2022 (9) TMI 95 - HC - GST

Seeking grant of bail - illicit supply of finished goods, namely perfumery compounds, without issuing any tax invoice and without payment of GST - Compounding of offences - Section 132 (1) (i) of the Act - HELD THAT - The position of law regarding grant of bail which emerges from the judgments of the Supreme Court, is that the basic jurisprudence relating to bail in economic offences remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. It is not advisable to categorize all the economic offences into one group and deny bail on that basis. One of the circumstances to consider the gravity of the offence is the term of sentence that is prescribed for the offence the accused is alleged to have committed. Even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. A prayer for bail is not to be denied merely because of the sentiments of the community are against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the court, whether before or after conviction, to assure that he will submit to the jurisdiction of the court and be in attendance thereon whenever his presence is required. This is a fit case to exercise this Court s discretion of granting bail to the applicant - the bail is granted subject to conditions imposed - application allowed.

Issues Involved:
1. Bail application under CGST Act, 2017.
2. Allegations of GST evasion and illicit supply of goods.
3. Seizure of cash and gold.
4. Voluntary statement and tax payment by the applicant.
5. Medical condition of the applicant.
6. Legal provisions regarding punishment and compounding of offences.
7. Previous court orders rejecting bail.
8. Legal principles for granting bail in economic offences.

Issue-wise Detailed Analysis:

1. Bail Application under CGST Act, 2017:
The applicant sought bail in Criminal Case No. 7646 of 2022, related to offences under Section 132 (1) (a) read with Section 132 (1) (i) and 132 (5) of the Central Goods and Services Tax Act, 2017. The applicant was accused of GST evasion through illicit supply of perfumery compounds without issuing tax invoices.

2. Allegations of GST Evasion and Illicit Supply of Goods:
The complaint stated that the applicant, a partner in M/S Odochem Industries, managed two proprietorship concerns and was involved in the illicit supply of goods without payment of GST. The applicant admitted to these activities in his voluntary statements and offered to pay Rs. 52 Crores towards tax liability.

3. Seizure of Cash and Gold:
During searches from 22-12-2021 to 28-12-2021, DGGI officers seized Rs. 196.57 Crores in cash and 23 kilograms of gold from the applicant's premises. The applicant was arrested on 26-12-2021. The DGGI's complaint highlighted that the GST evasion amount exceeded Rs. 500 lakhs, warranting a punishment of up to five years.

4. Voluntary Statement and Tax Payment by the Applicant:
The applicant's voluntary statements were recorded multiple times, where he admitted to the illicit activities. He paid Rs. 54.09 Crores towards GST liability, interest, and penalty. However, the DGGI argued that the final tax liabilities were still being ascertained.

5. Medical Condition of the Applicant:
The applicant claimed to suffer from multiple illnesses, including double vision, glaucoma, insomnia, hypertension, anxiety, and blood pressure, for which he was undergoing treatment.

6. Legal Provisions Regarding Punishment and Compounding of Offences:
Section 132 of the CGST Act outlines punishments for GST evasion, with a maximum term of five years for evasion exceeding Rs. 500 lakhs. Section 138 allows for the compounding of offences, indicating that the offences are not grave. The court noted that the applicant's case was compoundable despite the DGGI's contention that it fell under clause (c) of the proviso to Section 138.

7. Previous Court Orders Rejecting Bail:
The applicant's bail applications were previously rejected by the Trial Court and the Sessions Judge on grounds of the serious nature of the offence, the large amount of cash seized, and the potential harm to the country's economic health.

8. Legal Principles for Granting Bail in Economic Offences:
The court referred to several Supreme Court judgments, emphasizing that bail is the rule and jail is the exception. Factors to consider include the nature of the accusation, severity of punishment, possibility of tampering with evidence, and the applicant's character and behavior. The court found that the applicant's case met the criteria for bail, considering the amount already paid towards tax liability, the applicant's medical condition, the lack of previous criminal history, and the fact that the trial had not yet commenced.

Conclusion:
The court granted bail to the applicant on furnishing a personal bond of Rs.10,00,000/- and two sureties, subject to conditions such as not tampering with evidence, not influencing witnesses, and appearing before the trial court. The court emphasized that the applicant's prolonged detention was not justified given the circumstances and the principles of bail jurisprudence.

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