2023 (9) TMI 1127 - HC - GST

Seeking grant of regular bail - forming fictitious entities and issuing of fake invoices without actual physical movement of goods from the firms operated by him - HELD THAT - On perusal of record, it appears that the arrest memo was made on 09.03.2023, the applicant was produced before the learned Addl. Chief Judicial Magistrate on 10.03.2023. The applicant was sent for remand on 17.03.2023 and thereafter sent to Sabarmati Jail. The facts of the complaint would be required to be proved by the Director General of GST Department who has filed the complaint. The learned Additional Chief Metropolitan Magistrate has ordered to register the complaint vide order below Exhibit 1 - summons would have been served in jail. The trial would begin on the recording of the evidence from the side of the Department. There is no time bound procedure after the cognizance of the offence. Further, the trial will take its own time to conclude. In the case of SANJAY CHANDRA VERSUS CBI 2011 (11) TMI 537 - SUPREME COURT , a reference has been made to observe that the important factor while deciding the bail application certainly would be to take into consideration, the delay in concluding the trial. Section 138 of the Act makes provision for compounding of offences under the Act, even after the institution of prosecution, on payment by the person accused of the offence, such compounding amount in such manner as may be prescribed. The compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences, on payment of compounding amount as may be determined by the commissioner, the criminal proceeding already initiated in respect of the said offence shall stand abated. This Court is of the opinion that, discretion is required to be exercised to enlarge the applicant on regular bail. This Court has considered the following facts while exercising discretion in favour of the applicant - without discussing the evidence in detail, this Court, prima facie, is of the opinion that, this is a fit case to exercise discretion and enlarge the applicant on regular bail. Hence, the present application is allowed and the applicant is ordered to be released on regular bail.

Summary

Issues Involved:
1. Application for regular bail under Section 439 of the Code of Criminal Procedure.
2. Alleged offences under Section 132(1)(a),(b) of the Gujarat Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017, and Section 120(B) of the IPC.
3. Consideration of the applicant's role and allegations.
4. Arguments for and against granting bail.
5. Legal provisions and precedents relevant to the bail application.

Summary:

1. Application for Regular Bail:
The applicant filed an application for regular bail under Section 439 of the Code of Criminal Procedure in connection with a complaint dated 06.05.2023 in GST Criminal Case No. 41374 of 2023, confirmed by the Additional City Civil and Sessions Judge, Ahmedabad.

2. Alleged Offences:
The applicant was arrested on 09.03.2023 for offences under Section 132(1)(a),(b) of the Gujarat Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017, and Section 120(B) of the IPC.

3. Applicant's Role and Allegations:
The prosecution alleged that the applicant, proprietor of Shree Sava Jewellers, orchestrated a scam defrauding the government of revenue worth crores of rupees. The applicant allegedly used fictitious entities to issue fake invoices without actual physical movement of goods, resulting in wrongful input tax credit worth Rs.40.80 Crore.

4. Arguments for Bail:
The applicant's counsel argued that the investigation is pending despite the complaint being filed, and the applicant is portrayed as the mastermind without sufficient evidence. The counsel emphasized that the applicant's presence is not necessary for the investigation, and the offence is compoundable under Section 138 of the GST Act. Further, the counsel cited a circular clarifying that issuing tax invoices without actual supply does not make one liable to pay GST.

5. Arguments Against Bail:
The Additional Public Prosecutor argued that the applicant played an active role in issuing bogus bills without supplying goods, causing significant financial loss to the government. The applicant has a criminal past and may tamper with evidence or repeat the offence if released on bail.

Legal Provisions and Precedents:
The court considered Section 132(1)(i) of the GST Act, which provides for imprisonment up to five years for tax evasion exceeding Rs.500 lakh. The court also referenced the Supreme Court's observation in Sanjay Chandra v. Central Bureau of Investigation regarding the importance of considering trial delays in bail applications.

Decision:
Considering the applicant's jail term since 09.03.2023, completion of the investigation, and the maximum punishment of five years under the relevant sections, the court exercised discretion to grant regular bail. The applicant is ordered to be released on bail with conditions, including not leaving India without permission, surrendering the passport, and not misusing the liberty granted.

Conclusion:
The application for regular bail is allowed, and the applicant is ordered to be released on bail with specific conditions to ensure compliance and prevent any misuse of the granted liberty.