Bail granted for accused in GST evasion case involving perfumery compounds under Section 132(1)(i)

The Allahabad HC granted bail to an accused charged with illicit supply of perfumery compounds without tax invoice and GST payment under Section 132(1)(i). The court held that bail is the rule and refusal is exception, even in economic offences. The HC emphasized that economic offences should not be categorized uniformly for bail denial, and gravity must be assessed based on prescribed sentence terms. The court ruled that bail cannot be denied solely due to community sentiment, as the primary purpose is relieving accused of imprisonment while ensuring court attendance. Bail was granted with conditions.

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Issues Involved:
1. Bail application under CGST Act, 2017.
2. Allegations of GST evasion and illicit supply of goods.
3. Seizure of cash and gold.
4. Voluntary statement and tax payment by the applicant.
5. Medical condition of the applicant.
6. Legal provisions regarding punishment and compounding of offences.
7. Previous court orders rejecting bail.
8. Legal principles for granting bail in economic offences.

Issue-wise Detailed Analysis:

1. Bail Application under CGST Act, 2017:
The applicant sought bail in Criminal Case No. 7646 of 2022, related to offences under Section 132 (1) (a) read with Section 132 (1) (i) and 132 (5) of the Central Goods and Services Tax Act, 2017. The applicant was accused of GST evasion through illicit supply of perfumery compounds without issuing tax invoices.

2. Allegations of GST Evasion and Illicit Supply of Goods:
The complaint stated that the applicant, a partner in M/S Odochem Industries, managed two proprietorship concerns and was involved in the illicit supply of goods without payment of GST. The applicant admitted to these activities in his voluntary statements and offered to pay Rs. 52 Crores towards tax liability.

3. Seizure of Cash and Gold:
During searches from 22-12-2021 to 28-12-2021, DGGI officers seized Rs. 196.57 Crores in cash and 23 kilograms of gold from the applicant's premises. The applicant was arrested on 26-12-2021. The DGGI's complaint highlighted that the GST evasion amount exceeded Rs. 500 lakhs, warranting a punishment of up to five years.

4. Voluntary Statement and Tax Payment by the Applicant:
The applicant's voluntary statements were recorded multiple times, where he admitted to the illicit activities. He paid Rs. 54.09 Crores towards GST liability, interest, and penalty. However, the DGGI argued that the final tax liabilities were still being ascertained.

5. Medical Condition of the Applicant:
The applicant claimed to suffer from multiple illnesses, including double vision, glaucoma, insomnia, hypertension, anxiety, and blood pressure, for which he was undergoing treatment.

6. Legal Provisions Regarding Punishment and Compounding of Offences:
Section 132 of the CGST Act outlines punishments for GST evasion, with a maximum term of five years for evasion exceeding Rs. 500 lakhs. Section 138 allows for the compounding of offences, indicating that the offences are not grave. The court noted that the applicant's case was compoundable despite the DGGI's contention that it fell under clause (c) of the proviso to Section 138.

7. Previous Court Orders Rejecting Bail:
The applicant's bail applications were previously rejected by the Trial Court and the Sessions Judge on grounds of the serious nature of the offence, the large amount of cash seized, and the potential harm to the country's economic health.

8. Legal Principles for Granting Bail in Economic Offences:
The court referred to several Supreme Court judgments, emphasizing that bail is the rule and jail is the exception. Factors to consider include the nature of the accusation, severity of punishment, possibility of tampering with evidence, and the applicant's character and behavior. The court found that the applicant's case met the criteria for bail, considering the amount already paid towards tax liability, the applicant's medical condition, the lack of previous criminal history, and the fact that the trial had not yet commenced.

Conclusion:
The court granted bail to the applicant on furnishing a personal bond of Rs.10,00,000/- and two sureties, subject to conditions such as not tampering with evidence, not influencing witnesses, and appearing before the trial court. The court emphasized that the applicant's prolonged detention was not justified given the circumstances and the principles of bail jurisprudence.

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