2021 (2) TMI 139 - HC - GST

Bombay High Court Grants Bail to Company Director in GST Offence Case

The High Court of Bombay granted bail to the applicant, a Director of a public limited company, in a case involving an offence under Section 132(1)(i) of ... Grant of bail - Release on furnishing personal recognizance bond and local surety - Bank guarantee as condition for bail - Offence under the Central Goods and Services Tax Act involving alleged wrongful availment of input tax credit - Nature of offence triable by Magistrate and sentence as factor in bail - Restriction on leaving the country without permission - Obligation to make oneself available for investigation and not to tamper with evidenceGrant of bail - Nature of offence triable by Magistrate and sentence as factor in bail - Release on furnishing personal recognizance bond and local surety - Bank guarantee as condition for bail - Obligation to make oneself available for investigation and not to tamper with evidence - Application for bail by the accused charged in proceedings under the Central Goods and Services Tax regime - HELD THAT: - The Court examined whether the applicant should be detained pending trial for an offence alleging wrongful availment of input tax credit. Noting that the offence attracts imprisonment which may extend to five years but is triable by a Magistrate, and that the applicant had been in custody for over a month, the Court observed that there was no argued apprehension of tampering with evidence or of absconsion. The Court recorded the applicant's readiness to cooperate and appear when required. Balancing these factors, the Court held that the applicant could be released on bail subject to stringent conditions to secure attendance and prevent interference with the prosecution, including furnishing a personal recognizance bond with a local surety, deposition of a bank guarantee, restriction on leaving the country without permission, provision of address and contact details, availability to the investigating authority on notice, and a prohibition on tampering with evidence. The Court expressly refrained from adjudicating the substantive tax liability or questions relating to adjudication under the statutory procedure for determination of wrongful availment of input tax credit, recording that its observations are confined to the grant of bail and shall not prejudice the trial court. [Paras 6, 7, 8, 9, 10]Bail allowed subject to conditions: furnishing PR bond with one local surety, deposit of bank guarantee within four weeks, prohibition on leaving India without permission, provision of contact details, requirement to be available to authorities on notice, and not to tamper with prosecution evidence; observations confined to bail and not to affect trial.Final Conclusion: The criminal application for grant of bail is allowed; the applicant is directed to be released on bail subject to specified conditions, and the Court's observations are restricted to the bail grant and shall not prejudice the trial on merits. Issues:Application for grant of bail in a case involving an offence under Section 132(1)(i) of the Central Goods and Services Tax Act, 2017.Analysis:The applicant, a Director of a public limited company, was arrested for allegedly availing input tax credit without a physical presence in the State of Maharashtra. The arrest was based on the discrepancy in the declared business address and the actual functional address of the entity, as well as the use of fake documents on the GST portal. The applicant sought bail, arguing that the liability for tax payment does not arise until adjudication under Section 74 of the Act of 2017. The Court considered the seriousness of the offence, punishable by imprisonment up to five years and a fine, but also noted that the offence is triable by a Magistrate. The applicant expressed readiness to cooperate with the investigation. The respondent did not contest the possibility of tampering with evidence or non-availability for trial.The Court, after evaluating the punishment for the alleged offence and the fact that the applicant had been in jail for over a month, granted bail with specific conditions. The applicant was directed to furnish a personal recognizance bond and a bank guarantee, provide contact details, remain available for investigation, not leave the country without permission, and refrain from tampering with evidence. The Court clarified that the bail order does not affect the trial proceedings.In conclusion, the High Court of Bombay granted bail to the applicant, emphasizing the importance of complying with the imposed conditions to ensure cooperation with the investigation and trial process. The judgment highlighted the seriousness of the offence under the GST Act while balancing the applicant's right to liberty pending trial.