2022 (8) TMI 52 - HC - GST

Bail granted to accused under Section 132(1)(b) CGST amid long trial, custody since 18.2.2022, no prior record

Paras Jain @ Rohan Jain Versus Union of India

HC allowed bail to the applicant charged under Section 132(1)(b) CGST for alleged large-scale availment of input tax credit through non-existent firms. ... Bail application - Input Tax Credit - availment of input tax credit - fake firms/non-existent firms - Section 132 (1)(b) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court finds that there is no dispute that the applicant is involved in an economic offence of considerable magnitude and gravity. The department has already filed complaint against the applicant, wherein list of witnesses has been furnished. The proprietor of two firms, namely, Sri Shyam International, Delhi and M/s Balaji Enterprises have also been made witnesses in the complaint, who were also the beneficiary of the allegedly illegal conduct of the applicant. The evidence collected against the applicant has been described in the complaint. The applicant is to be tried by the court of Special Chief Judicial Magistrate, Meerut. The alleged 75 non-existent firms could not be located till the filing of the complaint and if located the evidence collected from those firms could be led before the trial court. The applicant is in jail since 18.2.2022 and there is no allegation that he had any prior criminal history of any economic offence or otherwise against him. The Hon'ble Supreme Court in case of SANJAY CHANDRA VERSUS CBI [2011 (11) TMI 537 - SUPREME COURT], has observed that in deciding the bail applications an important factor which should certainly be taken into consideration by the court is the delay in concluding the trial. Here, taking into consideration the course of investigation adopted by the Department, the evidence, so collected, the trial will take considerable time and it may happen, if denied bail, the judicial custody of applicant can be prolonged beyond the statutory period of punishment which is five years. Taking into consideration the provisions of law and the fact that the Commissioner is empowered to recover the due amount and propose for abating the proceedings and as the trial will take its own time to conclude, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant - The applicant is in jail since 18.2.2022 and has no criminal history. Keeping in view the nature of the offence, argument advanced on behalf of the parties, evidence on record regarding complicity of the accused, larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of DATARAM SINGH VERSUS STATE OF UTTAR PRADESH AND ANR. [2018 (2) TMI 410 - SUPREME COURT] and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail - Bail application allowed. Issues Involved:1. Allegations of fraudulent Input Tax Credit (I.T.C.) availed by the applicant.2. Legality and admissibility of evidence collected during the investigation.3. Applicant's request for bail considering the nature of the offense and evidence.4. Conditions imposed for granting bail.Detailed Analysis:1. Allegations of Fraudulent Input Tax Credit (I.T.C.):The applicant, Paras Jain @ Rohan Jain, is accused of availing fake Input Tax Credit (I.T.C.) amounting to Rs. 40.66 crores through non-existent firms, M/s JMJ Traders and M/s Durga Traders, and passing on fraudulent I.T.C. of Rs. 57.96 lacs to M/s Balaji Enterprises. During a search, the proprietor of M/s Balaji Enterprises admitted to receiving invoices without goods and voluntarily deposited Rs. 3.14 crores. Further investigation revealed the applicant and co-accused managed multiple bogus firms, issuing fake invoices and availing ineligible I.T.C. worth Rs. 343 crores.2. Legality and Admissibility of Evidence:The applicant's counsel argued that the Panchnama was pre-signed, statements were pre-typed, and data from mobile phones was collected by an unauthorized private firm without certification under Sections 145 of CGST Act, 2017. The counsel contended that the registration numbers of the disputed firms were verified by the GST department, and the investigation was conducted hastily, leading to the applicant's illegal detention. The opposite party countered that the allegations were substantiated by the applicant's own admissions and corroborative evidence, including fake invoices and statements from co-accused and witnesses. The evidence was deemed admissible under Section 145 of CGST Act, 2017.3. Applicant's Request for Bail:The applicant's counsel cited the Supreme Court's judgment in Sanjay Chandra Vs. CBI, emphasizing the importance of bail and the delay in concluding trials. The applicant had no prior criminal history, and the trial would likely extend beyond the statutory punishment period. The opposite party highlighted the gravity of the economic offense and the applicant's active role, arguing against bail. The court acknowledged the seriousness of the offense but considered the prolonged trial period and the applicant's fundamental rights under Article 21 of the Constitution of India.4. Conditions Imposed for Granting Bail:The court granted bail, imposing several conditions:- The applicant must surrender his passport and not leave the country without court permission.- Furnish a bank guarantee of Rs. 50 lacs, forfeitable upon violation of bail conditions.- Refrain from tampering with evidence or intimidating witnesses.- Avoid any criminal activity post-release.- Not induce or threaten any person related to the case facts.- File an undertaking to avoid seeking adjournments when witnesses are present.The court emphasized that any breach of these conditions could lead to bail cancellation and forfeiture of the bank guarantee. The decision balanced the applicant's right to liberty with the seriousness of the charges, ensuring compliance with legal procedures and protection of public interest.