2022 (5) TMI 1184 - HC - GST

Bail Granted in GST Fraud Case: Court Cites Trial Delays Despite Allegations of Fake Firm Creating Input Tax Credit Scheme

Ashish Kumar and Sonu Kumar Khuswah Versus State of Haryana

HC granted bail to petitioners charged under multiple sections of IPC, CGST Act, and IT Act for allegedly creating a fake firm to fraudulently claim input ... Seeking grant of regular bail - availment of fraudulent input tax credit - bogus/fake firms - criminal conspiracy - HELD THAT:- Considering the above background and custody of the petitioners, this Court is of the opinion that the conclusion of trial is likely to consume considerable time, as only two prosecution witnesses have been examined out of total thirty four prosecution witnesses, therefore, further detention of the petitioners may not serve any useful purpose, who are presently confined in judicial custody after their arrest. Apart from it, the material witnesses are police officials and officials of Excise Department and presently, there does not seem to be any possibility of their being won over. Without meaning any expression of opinion on the merits of the case, it is ordered that the petitioners be released on regular bail in the case, subject to their furnishing requisite bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate concerned - Petition allowed. Issues:Grant of regular bail under Section 439 Cr.P.C pending trial in a case involving multiple charges including Sections 420, 467, 468, and 471 IPC, Sections 132(1)(i) and 132(1)(iv) CGST Act, 2017, Sections 66, 66D, and 71 IT Act, 2000, and 419 and 120-B IPC.Analysis:The petitioners sought regular bail under Section 439 Cr.P.C. pending trial in a case involving various serious charges, including Sections 420, 467, 468, and 471 IPC, along with other statutory provisions. The FIR was registered based on a complaint by Shiv Kumar, alleging the creation of a fake firm, which resulted in significant losses to the Government exchequer. The accused were accused of making wrongful gains through input tax credit without actual supply of materials. The petitioners were implicated on the basis of criminal conspiracy, with one of them alleged to have obtained personal documents of the complainant under false pretenses.The prosecution argued that the accused had created a bogus firm to claim input tax credit, resulting in substantial financial gains. The accused had allegedly misused the identity documents of a prosecution witness to establish the fake firm. The State counsel contended that the accused were also involved in another case involving similar fraudulent activities. Despite the completion of investigation and framing of charges, only a few prosecution witnesses had been examined, raising concerns about the prolonged trial process.The defense counsel highlighted the lack of direct evidence linking the petitioners to the alleged crimes, emphasizing that they had already been granted bail in a related case. The court, after considering the arguments and the status of the trial, acknowledged the likelihood of a protracted legal process due to the substantial number of prosecution witnesses yet to be examined. Given the circumstances and the nature of the case, the court granted bail to the petitioners, noting that their continued detention may not serve any significant purpose at that stage.In conclusion, the court, without delving into the merits of the case, ordered the release of the petitioners on regular bail, subject to the fulfillment of necessary bail bonds or surety bonds to the satisfaction of the trial court or Duty Magistrate. The decision was based on the assessment that further detention of the petitioners during the extended trial proceedings may not be justified, especially considering the limited progress in examining crucial prosecution witnesses.