2022 (9) TMI 555 - HC - GST

GST fraud accused granted regular bail with Rs.10 lakh deposit condition in installments

The Gujarat HC granted regular bail to an applicant charged under GST Act Sections 132(1)(A), 132(1)(B), 132(1)(C) and IPC Sections 21, 120B for ... Seeking grant of Regular Bail - availing input tax credit by showing fake inward transactions - creation of fictitious firms/companies - Sections 132(1)(A), 132(1)(B) and 132(1)(C) of the Gujarat Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017, ready with Section 21 and 120B of the IPC - HELD THAT:- The applicant is working for and on behalf of the principal accused Mr. A.A.Shah and was charging commission amount. In such circumstances, when principal accused Mr. A.A.Shah granted bail by this court, subject to deposition of Rs.2 crore, the present application also deserves consideration. The department failed to point out the facts that the further custody of the applicant is necessary. The entire case is based on documentary evidence and same are in the custody of the department. After filing the complaint before the learned Metropolitan Magistrate Court, there is no chances to conclude the trial in a reasonable time. The applicant is directed to be released on bail with a condition that the applicant shall deposit Rs.10 lacs before the Office of the respondent no. 2 i.e Assistant Commissioner of State Tax, Unit-5, 11th Floor, B-Block, Multi-storied Building, Lal Darwaja, Ahmedabad within a period of 6 months in equal six installments - bail application allowed subject to conditions imposed. Issues:Regular bail application under Section 439 of the Cr.P.C. for offences under GST Act and CGST Act.Analysis:The applicant, currently in custody, filed a regular bail application under Section 439 of the Cr.P.C. in connection with a case registered under the Gujarat Goods and Services Tax Act, 2017, and the Central Goods and Services Tax Act, 2017. The applicant was arrested on 23.03.2022 and has been in judicial custody since then. The bail application filed before the City Sessions Court was rejected, leading to the present application seeking regular bail. The allegations involve wrongful claiming of input tax credit, creating fictitious firms, passing illicit ITC, and causing a monetary loss to the government exchequer. The applicant's residence was also searched during the proceedings, revealing involvement in fraudulent activities related to ITC and commission charges.The applicant's senior counsel argued that the allegations were false and that the arrest did not follow finance department guidelines. It was contended that the applicant was not the proprietor of the business in question and was merely an accountant charging commission. Comparisons were drawn to a co-accused who had been granted bail by the court subject to certain conditions. The defense emphasized that the applicant had been in custody for a significant period, and further detention was unnecessary as the complaint had already been filed before the court concerned.The respondent's argument highlighted the grave economic nature of the offense, the risk of evidence tampering, and the need for a different approach to bail in economic offense cases. The contention was that the applicant, in collusion with the principal accused, defrauded the state exchequer significantly. The prosecution urged against the applicant's release to ensure proper investigation and prevent potential manipulation of evidence.After considering the arguments from both sides and examining the material on record, the court found that the applicant was working for the principal accused and was involved in charging commission. Given that the principal accused had been granted bail by the court, the present application was deemed worthy of consideration. The court noted that the case was primarily based on documentary evidence in the possession of the department, and the trial was unlikely to conclude promptly after the complaint filing. Citing a Supreme Court case, the court exercised discretion in favor of the applicant and granted bail with the condition of depositing a specified amount within six months.The court ordered the release of the applicant on regular bail, subject to various conditions, including executing a personal bond, surrendering passport, not leaving the country without permission, providing address details, and depositing the specified amount within six months in installments. Failure to comply with the conditions would result in automatic cancellation of bail. The court directed the applicant to file an undertaking within a specified period and allowed for modifications to the conditions by the sessions judge as per the law. The ruling did not express any opinion on the case's merits, and direct service was permitted.