2022 (7) TMI 132 - HC - GST

Seeking grant of Regular Bail - availment of fraudulent input tax credit - supply of only invoices without actual supply of goods - economic offence or not - offence punishable under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Service Tax, 2017 - HELD THAT - Upon perusal of the material placed on record, in the facts of present case, based on the investigation and after complying the statutory mandatory provision, the applicant herein is arrested on 26.11.2021. The tenure of the alleged offence is between 2017 to 2019. The respondent no. 2 already determined the tax amount and has served demand notice and thereafter, complaint before the court concerned is filed. The entire case is based on documentary evidence and same has been seized by the department. In such circumstances, merely an offence is termed as economic offence , it would not mean that in every case bail needs to be denied. Whether bail is granted or not, it always depends on peculiar facts of each case. In the facts of the present case, more particularly fact that after filing the complaint, there is no progress in the trial proceedings and considering the cases of the court concerned, the trial of the case will take considerable time. The applicant is in custody since 26.11.2021 and he having no any past antecedent of like nature and there is no possibility of he being flee from justice and therefore, this Court does not find any good reason to detain the applicant in custody, that too, after completion of investigation and filing of the complaint. Thus, no useful purpose would be served by keeping the applicant behind bar, thus, present application is allowed and he is ordered to be released on bail, subject to conditions imposed - application allowed.

Summary

Issues:
Regular Bail Application under Section 439 of the Cr.P.C for alleged offence under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Service Tax Act, 2017.

Analysis:
The judgment involved a Regular Bail Application under Section 439 of the Cr.P.C for an alleged offence under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Service Tax Act, 2017. The applicant was accused of involvement in a fraudulent Input Tax Credit (ITC) scheme amounting to Rs.17.65 crores. The Directorate General of GST Intelligence conducted investigations revealing a chain of ineligible ITC transactions involving various companies. The applicant was arrested and subsequent legal actions were taken, including the issuance of a demand-cum-show cause notice and the filing of a complaint before the court. The applicant's bail applications were previously rejected by lower courts.

The applicant's counsel argued that the allegations were false, emphasizing the applicant's limited involvement in the firm managed primarily by his father. It was contended that the applicant had no criminal record, had strong community ties, and posed no flight risk. Reference was made to established legal principles regarding bail, highlighting that bail is the rule and refusal is the exception, especially in cases where the accused deserves a fair trial. The counsel also argued that the offence was compoundable, based on documentary evidence, and that a trial would not conclude promptly.

The respondent's counsel opposed bail, citing the gravity of the economic offence, the substantial tax evasion amount, and the non-bailable nature of the offence. Legal precedents were referenced to support the argument that economic offences require a different approach to bail considerations. It was asserted that the applicant, as the alleged mastermind, should not be granted bail.

The court considered the arguments from both sides, emphasizing that bail should be granted unless exceptional circumstances exist. The court noted that the offence being termed as an economic offence does not automatically warrant denial of bail. The court highlighted the need to evaluate each case individually, considering factors such as the gravity of the offence, the accused's background, and the likelihood of a fair trial. In this case, with no progress in trial proceedings and the applicant in custody since the arrest, the court found no compelling reason to continue detention. Consequently, the court allowed the bail application, ordering the release of the applicant on bail upon certain conditions.

In conclusion, the court granted the applicant regular bail in connection with the alleged offence, subject to specified conditions, and allowed for modifications to the conditions as per legal requirements.