2022 (1) TMI 750 - HC - GST

Bail Granted in Economic Offense Case Under Section 439 Cr.P.C.: Consideration of Local Ties & Offense Gravity

The Court granted bail to the petitioner under Section 439 Cr.P.C. in a case involving offenses under the OGST Act, 2017 related to fake ITC and ... Seeking grant of Bail - Input Tax Credit - issue of invoices and bills without physical supply of materials - Section 132(1)(b),(c)&(l) the OGST Act, 2017 - HELD THAT:- Grant of bail or refusal is always a discretionary exercise which is to be guided by judicial application of mind. No inexorable formula is in place for considering a plea of bail which depends on variety of factors as has been propounded by the Supreme Court on number of occasions. In so far as economic offences are concerned, definitely, a different approach is to be adopted but then, the basic principles of bail shall have to be borne in mind. It is well known that there is no straight jacket formula for considering the matters of bail which varies from individual case to case. In the instant case, the petitioner was arrested on 02.09.2021 for offences under Section 132(1)(b),(c)&(l) of OGST Act, 2017 having availed fake ITC by a firm M/s. S.S. Syndicate during the period under consideration. As is made to understand, the petitioner being the proprietor of a fictitious firm availed passed on bogus ITC without physical receipt and supply of goods on the strength of fake invoices issued in the name of non-existing suppliers which could be revealed after extensive investigation. The allegation is also to the effect that the petitioner in collusion with other accused persons were involved in operation of fictitious firms and availed bogus ITC of ₹ 4.16 crore and passed on ITC for an amount of ₹ 47.99 crore. No doubt, the materials on record prima facie suggest the involvement of the petitioner and others in engaging themselves in activities whereby bogus ITC was claimed on the strength of fake invoices without physical receipt and supply of goods and also passed on to others. In other words, all the necessary materials which are required to prosecute the petitioner can be said to have been substantially collected during investigation. The petitioner happens to be a local inhabitant of Bhubaneswar. Being a permanent resident of Bhubaneswar, the Court is of the view that there is a less chance of petitioner absconding or fleeing from justice. Since reasonably sufficient material evidence appears to have been gathered and taking into account the period of detention and the fact that the alleged offences are punishable with a maximum imprisonment of five years and as the accused not being an outsider but a local of Balianta situate within the jurisdiction of Bhubaneswar, the Court is of the humble view that the petitioner, who has remained in judicial custody for four months, should be enlarged on bail with stringent conditions which are as follows - the petitioner is directed to be released on bail on furnishing a bail bond of ₹ 50,00.000/- with two solvent sureties for the like amount to the satisfaction of the learned court below, and subject to the conditions imposed. Application allowed. Issues Involved:- Bail application under Section 439 Cr.P.C. read with Sections 69 and 132 of OGST Act, 2017.- Allegations of availing fake ITC, forging documents, and operating fictitious business entities.- Consideration of bail in economic offences under OGST Act, 2017.- Examination of evidence for prima facie case and discretion in granting bail.- Application of principles in economic offences for bail determination.Detailed Analysis:1. Bail Application under Section 439 Cr.P.C.:- The petitioner sought bail in connection with a case under OGST Act, 2017, where he was arrested for offenses related to fake invoices and bogus ITC.- The petitioner contended that services were provided, transactions were recorded in bank accounts, and other accused persons were involved, questioning his direct involvement.2. Allegations of Fake ITC and Fictitious Business Entities:- The prosecution alleged that the petitioner and others operated non-existent business entities, availed fake ITC, and passed it on without physical goods movement.- The petitioner was accused of forging documents for GST registration of fictitious firms, misusing identity documents, and creating fake invoices.3. Consideration of Bail in Economic Offences:- The State argued against bail, citing Supreme Court precedents emphasizing a different approach for economic offenses due to their impact on public funds and the economy.- The Court noted the seriousness of economic offenses and the need for a cautious approach in bail decisions, considering the impact on financial stability.4. Examination of Evidence and Discretion in Bail Grant:- The Court highlighted that bail decisions should not involve detailed evidence examination but focus on prima facie case existence and other factors like nature of accusation and likelihood of tampering with evidence.- It emphasized the need for judicious exercise of discretion in bail matters, considering individual case circumstances and not following a fixed formula.5. Application of Principles in Economic Offences for Bail Determination:- The Court considered the petitioner's local residence, period of detention, and the seriousness of the alleged offenses in deciding to grant bail with stringent conditions.- Bail was granted with conditions to prevent witness tampering, influence on prosecution witnesses, and engagement in similar activities, ensuring compliance with the court's directives.This detailed analysis of the judgment covers the issues involved, the arguments presented by both parties, the legal principles applied, and the reasoning behind the Court's decision to grant bail to the petitioner in the case under consideration.