2021 (12) TMI 135 - HC - GST

Anticipatory Bail Granted in CGST Fraud Case: Upholding Personal Liberty & Presumption of Innocence

The court granted anticipatory bail to the petitioner in a case involving alleged fraudulent activities under the CGST Act. The petitioner was required to ... Anticipatory bail under Section 438 CrPC - offences under Section 132 of the CGST Act (wrongful availment of input tax credit and issuance of invoices without supply) - power of arrest under Section 69 of the CGST Act - non cognizable and bailable nature of offences under the CGST Act (except specified offences punishable under clause (i)) - compounding of offences under Section 138 of the CGST Act - custodial interrogation not warranted for document based tax offences - Article 21 - right to life and personal liberty (bail as rule, jail as exception)Anticipatory bail under Section 438 CrPC - offences under Section 132 of the CGST Act (wrongful availment of input tax credit and issuance of invoices without supply) - power of arrest under Section 69 of the CGST Act - Article 21 - right to life and personal liberty (bail as rule, jail as exception) - Grant of anticipatory bail to the petitioner accused of offences under clauses (b) and (c) of Section 132 of the CGST Act - HELD THAT: - The Court analysed the scheme of the CGST Act, noting that clauses (b) and (c) of Section 132 relate to issuance of invoices without supply and availing input tax credit without supply, and that where the amount involved exceeds Rs. 5 crore such offences are cognizable and non bailable under sub section (5). The Court observed that offences under the Act are in many respects compoundable under Section 138 and that custodial interrogation is not warranted where the evidence is documentary. Applying settled principles protecting personal liberty under Article 21 and the salutary jurisprudence that bail is the rule and jail the exception, the Court held that economic character of the offence does not automatically preclude bail, and that the gravity of the offence must be assessed having regard to statutory sanctions and the facts. Considering the petitioner's submissions, the documentary nature of the evidence, the petitioner's health and apprehension of arrest, and the competing interest of ensuring an unhampered investigation, the Court concluded that anticipatory bail ought to be granted while safeguarding investigative interests. [Paras 44, 55, 56, 58, 59]Anticipatory bail granted; petitioner to be released on bail upon arrest subject to furnishing bond and compliance with conditions.Conditions of anticipatory bail - custodial interrogation not warranted for document based tax offences - cooperation with investigation and prohibition on tampering - Terms and conditions to be imposed while granting anticipatory bail - HELD THAT: - To balance the liberty of the accused and the integrity of the investigation, the Court imposed tailored conditions. These included furnishing a personal bond with two solvent sureties, surrender of passport (or affidavit if none), prohibition on leaving India without permission, cooperation with the investigation and attendance as and when summoned, prohibition on inducing or threatening witnesses, continuous operability of mobile number, disclosure of location via a Google Maps PIN to the Investigating Officer/Apprehending Authority, and an undertaking to commit no offence while on bail. The Court recorded that breach of any condition would entitle the Investigating Officer/Apprehending Authority to move for cancellation of the anticipatory bail. [Paras 55, 56, 59, 60, 61]Specific stringent conditions imposed as part of anticipatory bail (personal bond with two sureties; surrender passport or file affidavit; cooperate and appear when summoned; no inducement/threat to witnesses; provide operational mobile number; drop Google Maps PIN; commit no offence). Breach may lead to cancellation application.Final Conclusion: Anticipatory bail under Section 438 CrPC is allowed in favour of the petitioner accused of offences under clauses (b) and (c) of Section 132 of the CGST Act; release on arrest is subject to furnishing a personal bond with two solvent sureties and compliance with specified conditions (including surrender of passport or affidavit, cooperation with investigation, no inducement/threat to witnesses, provision and operation of mobile number, sharing of location via Google Maps PIN, and abstaining from further offences); breach of conditions may prompt cancellation proceedings. Issues Involved:1. Anticipatory Bail Application under Section 438 of the Criminal Procedure Code, 1973.2. Alleged fraudulent availing and passing on of ineligible/fake Input Tax Credit under Section 132 of the Central Goods and Services Act, 2017.3. Compliance with summons issued by the respondent.4. Nature and gravity of the alleged economic offence.5. Applicability of custodial interrogation.6. Legal precedents and judicial approach towards anticipatory bail in economic offences.Issue-wise Detailed Analysis:1. Anticipatory Bail Application under Section 438 of the Criminal Procedure Code, 1973:The petitioner sought anticipatory bail under Section 438 of the Code, fearing arrest in a case involving alleged fraudulent activities under the CGST Act. The petitioner also filed an application for ad-interim protection from coercive action during the pendency of the anticipatory bail application.2. Alleged fraudulent availing and passing on of ineligible/fake Input Tax Credit under Section 132 of the Central Goods and Services Act, 2017:The respondent alleged that the petitioner's company, along with other firms, fraudulently availed and passed on ineligible/fake Input Tax Credit amounting to Rs. 72 crores. The purchases were primarily from firms found to be non-existent at their official addresses.3. Compliance with summons issued by the respondent:The petitioner failed to comply with multiple summons issued by the respondent, citing reasons such as his and his mother's ill health and apprehension of arrest. The respondent argued that the petitioner’s non-compliance exhibited appalling conduct and set a wrong precedent.4. Nature and gravity of the alleged economic offence:The court analyzed the nature of the offence under Section 132 of the CGST Act, which includes availing input tax credit using invoices without the supply of goods or services and issuing invoices without the supply of goods or services. The maximum penalty for such offences is imprisonment for up to five years and a fine. The court noted that while economic offences are grave, they do not always necessitate denial of bail.5. Applicability of custodial interrogation:The court found that custodial interrogation was not warranted for the alleged offence. The petitioner’s cooperation with the investigation could be ensured without detaining him in judicial custody, which would adversely impact his business.6. Legal precedents and judicial approach towards anticipatory bail in economic offences:The court referred to various legal precedents, including the Supreme Court's judgments, emphasizing that bail is the rule and jail is the exception. The court also noted that anticipatory bail is a statutory right linked to the fundamental right to life and personal liberty under Article 21 of the Constitution. The court considered the petitioner’s clean antecedents, cooperation with the investigation, and the fact that the alleged offence is compoundable under the CGST Act.Conclusion:The court allowed the anticipatory bail application with stringent conditions to ensure the petitioner’s cooperation with the investigation. The petitioner was required to furnish a personal bond of Rs. 5,00,000 with two solvent sureties, surrender his passport, cooperate with the investigation, and not commit any offence during the bail period. The court emphasized the importance of upholding the principles of personal liberty and the presumption of innocence while ensuring that the investigation is not hampered.