2022 (5) TMI 67 - HC - GST

Seeking grant of Bail - tax evasion - sham companies - offence under Section 132(1)(i) read with Sections 132(4) and 132(5) of the Gujarat GST Act and the Central GST Act, 2017 - bailable offence or not - HELD THAT - The details of the tax evasion of the respective accused arraigned in the complaint, reveal that the total tax evasion of the applicant's Company Heugo Metal is shown as Rs.4,51,05,130/- which is less than 5 crores. It is further revealed that the tax liability of other company being Dattatrey Corporation, concerning the accused No.3, is also added and the total tax evasion of both the companies, is shown as Rs.7,55,76,378/-., i.e. above 5 crores. Both the companies are a seperate and distinct identity having different GST numbers. The residential premises of the applicant was raided in the year 2019 by now more than three years have been passed. Vide orders passed by the Division Bench of this Court, the action of cancellation of the registration of the firm M/s.Heugo Metal was also allowed. The attachment orders have also lost its validity. Even, if the tax evasion is taken more than 5 crores, the maximum punishment which can be imposed is five years. It is not disputed by the department that if the tax evasion of the applicant is less than Rs.5 crores, then it will be a bailable offence as per the provisions of Section 132(1)(i) read with Sections 132(4) and 132(5) of the Gujarat GST Act and the Central GST Act, 2017. Considering the aforesaid observations, the applicant has carved out his case for grant of bail under the provision of section 438 of the Cr.P.C. The applicant is ordered to be released on bail in the event of his arrest registered with the Office of the Assistant Commissioner of State Tax-1, Unit-75, 1st Floor, Bahumali Bhawan, Bhavnagar registered with the Office of Assistant Commissioner of State Tax, Unit-9, Division (1), Anmedabad, on his executing a personal bond of Rs.10,000/- with one surety of like amount on the conditions imposed - application allowed

Summary

Issues:
Bail application under Section 438 of the Code of Criminal Procedure for alleged offences under GST Act and IPC.

Analysis:
1. The applicant sought bail for alleged offences under the Gujarat Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017, along with sections of the Indian Penal Code. The complaint accused the applicant of evading Input Tax Credit amounting to Rs.4,51,05,130.

2. The applicant's advocate argued that the offence should be considered bailable as per the provisions of the GST Acts due to the maximum punishment being five years. The advocate highlighted the applicant's cooperation with past legal proceedings and willingness to cooperate further in the investigation.

3. The advocate emphasized that the applicant had previously challenged the cancellation of his company's registration successfully and cooperated with legal processes. The applicant expressed readiness to abide by all conditions, including cooperation with investigating agencies and the court.

4. The prosecution opposed bail, citing the gravity of the offence and the ongoing investigation. They argued that the applicant had connived with co-accused in tax evasion exceeding Rs.5 crores, necessitating custodial interrogation.

5. The court, after considering the arguments and evidence, decided to grant bail to the applicant. The court noted the total tax evasion attributed to the applicant's company and another corporation, totaling over Rs.7.5 crores, but highlighted that the applicant's individual liability was below Rs.5 crores.

6. Additionally, the court referenced relevant case laws and legal precedents in its decision-making process, ensuring a comprehensive analysis of the bail application.

7. The court imposed specific conditions for the applicant's bail, including cooperation with the investigation, appearance at the police station, and restrictions on leaving the country without permission.

8. The court allowed the investigating agency to apply for police remand if necessary, with the magistrate deciding on the merit of such requests. The court clarified the process for handling any potential remand orders.

9. The court directed the trial court to independently assess the case without being influenced by the observations made in the bail order.

10. The application for bail was granted, and the registry was instructed to disseminate the order to the relevant authorities through suitable electronic means.

This detailed analysis covers the key aspects of the judgment, including the legal arguments, court's reasoning, conditions of bail, and procedural instructions provided by the court.