2019 (3) TMI 373 - HC - GST

Grant of Anticipatory Bail under Criminal Procedure Code for Alleged GST Offences

Sri Avinash Aradhya, Sri Mallokaradhya I.P. Versus The Commissioner of Central Tax Bangalore East Commissionerate

The court granted anticipatory bail to the petitioners under Section 438 of the Criminal Procedure Code for alleged offences under Section 137 of the GST ... Anticipatory Bail - offence punishable under Section 137 of Goods and Services Tax Act, 2017 - input tax credit - continuous issuance of fake invoices without actual supply of goods - whether the alleged offences are non cognizable or cognizable? - Held that:- The issue has been dealt in by the Hon’ble Apex Court in the case of Om Prakash & Anr. v. Union of India & Anr. [2011 (9) TMI 65 - SUPREME COURT OF INDIA], where it was held that on a construction of the definitions of the different expressions used in the Code and also in connected enactments in respect of a non-cognizable offence, a police officer, and, in the instant case an Excise Officer, will have no authority to make an arrest without obtaining a warrant for the said purpose. A close glancing of the above proposition of law with present Act, the punishment imposed is five years. In that light, the alleged offences are non- cognizable offences. By keeping the above proposition of law and on plain reading of all these sections together, one thing in the case is clear that the said offences are compoundable by the commissioner on payment and maximum punishment of five years with fine and they are not punishable with death or imprisonment for life - When the maximum punishment which can be imposed is only up to five years with fine, will throw light on the seriousness of the offence. By imposing some stringent conditions, if accused–petitioners are ordered to be released on bail, it will meet the ends of justice - the petitioners/accused are ordered to be enlarged on anticipatory bail in the event of their arrest in O.R. No.40/2018-19 for the offence punishable under Section 137 of GST Act, 2017 subject to conditions imposed - petition allowed. Issues Involved:1. Legality of anticipatory bail under Section 438 of Cr.P.C.2. Nature and gravity of the alleged offence under Section 137 of the GST Act.3. Applicability of Sections 132, 137, and 138 of the GST Act.4. Whether the alleged offences are cognizable or non-cognizable.5. Parameters for granting anticipatory bail.Detailed Analysis:1. Legality of Anticipatory Bail under Section 438 of Cr.P.C.:The petitions were filed under Section 438 of Cr.P.C seeking anticipatory bail in the event of arrest for offences under Section 137 of the GST Act. The court acknowledged the legal provision allowing for anticipatory bail and considered the submissions of both parties.2. Nature and Gravity of the Alleged Offence under Section 137 of the GST Act:The prosecution alleged that companies involved were issuing fake invoices without actual supply of goods to fraudulently avail input tax credit. This act was deemed criminal in nature, leading to the registration of a complaint. The court noted that the maximum punishment under the GST Act for such offences is five years, and the offences are compoundable before the Commissioner on payment.3. Applicability of Sections 132, 137, and 138 of the GST Act:The court extracted and analyzed Sections 132, 137, and 138 of the GST Act. Section 132 outlines punishments for various offences, including issuing invoices without supply of goods and availing input tax credit fraudulently. Section 137 deals with offences by companies, holding responsible persons in charge liable. Section 138 allows for compounding of offences by the Commissioner on payment.4. Whether the Alleged Offences are Cognizable or Non-Cognizable:The court referred to the Supreme Court's decision in Om Prakash & Anr. v. Union of India & Anr., which clarified that offences under certain acts, including the GST Act, are non-cognizable. The court concluded that the alleged offences in the present case are non-cognizable, meaning a police officer has no authority to arrest without a warrant.5. Parameters for Granting Anticipatory Bail:The court referred to the Supreme Court's guidelines in Siddharam Satlingappa Mhetre v. State of Maharashtra, which outlined factors to consider for anticipatory bail, including the nature and gravity of the accusation, antecedents of the applicant, possibility of fleeing from justice, and potential impact on investigation. The court applied these parameters, considering the gravity of the offence and the maximum punishment involved.Conclusion:The court allowed the petitions, granting anticipatory bail to the petitioners with conditions to ensure they cooperate with the investigation, do not tamper with evidence, and do not leave the country without permission. The conditions included executing personal bonds, surrendering before the Investigating Officer, and refraining from similar criminal activities. The court emphasized that the decision was based on the parameters for anticipatory bail and the non-cognizable nature of the offences.