support their arguments. The petitioner's counsel referred to bail orders in cases involving similar offences under the OGST Act, while the prosecution cited apex court decisions emphasizing a stringent approach towards economic offences and the need to prevent economic offenders from evading justice.

In conclusion, after considering the arguments and legal precedents, the court granted bail to the accused. The court found that the accused had made a strong case for release based on the duration of custody, ongoing investigation, and lack of substantial grounds for continued detention. The court imposed conditions, including territorial restrictions and cooperation with further investigation, to ensure compliance with the bail order.