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2025 (3) TMI 1028 - HC - GSTSeeking grant of bail - fraudulent availment of Input Tax Credit - contravention of the conditions of eligibility stipulated in Section 16(2)(b) of the CGST Act 2017 - HELD THAT - On perusal of the case diary it reveals that the petitioner is the proprietor of the alleged company M/s P.S. Enterprise against whom the allegations was made evading payment of total GST amounting to crores of rupees. Learned counsel for the petitioner prayed to release the accused on bail on the ground of length of detention i.e. 54 days in judicial custody wherein the mandatory period is 60 days. It is not in dispute that the alleged offences are punishable with imprisonment up to a maximum period of 5 (five) years and compoundable in nature. It transpires that the object and the purpose of CGST Act is not penal in nature but it is for the purpose of legislation being to recover any amount that may be due to the Government Exchequer. In the case of Sanjay Kumar Bhuwalka Vs. Union of India 2018 (7) TMI 589 - CALCUTTA HIGH COURT wherein the benefit of bail was granted to the accused person on deposit of certain portion of disputed liabilities/dues. While deciding a bail application in the case of similar nature the Court observed Revenue is the monetary payment due to the Government and non-payment whatever be the means applied for such non-payment confers right on the Government both central and the State to realize the revenue whereas penal provision of arrest and detention is only when there is violation of the provision under the statute which is not the intention of the legislature to achieve the fiscal object regardless of the existence of a provision for the arrest of the offender in the Act. Conclusion - Situated thus as it appears that the petitioner has been languishing in judicial custody for last 54 days the GST officials has got sufficient opportunity to interrogate the petitioner. Under such backdrop this Court is inclined to grant bail to the petitioner - the petitioner is granted bail subject to fulfilment of conditions imposed. Bail application allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Eligibility for Bail under the CGST Act, 2017 The relevant legal framework involves the provisions of the CGST Act, 2017, specifically Section 132, which outlines offenses related to tax evasion and fraudulent claims. The petitioner is accused of offenses under Section 132(1)(c), (b), and (i), which involve fraudulent ITC claims without actual receipt of goods. The Court's interpretation emphasized that the CGST Act is primarily a fiscal statute aimed at revenue realization rather than penalization. The Court referenced the case of Sanjay Kumar Bhuwalka Vs. Union of India, where bail was granted upon partial payment of disputed liabilities, highlighting the fiscal nature of the statute. Key evidence includes the petitioner's role as a partner in M/s Yash Associates and the alleged fraudulent ITC claims amounting to Rs. 5.40 Crores. The investigation's progress and the petitioner's cooperation were considered in assessing the necessity of continued detention. The Court applied the law by weighing the petitioner's detention period against the investigation's needs, concluding that further custodial detention was unnecessary given the cooperation and progress made. Competing arguments involved the petitioner's claim of non-involvement and cooperation versus the prosecution's assertion of ongoing investigation and fraudulent activities. The Court balanced these by considering the fiscal nature of the offense and the investigation's status. The Court concluded that bail was justified, given the fiscal nature of the statute, the petitioner's cooperation, and the investigation's progress. 2. Length of Detention and Cooperation with Investigation The petitioner argued that the 54-day detention period, nearing the mandatory 60 days, justified bail. The Court noted that the alleged offenses are compoundable and punishable with imprisonment up to five years, suggesting that the primary legislative intent is revenue recovery rather than penalization. The Court found that the petitioner had been thoroughly interrogated and had cooperated with the investigation, reducing the need for further detention. The Court also noted that the GST officials had sufficient opportunity to interrogate the petitioner during the detention period. The Court concluded that the petitioner's detention period and cooperation justified granting bail, with conditions to ensure compliance and non-interference with the ongoing investigation. SIGNIFICANT HOLDINGS The Court held that the petitioner should be released on bail, subject to conditions ensuring non-interference with the investigation and compliance with legal requirements. The decision emphasized the fiscal nature of the CGST Act and the legislative intent to prioritize revenue recovery over penalization. Verbatim quote: "...the GST Act of 2017 is essentially a fiscal statute and the statement of the object and reason has to be read together which is that realization of revenue..." Core principles established include the prioritization of revenue recovery in fiscal statutes and the consideration of detention length and cooperation in bail decisions. Final determinations on each issue were that the petitioner be granted bail with conditions, acknowledging the fiscal nature of the offenses and the petitioner's cooperation.
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