BAIL FOR INPUT TAX CREDIT FRAUD

In RAKESH KUMAR GUPTA S/O SHRI PRAKASH CHAND GUPTA VERSUS UNION OF INDIA GST OFFICER UNIT GWALIOR - 2023 (11) TMI 96 - MADHYA PRADESH HIGH COURT, the petitioner was issued summons by the proper officer to appear before them on different dates.  The applicant has been arrested by police station CGST Officer connection with the crime registered for the offence punishable under Section 132 (1)(b) and (c) of the CGST Act.  The applicant filed an application before the Judicial Magistrate First Class, Gwalior for bail.  Since the bail was rejected he applicant filed the application before the High Court for grant of bail.

The applicant submitted the following before the High Court-

• He is an innocent person and has been falsely implicated in this case.
• He was wrongly retained in the custody of CGST officers in their office till 14.10.2023.
• He was assessed for the years 2018 - 19 and 2019 - 20 in November 2021.  No re-assessment, for the above said years, is not required to be done by the authorities.
• No enquiry was to be made for the above said years after the lapse of six months from November 2021.
• The GST liability of the applicant for the period from 2021 to 2023 is less than Rs.5 crores.  Therefore the arrest of the applicant was not justified.
• The Authorities below was wrong in suspecting the involvement of the applicant in illegally availing benefit of input tax credit merely because of the vendor supplying food grains to the applicant is an IT major in Mumbai.
• The Department did not need the applicant for any interrogation as they have not moved any application for police remand neither they have expressed apprehension of flight risk for the applicant or any fear of tampering with evidence or influencing the witnesses.
• No purpose will be served on keeping the applicant in prison.

Therefore the applicant prayed the Court to release the applicant on bail.

The Department contended the following before the High Court-

• The department has followed the procedure while detaining the applicant by issue of summons.
• The applicant was involved in making invoices and selling grains to IT companies.
• Looking into the gravity of the offence and the role played by the applicant and on the facts and circumstances of the case the applicant is not entitled to bail.

The High Court heard the submissions of the parties to this case.  The High Court observed that the detention of the applicant is not illegal even though he was given summon for his appearance on different dates.  The applicant has co-operated with the Department during investigation.  He made himself available before the Departmental authorities as and when summons were issued against him and he also given statements even in jail.  Further the Authorities has not expressed any apprehension of flight risk for the applicant and has also not moved any application for police remand and has not expressed any fear of tampering with the evidence or influencing the witnesses.

Considering the above the High Court allowed the application without expressing any opinion on merits of the case. The High Court directed that the applicant may be released on bail on furnishing a personal bond to the tune of Rs.1 lakh with two local solvents sureties in the like amount to the satisfaction of the trial court. 

The High Court further directed that the above said order will remain operative subject to compliance of the following conditions by the applicant, before the release of order the sureties shall be verified-

• The applicant will comply with all the terms and conditions of the bond executed by him.
• He shall co-operate in the investigation/trial.
• He will not indulge himself in extending inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the Police Officer.
• He shall not commit any other offence including similar type of criminal activities covered under the Act during pendency of the trial, failing which, the bail ordered shall stand cancelled automatically without further reference to the High Court.
• The applicant will not seek unnecessary adjournments during the trial.
• He shall be made himself available before the Investigating Agency as and when he is ordered to do so.
• If he does not co-operate with the investigation, the Department shall be at liberty to move to the Court for cancellation of bail.
• The applicant shall not leave India without any previous permission of the trial court/investigating Officer.
• The applicant shall surrender his original passport before the jurisdictional Court.  In case he is not having passport  he will file affidavit to this effect before the trial court.