2022 (9) TMI 665 - HC - GST

Anticipatory Bail Denied in Major GST Fraud Case, Custodial Interrogation Deemed Essential for Comprehensive Economic Crime Probe

HC denied anticipatory bail in a GST fraud case involving over Rs. 1 crore. Court emphasized the necessity of custodial interrogation for serious economic ... Seeking grant of Anticipatory Bail - fraud related to GST invoices and getting credits - allegation of cheating the State by claiming input credit through fake invoices by using fake addresses of the firms created through different proprietors and defrauded the State to the extent of more than Rs. One crore - HELD THAT:- A perusal of the FIR and investigation points out towards the existence of a prima facie case against the petitioner. When the allegations against an accused are of cheating and the amount involved is massive, like the present case, where it is more than rupees one crore, the investigating agency's demand for custodial interrogation is based on the following judicial precedents, which bind all the investigating agencies - The petitioner took enormous advantage of the loopholes and defects in the GST software, the system put in place, and the lack of efficient standards to ensure that it becomes impossible to misuse the scheme. Given the nature of allegations, custodial interrogation is required. An analysis of the allegations and evidence collected does not warrant the grant of bail to the petitioner. Petition dismissed. Issues:Petition for anticipatory bail under Section 438 CrPC based on allegations of fraud related to GST invoices amounting to over Rs. 1 crore. Argument for bail based on inadmissible confession and irreparable harm from pre-trial incarceration. State opposing bail, seeking custodial interrogation to uncover scam and government officials' involvement.Analysis:1. The petitioner sought anticipatory bail under Section 438 CrPC due to apprehension of arrest in an FIR involving fraud related to GST invoices totaling Rs. 1,10,35,701. The petitioner claimed no criminal antecedents in the bail petition.2. The petitioner's counsel argued against custodial investigation, citing an inadmissible confession as primary evidence and the potential irreversible injustice from pre-trial incarceration to the petitioner and family.3. The State, represented by its counsel, opposed bail and requested custodial interrogation to unearth the scam and eliminate the possibility of government officials' involvement in the alleged fraud.4. The court noted that the allegations against the petitioner involved cheating the State through fake invoices and obtaining input credit fraudulently, amounting to over Rs. 1 crore. The FIR and investigation indicated a prima facie case against the petitioner.5. Referring to judicial precedents, the court highlighted the necessity of custodial interrogation in cases of serious offenses, especially when the amount involved is substantial, as in the present case exceeding Rs. 1 crore. The court emphasized the importance of effective interrogation in such cases to gather crucial information and materials.6. The court rejected the argument for bail based on parity with a co-accused, noting specific allegations against the co-accused and the duration of custody already undergone. The court concluded that the nature of allegations warranted custodial interrogation, and the evidence did not support granting bail to the petitioner.7. Ultimately, the court dismissed the petition for anticipatory bail, stating that the petitioner failed to establish a case for bail at that stage. The court clarified that its observations were not a reflection of the case's merits, and neither the regular bail nor trial court should consider these comments.8. The judgment concluded by dismissing the petition and disposing of any pending applications accordingly.