2021 (6) TMI 768 - HC - GST

Petitioner granted bail despite financial constraints, must meet strict conditions

M. Sampath Kumar Versus The Superintendent of CGST & Central Excise

The court granted bail to the petitioner despite financial constraints, citing alleged tax evasion and non-compliance with previous bail conditions. ... Grant of Statutory Bail - availment of illegal Input Tax Credit - fake invoices - charge sheet not filed within the statutory period of 90 days - Section 132 (1) (i) of the CGST Act, 2017 - HELD THAT:- It is to be noted that admittedly, the learned Principal District and Sessions Judge, Coimbatore, granted bail to the petitioner on 14.12.2020 itself with certain conditions. Since the petitioner could not comply with the conditions imposed by the learned Principal District and Sessions Judge, filed a modification petition before this Court and this Court, by an order dated 22.02.2021, refused to modify the conditions and however, granted six week times to comply the conditions imposed by the learned Principal District and Sessions Judge, Coimbatore. However, without complying the conditions, the petitioner has taken the next available opportunity of filing a petition under Section 167 (2) of Cr.P.C., seeking mandatory bail, as the charge sheet was not filed within the statutory period of 90 days. The learned Chief Judicial Magistrate, on consideration of facts, held that once a person already granted bail, he cannot file a petition under Section 167 (2) of Cr.P.C. and therefore, the learned Chief Judicial Magistrate, dismissed the petition. Admittedly, in the case on hand, the petitioner was remanded to judicial custody from 29.10.2020 and charge sheet has not been filed so far - Though it is the contention of the learned counsel for the petitioner that the petitioner could not comply with the condition Nos. (i) or (ii) as the petitioner is not financially strong enough to comply with the above conditions, it is to be noted that the petitioner is a registered dealer and he facilitated the recipient of invoices to avail ineligible input tax credit and pay their GST liability through the fraudulently acquired credit, causing loss of revenue to the Government exchequer, that too, to the tune of R.9.7 Crores. This Court is inclined to give one more opportunity and grant bail to the petitioner subject to conditions imposed - application allowed. Issues:1. Petition to set aside the order denying Statutory Bail.2. Allegations of floating fake companies and tax evasion.3. Previous bail applications and compliance with conditions.4. Petitioner's financial inability to comply with bail conditions.5. Judicial custody without charge sheet being filed.6. Interpretation of Section 167(2) of Cr.P.C.7. Granting bail with specific conditions.Analysis:1. The petitioner filed a petition seeking to set aside the order denying Statutory Bail. The prosecution alleged that the petitioner had floated fake companies and issued invoices involving a significant amount, leading to GST evasion. The petitioner had been in judicial custody for alleged offenses under the CGST Act. Previous bail applications were made and conditions set by the courts were not fully complied with, leading to subsequent petitions.2. The main contention was that the charge sheet was not filed within the statutory period of 90 days, warranting bail under Section 167(2) of Cr.P.C. The Chief Judicial Magistrate dismissed the petition citing that once bail was granted, a subsequent petition under Section 167(2) could not be entertained. The petitioner's financial constraints in meeting bail conditions were also highlighted.3. The petitioner had been in judicial custody since October 2020 without a charge sheet being filed. The court noted the petitioner's inability to comply with financial conditions due to being a registered dealer involved in facilitating ineligible input tax credit, causing substantial revenue loss.4. Despite the petitioner's financial constraints, the court, considering the circumstances and quantum of alleged tax evasion, decided to grant bail with specific conditions. The conditions included producing security or a bank guarantee, executing a bond, daily reporting to the police, non-tampering with evidence, cooperation with the investigating agency, and consequences of violating the bail terms.5. The court disposed of the Criminal Revision Case by granting bail to the petitioner with the same conditions imposed by the Principal District Sessions Judge. The judgment emphasized the importance of complying with the bail conditions and the consequences of non-compliance, citing relevant legal precedents for cancellation of bail upon violation.This comprehensive analysis covers the issues raised in the judgment, detailing the legal aspects and decisions made by the court.