2022 (8) TMI 148 - HC - GST

Applicants granted regular bail in GST Input Tax Credit fraud case with Rs.1 crore deposit condition each

Gujarat HC granted regular bail to applicants charged with wrongful availment of Input Tax Credit under GST Act and IPC Section 120B. Court noted offences ... Seeking grant of Regular Bail - wrongful availment of Input Tax Credit - Sections 132(1)(b), 132(1)(c) of the Gujarat Goods and Service Tax Act, 2017 and Central Goods and Services Tax Act, 2017 read with Section 120B of the Indian Penal Code - HELD THAT:- In the matter of bail, there is no straitjacket formula for consideration of bail to an accused as it all depends upon the facts and circumstances of each case. In the facts of present case, the offence under the Act are compoundable and maximum punishment is upto 5 years. The applicants are in custody since December, 2021 and investigation part is concerned, it is virtually over. It is an admitted fact that, still adjudication proceedings is not commenced and no notice as provided under the Act is issued. Even after adjudication of liability, the applicants can challenge it before the appellate authority subject to deposit of 10 % and the maximum amount of deposit is upto Rs.2 crore. Considering the alleged fraudulent ITC, the applicants herein willing to deposit Rs.1 crore individually before the authority concerned within stipulated time. Entire documentary evidence and computer gadgets have been seized and they are in custody of the department - Department failed to point out that, further custody of the applicants is necessary. Irrespective of nature and gravity of charge, whether bail is granted or not, the consideration will have to be on case to case basis on the facts involved therein and securing the presence of the accused to stand trial - applications are allowed on a condition that the applicants shall deposit Rs.1 crore individually before the respondent office at Ahmedabad, within a period of one month from their release. The applicants are ordered to be released on regular bail - Bail application allowed. Issues:Bail applications under Section 439 of the Code of Criminal Procedure for offences under GST and IPC.Detailed Analysis:1. Background: The applicants sought regular bail for offences under the Gujarat Goods and Service Tax Act, 2017, and the Central Goods and Services Tax Act, 2017, along with the Indian Penal Code. They were arrested on different dates in late 2021 and early 2022.2. Contentions by Applicants: The applicants argued that the arrests were illegal due to lack of proper authorization, absence of show-cause notices, and insufficient reasons for arrest. They emphasized the need for launching prosecution only after adjudication, highlighted their lack of criminal history, and offered to deposit a significant amount.3. Prosecution's Arguments: The prosecution contended that the applicants were involved in an organized tax fraud scheme, obtaining fraudulent credits and refunds amounting to crores. They stressed the seriousness of economic offences and the potential impact on society, advocating against bail to prevent interference with ongoing investigations.4. Court's Decision: After considering all arguments and the case facts, the court noted the absence of a fixed formula for granting bail, emphasizing the unique circumstances of each case. The court highlighted that the offence was compoundable with a maximum punishment of 5 years, and the investigation phase was almost complete. It was also noted that no notice had been issued for adjudication yet. The court acknowledged the applicants' willingness to deposit a substantial amount and their lack of criminal records.5. Judicial Rationale: The court referenced previous judgments, including the importance of case-specific considerations for bail decisions. It was noted that the gravity of the charge alone should not be a bar to bail, and the focus should be on ensuring the accused's presence for trial. Considering the facts and reasons presented, the court decided to grant bail to the applicants on the condition of depositing a specified amount within a month.6. Conditions of Bail: The court outlined specific conditions for bail, including not misusing liberty, cooperating with authorities, surrendering passports, and providing updated residence information. Breach of conditions would lead to appropriate actions. The court granted the bail applications and allowed for modifications to the conditions as per legal requirements.7. Conclusion: The court allowed the bail applications, considering the circumstances and the applicants' compliance with the specified conditions. The judgment highlighted the need for a case-by-case assessment in bail matters, balancing the rights of the accused with the seriousness of the alleged offences.