2019 (12) TMI 1214 - HC - GST

Court dismisses bail application for economic offense, petitioner advised to seek redressal under Section 138

The court dismissed the bail application, highlighting the seriousness of the economic offense and the substantial loss to the government exchequer. The ... Bail application - allegation that GST invoices issued without any supply of the goods to the buyers on commission basis causing loss of more than 98 crores approximately - Section 167 of the Criminal Procedure Code - HELD THAT:- The authority who is empowered to interfere with the liberty of a person by issuing an order of arrest on reasonable belief about necessity of arrest under Section 69(1) of the CGST Act, is also statutory obligated to decide, albeit on logical assessment of facts, that the person concerned is to be ‘prosecuted’. Such requirement of ‘sanction’ must be evident from the records and as the indispensable procedure of law mandates, must be backed by reasons which are prima facie intelligently acceptable. In the present case loss caused to Government Exchequer amounts to ₹ 141,76,46,639/-. Therefore in such a huge economic offence he should not be enlarged on bail. In consideration of the gravity of the economic offence, the petitioner is not entitled to be enlarged on bail, however, the petitioner is at liberty to approach the authority for compounding of the offence under Section 138 of CGST Act - petition dismissed. Issues Involved:1. Error by the Trial Court in not granting bail on the 61st day under Section 167 of the Cr.P.C.2. Compliance with the directives in Arnesh Kumar vs State of Bihar and Rini Johar & Anrs vs State of Madhya Pradesh & Ors.3. Bailability of offences under Section 132 of the CGST Act, 2017.4. Authority of the Commissioner to issue an arrest order.5. Requirement of previous sanction by the Commissioner for filing the charge sheet.Issue-wise Detailed Analysis:1. Error by the Trial Court in not granting bail on the 61st day under Section 167 of the Cr.P.C.:The petitioner argued that the learned Magistrate failed to comprehend the significance of Section 167(2) of the Cr.P.C., which mandates the release of an accused on bail if the investigation is not concluded within the stipulated period (60 days for offences punishable with imprisonment less than 10 years). The petitioner cited several Supreme Court judgments, including Hussainara Khatoon and Ors. and Uday Mohanlal Acharya vs State Of Maharashtra, to support the claim of an 'indefeasible right' to bail. In rebuttal, it was argued that the charge sheet was filed on the 61st day, the same day the bail application was moved, thus nullifying the default bail claim. The court agreed with the prosecution, noting that the right to default bail does not survive once the charge sheet is filed.2. Compliance with the directives in Arnesh Kumar vs State of Bihar and Rini Johar & Anrs vs State of Madhya Pradesh & Ors:The petitioner claimed non-compliance with the Supreme Court's directives in Arnesh Kumar, which mandates that police officers should not arrest accused unnecessarily and that Magistrates should not authorize detention casually. The petitioner argued that he was not served with a notice under Section 41A of the Cr.P.C., and the Magistrate did not record satisfaction regarding the necessity of arrest. The court, however, found that Section 41 and 41A of Cr.P.C. were complied with, as the petitioner had provided statements in terms of Section 70 of the CGST Act, which was considered sufficient.3. Bailability of offences under Section 132 of the CGST Act, 2017:The petitioner contended that the offences under Section 132 of the CGST Act are bailable and that no previous sanction for prosecution was obtained from the Commissioner as required under Section 132(6) and Section 134 of the CGST Act. The court referred to a decision by the Punjab and Haryana High Court in Vikas Goel vs Deputy Director, Directorate General of GST Intelligence, which held that economic offences of such magnitude are non-bailable. The court agreed with this view, considering the significant loss to the government exchequer.4. Authority of the Commissioner to issue an arrest order:The petitioner argued that the Commissioner had not granted the necessary sanction for prosecution under Section 134 of the CGST Act. The court found that the Commissioner had sufficient reason to believe that the petitioner had committed an offence under Section 132 of the CGST Act, thus justifying the arrest under Section 69 of the CGST Act.5. Requirement of previous sanction by the Commissioner for filing the charge sheet:The petitioner claimed that no document reflecting compliance with Section 132(6) and Section 134 of the CGST Act was presented, thus barring the Magistrate from taking cognizance of the offence. The court dismissed this argument, noting that the charge sheet and final report provided sufficient grounds for the petitioner's detention and prosecution.Conclusion:The court dismissed the bail application, emphasizing the gravity of the economic offence and the significant loss to the government exchequer. The petitioner was advised to approach the authority for compounding the offence under Section 138 of the CGST Act. The court upheld the decisions of the lower courts, finding no error in their refusal to grant bail.