2023 (4) TMI 1309 - HC - GST

Tax Evasion Accused Granted Conditional Bail, Required to Deposit Rs.5 Crores Under Protest with Strict Compliance Measures

HC granted bail in tax evasion case under GST Act, requiring petitioner to deposit Rs.5 Crores 'under protest'. Court distinguished economic offenders ... Bail under Section 439 Cr.P.C. - Economic offences and special treatment in bail - Grant of bail on deposit / monetary condition - Input tax credit evasionBail under Section 439 Cr.P.C. - Grant of bail on deposit / monetary condition - Economic offences and special treatment in bail - Input tax credit evasion - Application for enlargement on bail of the accused-petitioner Mohammad Shadab Kadri. - HELD THAT: - The court noted the admitted position that the petitioner had evaded tax and obtained input tax credit benefit nearing Rs.88.33 crores, and acknowledged the settled principle that economic offences attract special consideration at the stage of bail. Balancing the gravity of the alleged economic offence with the fact that conclusion of trial may take long, and without expressing any opinion on merits, the court exercised its discretion under Section 439 Cr.P.C. to grant bail subject to conditions. As a condition of bail the court directed deposit of Rs.5 crores by the petitioner before the respondent Department 'under protest' and required standard personal bond and sureties; the trial court was directed to take the receipt of the deposit on record before attesting bail bonds. The order was framed having regard to precedents relied upon by both parties and the nature of the offence, but did not adjudicate the merits of the allegations. [Paras 7, 8, 9, 10]Bail allowed subject to deposit of Rs.5 crores 'under protest', furnishing of personal bond and sureties, and recording of the deposit receipt by the trial court before attesting bail bonds.Final Conclusion: Bail application under Section 439 Cr.P.C. allowed; petitioner enlarged on bail on furnishing bond and sureties and on condition of depositing Rs.5 crores with the respondent Department 'under protest', with the trial court directed to record the deposit receipt before attesting bail bonds. Issues involved:The judgment involves a bail application filed u/s 439 Cr.P.C. arising from a complaint under Sections 132 (1) (b), (f), (h), (j), & (l) of the Central Goods and Services Tax Act, 2017.Summary:1. The petitioner, accused of tax evasion and benefiting from input tax credit, sought bail claiming wrongful implication. The petitioner's counsel argued that the offence is compoundable, the maximum punishment is 5 years, and there is no evidence of creating fake firms. Reference was made to a similar case of Dananjay Singh granted bail. The delay in trial was highlighted, requesting bail. 2. The petitioner's counsel cited various judgments to support the bail application.3. The respondent's counsel opposed the bail, alleging the petitioner and co-accused created fake firms for substantial financial gain. Economic offences were emphasized, mentioning a case where a deposit of Rs.200 Crores was directed for bail. The respondent proposed a deposit equivalent to the loss incurred for granting bail.4. The respondent's counsel referred to specific judgments to counter the bail application.5. After considering arguments from both sides, the court noted the tax evasion and input tax credit benefit. Economic offenders were distinguished from general offenders, and a precedent of a large deposit for bail was mentioned. The court ordered the petitioner to deposit Rs.5 Crores 'under protest' for bail.6. The bail application u/s 439 Cr.P.C. was allowed, with conditions for the petitioner's release on bail, including a personal bond and sureties. The trial court was instructed to record the petitioner's deposit before approving the bail bonds.