2021 (3) TMI 445 - HC - GST

Grant of Bail - input tax credit - fake invoices - Petitioner has completed 54 days in custody. - till date, no charge sheet has been filed - delegation of power by the Commissioner regarding recording of reasons to believe for affecting arrest - violation of fundamental rights of the petitioner under Article 21 of the Constitution of India - HELD THAT - Section 167 of the Code of Criminal Procedure, 1973 lays down the procedure where investigation cannot be completed in twenty-four hours. As per section 167(2)(a)(ii), the magistrate can authorize detention of an accused upto a maximum period of sixty days where the investigation relates to an offence other then those which are punishable with death, imprisonment for life or imprisonment for a term not less than ten years and on expiry of the aforesaid period of sixty days, the accused person shall be released on bail if he is prepared to and does furnish bail. The rival contentions particularly those relating to delegation of power by the Commissioner regarding recording of reasons to believe for affecting arrest under section 69 of the MGST Act or under the CGST Act may require a deeper analysis by the Court. While we defer examination of the same to subsequent hearing, the same however should not prevent us from dealing with the bail prayer of the petitioner. Petitioner shall be released on bail on furnishing cash surety of ₹ 5,00,000 in Remand Application before the Additional Chief Metropolitan Magistrate, 8th Court, Esplanade, Mumbai and within two weeks of his release, to furnish one solvent surety of the like amount before the said authority - Stand over to 20th April, 2021.

Summary

Issues:
1. Bail application under Article 226 of the Constitution of India.

Analysis:
The petitioner filed a bail application under Article 226 of the Constitution of India, specifically focusing on the prayer for bail. The petitioner was arrested under section 69 of the Maharashtra Goods and Services Tax Act, 2017 (MGST Act) for alleged offenses related to fake invoices and ineligible input tax credit. The arrest memo detailed the accusations, stating that the petitioner had received fake invoices amounting to over ?277 crores and claimed input tax credit of over ?31 crores, violating the MGST Act, Central Goods and Services Tax Act, 2017, and Integrated Goods and Services Tax Act, 2017. The remand application sought judicial custody for the petitioner based on ongoing investigations and alleged revenue loss to the government.

The petitioner's counsel argued that the arrest was illegal as the Assistant Commissioner lacked the authority to arrest under section 69 of the MGST Act. The respondent's counsel countered, highlighting the seriousness of the allegations and the authorization given by the Joint Commissioner for the arrest. The court considered the penalties under section 132 of the MGST Act for the offenses and the provisions of the Code of Criminal Procedure, 1973 regarding detention and bail.

After reviewing the arguments and materials, the court noted that the petitioner had been in custody for 54 days without a charge sheet being filed. Considering the nature of the offenses and the payments made by the petitioner, the court decided to grant bail with specific conditions. The court deferred the analysis of the delegation of power issue for subsequent hearings but emphasized the importance of addressing the bail application promptly.

The court referenced previous judgments emphasizing the principle of 'bail not jail' in cases not involving heinous offenses, highlighting the need to balance custodial interrogation with the accused's right to personal liberty. Based on this principle and the circumstances of the case, the court issued directions for the petitioner's release on bail with specified conditions to ensure cooperation with the investigation and prevent interference or tampering with evidence.

Overall, the judgment addressed the bail application under Article 226 of the Constitution of India, considering the legality of the arrest, seriousness of the allegations, penalties for the offenses, procedural requirements for detention and bail, and the principles of bail jurisprudence in cases involving financial impropriety. The court granted bail to the petitioner with conditions to uphold the balance between custodial interrogation and personal liberty.