2022 (12) TMI 257 - HC - GST

Seeking grant of Regular Bail - fraudulent transfer of Input Tax Credit (ITC) without actual supply of corresponding goods - HELD THAT - In the facts of the present case, during search proceedings, the incriminating material relevant for the investigation purpose have been seized and recovered by the department. The applicant is in custody since 24.02.2022 and after filing the complaint before the Magesterial Court, there is no progress in the trial and it will take considerable time. The entire case is based on documentary evidence. The department failed to point out that further custody of the applicant is necessary. The department has already recovered and seized Rs.64 lakhs and the applicant has shown his bonafide to deposit amount of 10%. In such circumstances, considering the facts and circumstances of the present case and the role attributed to the present applicant, when investigation qua him is virtually over, keeping him behind bar would not serve any further purpose. The present application is allowed and the applicant is ordered to be released on regular bail on executing a personal bond of Rs.10,000/-, with one surety of the like amount to the satisfaction of the learned Trial Court and subject to the conditions imposed.

Summary

Issues:
Application for regular bail under Section 439 of the Code of Criminal Procedure for offences under CGST Act and GST Act.

Analysis:
1. The applicant sought regular bail for offences under Sections 132(1)(b) and 132(1)(c) of the CGST Act and GST Act. The applicant was arrested and his bail application before the Sessions Court was rejected. The complaint was filed on 22.04.2022. The applicant approached the High Court seeking bail after the lower court's refusal.

2. The applicant, through his counsel, contended that the arrest lacked sufficient reasons and the investigation against him is almost complete. He offered to deposit 10% of the seized amount and argued that further custody is unnecessary. The applicant's counsel highlighted the delay in trial, the compoundable nature of the offence, and the potential violation of fundamental rights if kept in custody indefinitely.

3. The respondent department argued that the applicant managed non-existing firms, generated fake invoices, and availed fraudulent ITC causing substantial loss to the government. They expressed concerns about evidence tampering if the applicant is granted bail, as some family members were still at large. The respondent emphasized the severity of economic offences and the need to ensure proper investigation by keeping the applicant in custody.

4. The High Court referred to a Supreme Court judgment stating that bail decisions should be based on a case-to-case analysis, considering the gravity of the offence and ensuring the accused's presence for trial. The court observed that incriminating material had been seized during the search, the investigation against the applicant was almost complete, and there was no progress in the trial since the complaint was filed.

5. Considering the circumstances, the High Court granted bail to the applicant on the condition of depositing Rs.38 lakhs within four months in installments, as a significant amount had already been recovered. The court imposed various conditions like executing a personal bond, surrendering passport, not leaving the country without permission, providing the latest address, and complying with other directives to ensure the applicant's presence and cooperation in the trial.

6. The court warned that any breach of the bail conditions would lead to automatic cancellation of bail. It empowered the Sessions Judge to take appropriate action in case of violations. The court emphasized that the observations made while granting bail should not influence the trial court's decision based on the evidence presented during the trial.

7. The High Court's ruling balanced the applicant's right to liberty with the need for proper investigation and trial in economic offences, setting conditions to secure the applicant's presence while ensuring justice is served.