2022 (9) TMI 46 - HC - GST

Seeking grant of Regular bail - fraudulent transfer of Input Tax Credit - procuring invoices without actual receipt of goods - procuring invoices without actual receipt of goods - evasion of huge amount of Goods and Service Tax - HELD THAT - The entire case is based on documentary evidence and same are in the custody of the department. Record indicates that after filing the complaint, still no show cause notice for determining the liability is issued by the Department. However, the applicant herein has shown his bonafide and is willing to deposit Rs.2 crore before the department. Considering the observations made by the Apex Court in case of P. CHIDAMBARAM VERSUS DIRECTORATE OF ENFORCEMENT 2019 (12) TMI 186 - SUPREME COURT i.e. even allegations of grave economic offence, it is not a rule that bail should be denied in every case and whether bail is granted or not, will have to be on the case to case basis of the facts involved therein and securing the presence of the accused to stand trial. , it is deemed fit to exercise the discretion in favour of the applicant. The authorities shall release the applicant if he is not required in connection with the any other offence. If breach of any above condition is committed, the Sessions Judge concerned shall take appropriate action or issue warrant against the applicant. The bail bond to be executed before the learned trial Court having jurisdiction to try the case - application disposed off.

Summary

Issues:
Regular bail application under Section 439 of the Cr.P.C. in connection with offenses under GST Act and CGST Act.

Analysis:
The applicant, an administrator of a trading business, was arrested for alleged fraudulent activities related to Input Tax Credit (ITC) under the GST Act and CGST Act. The respondent department accused the applicant of defrauding the State Exchequer of Rs.37.95 crores through illicit ITC claims and fake transactions involving fictitious firms. The department seized incriminating material during a search at the business premises, supporting their allegations. The applicant's counsel argued that the arrest was against guidelines and that no show cause notice was issued after the complaint, questioning the necessity of further custody.

The applicant's defense included contentions that the allegations were false, and he was willing to deposit Rs.2 crores as a statutory right of appeal against the assessment order. The defense emphasized the constitutional right of liberty and the principle that bail is a rule, not an exception. The prosecution argued that the economic offense was grave, posing a risk of evidence manipulation, and detrimental to the nation's economy. The court considered the arguments and evidence presented by both sides.

The court noted that the department failed to establish the necessity of further custody, especially after the filing of the complaint without issuing a show cause notice. Considering the observations of the Apex Court regarding bail in cases of grave economic offenses, the court decided to grant bail to the applicant. The court imposed conditions, including the deposit of Rs.2 crores within six months, to secure the presence of the accused for trial. Failure to comply with the conditions would result in automatic cancellation of bail.

The court ordered the release of the applicant on regular bail upon executing a personal bond and surety, subject to various conditions to ensure compliance and proper conduct. The authorities were directed to release the applicant if not required for any other offense and to take appropriate action in case of condition breaches. The sessions judge had the discretion to modify or relax the conditions as per the law. The judgment did not express any opinion on the merits of the case, and direct service was permitted for the ruling to take effect.