2021 (9) TMI 110 - DSC - GST

Seeking grant of Regular Bail - concealment of facts - procurement of bogus bills from the non existent companies - availment of irregular credit - HELD THAT - It is stated that there is no hard and fast rule nor any precedent that completion of 30 days in judicial custody entitles the applicant/accused to be released on bail, as was argued by learned senior counsel. The material placed on record by the prosecution, which has surfaced on record during investigation conducted so far, the factum of existent of such firms is seriously under cloud. As was rightly highlighted by the learned Senior Standing Counsel, the said firms appears to exist only on papers and the entire so called business transactions seems to have been manipulated by the applicant himself. Prima facie complicity of the applicant/accused in the present case is evident from the records of the case - it is evident from the record that one of the main accused/Managing Director of applicant's ( M/s Urja ) is absconding, is evading the process of law which is hampering the further investigation of the case ; and if the applicant is enlarged on bail at this stage there is strong possibility of him influencing the prosecution witnesses and / or hampering the investigation of the case. Thus, taking note of the nature of accusations and severity of the offences alleged ( economic offences ), and that investigation is still at nascent stage ; number of accused persons are absconding and evading the process of law ; the entire incriminating material is yet to be recovered, the Managing Director of the company is absconding and there is strong possibility of the applicant interfering in the investigation and/or influencing the witnesses of the case, if enlarged on bail, at this stage of the case, hence, no grounds for grant of bail is made out. The bail application under section 439 Cr.P.C of applicant/accused Yogesh Kumar Goyal stands disposed off as dismissed.

Issues Involved:
1. Legality of the arrest of the applicant/accused.
2. Allegations of fraudulent activities and misuse of Input Tax Credit (ITC).
3. Compliance with legal procedures and provisions.
4. Arguments for and against granting bail.

Issue-wise Detailed Analysis:

1. Legality of the Arrest of the Applicant/Accused:
The applicant's counsel argued that the arrest was illegal and lacked compliance with legal requirements, including the disclosure of arrest grounds. They cited the judgments of Arnesh Kumar v. State of Bihar & Anr. and other cases to support their claim that the arrest and detention were illegal due to non-compliance with Sections 41 and 41A of the CrPC.

2. Allegations of Fraudulent Activities and Misuse of Input Tax Credit (ITC):
The department alleged that the applicant/accused was involved in fraudulent activities, including procuring bogus bills from non-existent companies to claim ITC, causing significant loss to the government exchequer. Investigations revealed that M/s Microlyte Energy (P) Ltd and M/s Urja Global Limited availed ITC worth crores on the strength of invoices from non-existent firms. The applicant's company allegedly issued invoices without actual supply of goods or services, passing on fake ITC to fictitious firms. The department's counsel argued that the applicant was the mastermind behind creating fake firms to avail ITC fraudulently.

3. Compliance with Legal Procedures and Provisions:
The applicant's counsel argued that criminal proceedings initiated by the department before adjudication proceedings were bad in law, relying on the judgment of MakeMyTrip Vs. UOI and other cases. They contended that the maximum punishment under the act was less than seven years, and the department failed to comply with mandatory provisions of Sections 41 and 41A of the CrPC. The applicant's counsel emphasized that the applicant had cooperated with the investigation and provided all necessary information.

4. Arguments for and Against Granting Bail:
The applicant's counsel argued for bail, stating that the applicant had no connection with the co-accused firms, had already paid the requisite GST, and no revenue loss was caused to the government. They highlighted the applicant's young age, cooperation with the investigation, and lack of risk of fleeing or tampering with evidence. Conversely, the department's counsel opposed bail, citing the applicant's failure to provide complete information, the ongoing investigation, and the risk of the applicant influencing witnesses or tampering with the investigation. They emphasized the seriousness of economic offences and the applicant's role in a well-planned conspiracy involving fictitious firms.

Judgment:
The court concluded that there is no precedent that completion of 30 days in judicial custody entitles the applicant to bail. The material on record indicated that the firms involved were fictitious, and the applicant's complicity was evident. The court distinguished the present case from the MakeMyTrip judgment, noting that the current case involved cheating and forgery with significant financial implications. Relying on the judgment of Y.S. Jagan Mohan Reddy Vs. CBI, the court emphasized the gravity of economic offences.

Given the nature of accusations, severity of offences, ongoing investigation, and risk of the applicant influencing the investigation or witnesses, the court found no grounds for granting bail. The bail application under Section 439 Cr.P.C. was dismissed. The court ordered that a copy of the order be provided to all concerned parties electronically and uploaded on the court's official website.

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