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2025 (4) TMI 484 - DSC - GSTSeeking grant of bail - proceedural lapse with regard to the arrest - territorial jurisdiction - HELD THAT - It is not in dispute that M/s Cosmos Enterprises is situated within the jurisdiction of Delhi and Investigation qua siad firm is out of the purview of prosecuting the complainant. The amount of ITC Rs. 7, 13, 27, 948/- is related to M/s Kanvas. Accused Virender Gupta and Rahul Dhingra are not connected with these firms in any document prima facie. As per Section 132 of CGST Act ITC amount involving upto Rs.5 crore is a bailable offence. Both the accused persons have been stated to be beneficiary of the amount of ITC involved in the present case. Accused Virender Gupta has been alleged to be beneficiary of 25% of the alleged amount and accused Rahul Dhingra has been stated to be beneficiary of receiving 7% commission which is less than the amount of Rs.5 crore. In order to show that both the accused are beneficiary of aforesaid 25% share and 7% commission complainant has relied upon the statements of both the accused recorded by the complainant department at the time of arrest of accused. At this stage the prosecution has not placed on record any concrete evidence in term of any whatsapp chats bank transactions or anything else. In case titled as Vikrant Singhal and another. Vs. Union of India 2025 (3) TMI 57 - ALLAHABAD HIGH COURT Hon ble Allahabad High Court has observed that the sole piece of evidence relied upon by the prosecution regarding involvement of accused that applicants with fake firms is the confession of the applicants recorded under Section 70 of CGST Act but the truthfulness of the same would be decided during the trial which is yet to commence. Both the accused are in custody since 25.02.2025 and they have undergone custody of 25 days and they are not required for any further custodial interrogation and any recovery. Long incarceration will not serve any useful purpose when no recovery is to be effected and no further interrogation of the accused is required. In the present case maximum sentence for the offence is upto 5 years and same is triable by the Court of Magistrate. In case titled as Sanjay Chandra Vs. CBI 2011 (11) TMI 537 - SUPREME COURT Hon ble Apex Court has held In the present case the charge is that of cheating and dishonestly inducing delivery of property and and forgery for the purpose of cheating using as genuine a forged document. The punishment for the offence is imprisonment for a term which may extend to seven years. It is no doubt true that the nature of the charge may be relevant but at the same time the punishment to which the party may be liable if convicted also bears upon the issue. Therefore in determining whether to grant bail both the seriousness of the charge and the severity of the punishment should be taken into consideration. Having regard to the entire facts and circumstances of this case the punishment and the material available on record the fact that accused persons have no previous criminal history and medical ground as prayed in the bail application and without commenting upon the merits of this case both the bail applications moved on behalf of applicants/accused Rahul Dhingra and Virender Gupta have been allowed and both the accused persons named above are admitted to regular bail on their furnishing bail bond in the sum of Rs. 50, 000/- with one surety in the like amount each. The requisite bail bonds and surety bonds furnished which are accepted and attested. Personal bonds accepted which are to be attested at jail gate. Release orders of accused Rahul Dhingra and Virender Gupta be issued immediately. Conclusion - The procedural requirements for arrest arre satisfied the argument of illegality dismissed. Bail granted to the accused requiring to furnish bail bonds with sureties. Bail application allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Legality of Arrest The accused argued that their arrest was illegal due to procedural lapses, including failure to inform them of the grounds of arrest and improper documentation of the arrest memo. The Court found these arguments untenable, noting that the accused were produced before a magistrate who confirmed that all statutory and procedural mandates governing arrest were adhered to. 2. Territorial Jurisdiction The defense contended that the complainant department lacked jurisdiction to investigate M/s Cosmos International, located in Delhi. However, the Court focused on the allegations related to M/s Kanvas and the ITC amount involved, which were within the jurisdiction of the complainant department in Gurugram. 3. Applicability of Section 132 of the CGST Act The accused argued that the offense was bailable under Section 132 of the CGST Act since the ITC amount involved was below Rs. 5 crore. The Court acknowledged that the ITC amount was Rs. 7,13,27,948/-, but the accused's alleged benefit was below Rs. 5 crore, thus making the offense bailable. 4. Sufficiency of Evidence The prosecution relied on statements recorded under coercion to establish the accused's involvement in fraudulent ITC activities. The Court noted the lack of concrete evidence such as bank transactions or communications, emphasizing that the truthfulness of the statements would be determined during the trial. 5. Medical Grounds and Personal Circumstances The accused cited medical conditions and personal circumstances, such as family health issues, as grounds for bail. The Court considered these factors, noting the absence of a criminal history and the lack of evidence suggesting a flight risk or potential for evidence tampering. 6. Flight Risk and Custodial Interrogation The Court found no specific evidence indicating a flight risk or the need for further custodial interrogation. The accused had cooperated with the investigation and were not required for further recovery or interrogation. SIGNIFICANT HOLDINGS The Court held that the procedural requirements for arrest were satisfied, dismissing the argument of illegality. It recognized the territorial jurisdiction of the complainant department concerning the allegations against M/s Kanvas. The Court emphasized the bailable nature of the offense under Section 132 of the CGST Act, given the accused's alleged benefit was below the threshold. It highlighted the absence of concrete evidence and the reliance on statements whose truthfulness would be assessed during trial. Addressing the medical and personal circumstances, the Court found these relevant in the decision to grant bail, noting the lack of prior criminal history and the absence of a flight risk. In conclusion, the Court granted bail to the accused, requiring them to furnish bail bonds with sureties. The release orders were issued immediately, with the Court explicitly stating that the decision did not affect the merits of the ongoing case.
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