2021 (6) TMI 516 - HC - GST

Court Upholds Anticipatory Bail Citing Cooperation & Lack of Evidence

Central Goods And Service Tax Delhi East Versus Sh. Naval Kumar & Ors.

The court upheld the anticipatory bail granted to the respondents, emphasizing their cooperation with the investigation and lack of evidence of tampering ... Challenging the order of granting anticipatory Bail - fictitious and non-existent firms - fake ITC availed - Bonafide case for grant of bail or not - HELD THAT:- It is settled that once bail granted should not be cancelled in a mechanical manner without there being any supervening circumstances which are not conducive to fair trial. It cannot be cancelled on a request from the side of the complainant/investigating agency unless and until it is established that the same is being misused and it is no longer conducive in the interest of justice to allow the accused any further to remain on bail. No doubt, the bail can be cancelled only in those discerning few cases where it is established that a person to whom the concession of bail has been granted is misusing the same. In the instant case, the respondents have joined the investigation and there are no allegations that they have not co-operated in the said investigation - It is also pertinent to mention here that the statements of the respondents have already been recorded in the month of December 2020 which shows that the respondents have been joining the investigation and there are no allegations of non-cooperation. There are no allegations of any tampering or influencing of the witnesses. There are also no allegations that the respondents are flight risk or there is any likelihood of their absconding. The petitioner has not been able to make out a case of supervening circumstances on the basis of which the bail granted to the respondents should be cancelled and nothing has been brought on record to show that the respondents have such a towering personality that their mere presence out on bail would in any manner thwart the further investigation of the case or that they are in any manner threat to the fair trial of this case. There are no reason for pre-trial incarceration of the respondents in the present case - petition dismissed. Issues Involved:1. Legality of the anticipatory bail granted to the respondents.2. Compliance and cooperation of the respondents with the investigation.3. Alleged involvement of the respondents in the GST evasion scheme.4. Grounds for cancellation of bail.Issue-wise Detailed Analysis:1. Legality of the anticipatory bail granted to the respondents:The petitioner sought to set aside the order dated 24.11.2020, which granted anticipatory bail to the respondents. The respondents were granted bail based on several grounds, including the fact that the alleged amount was yet to be adjudicated, the clean antecedents of M/s Milkfood Ltd., and the respondents not being habitual offenders. The court also referenced a Supreme Court interim order in C. Pradeep vs. The Commissioner of GST and Central Excise, Salem, which directed the petitioner to deposit 10% of the alleged liability. The respondents complied by depositing Rs. 10 Crores as a pre-condition for the anticipatory bail.2. Compliance and cooperation of the respondents with the investigation:The respondents argued that they had joined the investigation pursuant to the summons issued by the department and had cooperated fully. They highlighted that Ashish Aggarwal, alleged to be the mastermind, was granted regular bail due to the lack of custodial interrogation by the department. The respondents also deposited an additional Rs. 6.27 Crores, demonstrating their bona fides, bringing the total deposit to Rs. 16.27 Crores, which is almost 20% of the alleged evasion.3. Alleged involvement of the respondents in the GST evasion scheme:The petitioner alleged that M/s Milkfood Limited availed fake ITC of Rs. 54.86 Crores from fictitious firms operated by Ashish Aggarwal and Rs. 30.54 Crores from M/s Devyaani Agro Industries, totaling Rs. 85.4 Crores. The petitioner argued that the respondents played active roles in defrauding the Government Exchequer and that the company had complete control over the sales and purchases of the fictitious firms. The respondents, however, denied these allegations, stating that their involvement was limited and that they had complied with all investigation requirements.4. Grounds for cancellation of bail:The petitioner argued that the anticipatory bail was granted without appreciating the contentions raised and relied heavily on an interim Supreme Court order. They cited several cases emphasizing the seriousness of economic offenses and the need for custodial interrogation. The respondents countered by arguing that they had cooperated with the investigation and that there were no allegations of tampering with evidence or influencing witnesses. They also cited Supreme Court judgments stating that bail should not be canceled without supervening circumstances.Judgment:The court held that the respondents had joined the investigation and there were no allegations of non-cooperation, tampering with evidence, or influencing witnesses. The court emphasized that bail once granted should not be canceled mechanically without supervening circumstances. The court found no reason for pre-trial incarceration of the respondents and dismissed the petition, relying on the judgments in State (Delhi Administration) vs. Sanjay Gandhi and Dolat Ram v. State of Haryana, which outline the principles for cancellation of bail.