2019 (3) TMI 373 - HC - GST

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

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 - non-cognizable offence - cognizable and non-bailable offences - compoundable offence - input tax credit fraud / issuance of fake invoices - balancing test in anticipatory bail (Siddharam Mhetre parameters) - tampering with prosecution evidenceNon-cognizable offence - cognizable and non-bailable offences - compoundable offence - Classification of the alleged offences under the GST Act as non-cognizable and compoundable. - HELD THAT: - The court examined Sections 132, 137 and 138 of the GST Act and applied the principle laid down in Om Prakash & Anr. v. Union of India & Anr. regarding the consequences of deeming offences under a fiscal statute to be non-cognizable. Noting that the maximum prescribed punishment for the offences in question is imprisonment up to five years and that such offences are amenable to compounding by the Commissioner on payment, the court concluded that the alleged offences fall within the category of non-cognizable and compoundable offences. The court further observed that no material was placed on record to demonstrate the magnitude of revenue loss or the manner in which the economy would be affected such as to warrant treating the matter otherwise; those concerns, it held, are to be considered at the stage of completion of investigation and filing of charge-sheet. [Paras 10, 11]The alleged offences under the GST Act are non-cognizable and compoundable; seriousness must be assessed in light of maximum punishment and compounding provisions, and alleged cumulative economic effect is a matter for completed investigation.Anticipatory bail - balancing test in anticipatory bail (Siddharam Mhetre parameters) - tampering with prosecution evidence - Whether the petitioners are entitled to anticipatory bail and on what conditions. - HELD THAT: - Applying the parameters laid down by the Supreme Court in Siddharam Satlingappa Mhetre-requiring evaluation of nature and gravity of accusation, role of the accused, possibility of tampering with evidence, prejudice to investigation, and magnitude of the offence-the court found that the limited scope of the petitions (anticipatory bail only) and the statutory classification of the offences justified granting anticipatory bail subject to stringent conditions. The court observed that the accused had offered cooperation and that there was no material before it demonstrating that release would thwart investigation or cause irremediable harm to the public interest. To balance personal liberty with protection of the investigation, the court imposed conditions including furnishing of personal bond with sureties, surrender to the investigating officer within a stipulated period, prohibition on tampering with evidence, obligation to cooperate in investigation and restriction on leaving the country without prior permission, and a prohibition against repeating similar offences. [Paras 12, 13]Petitions allowed; petitioners are granted anticipatory bail in the event of arrest subject to enumerated conditions (personal bond with sureties, surrender, non-tampering, cooperation, permission to leave country, and non-repetition).Final Conclusion: Petitions allowed. The High Court granted anticipatory bail to the petitioners in respect of O.R. No.40/2018-19 for offences under Section 137 of the GST Act, 2017, observing that the alleged offences are non-cognizable and compoundable and imposing specific conditions to protect the integrity of the investigation. 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.