2022 (12) TMI 519 - HC - GST

Bail Granted in GST Tax Credit Fraud Case: Accused Released After Detailed Judicial Review of Evidence and Detention Period

Paritosh Kumar Singh Alias Diwakar Choudhary, Ravi Kumar Tiwari Alias Bablu Mishra, Munna Tiwari, Kaushal Tiwari Versus Senior Intelligence Officer

HC granted regular bail to applicants in GST tax credit fraud case under Section 439 CrPC. Despite Department's allegations of forged firms and illegal ... Seeking grant of Regular bail - second bail application - availment of illegal benefits of input tax credits - HELD THAT:- First bail application of application of applicants was rejected on merits on 18.1.2022. On the said date, investigation was not complete, as stated by learned counsel for non-applicant. There is allegation of causing loss of Rs.258 Crore approximately to the government ex-chequer by applicants. However, this Court cannot overlook the fact that by now applicants have been in custody for about 23 months and they cannot be indefinitely detained in custody pending trial. Maximum sentence which can be imposed upon applicants under Section 132 of the GST Act, 2017 is of five years. Charges against applicants has yet not been framed and during course of arguments, learned counsel for non-applicant on instructions submitted that investigation, so far as present applicants are concerned, is complete. Perusal of list of witnesses (Annexure A-1) would reflect that most of witnesses belong to non-applicant department i.e. government servant. Considering the above decisions of Hon'ble Supreme Court and the facts and circumstances of case at hand, particularly the fact that respondent filed complaint, applicants are in jail since 25.1.2021, maximum sentence which can be imposed is upto five years and no minimum sentence is prescribed under Section 132 of GST Act and investigation is complete, as submitted by learned counsel for non-applicant, without entering into merits of the case, I am inclined to grant regular bail to applicants herein. This second bail application of applicants is allowed and it is directed that applicants shall be released on bail, subject to the conditions imposed. Issues:Grant of regular bail under Section 439 of the Code of Criminal Procedure, 1973 in connection with a case under Section 132 of the Goods and Services Tax Act, 2017.Analysis:1. Allegations and Arrest: The applicants sought regular bail under Section 439 of the Code of Criminal Procedure, 1973, as they were in custody since 25.1.2021 in connection with a case registered under Section 132 of the Goods and Services Tax Act, 2017. The non-applicant Department alleged that the applicants had formed forged firms in multiple states, availed illegal benefits of input tax credits, and caused a substantial loss to the government exchequer.2. Contentions of the Applicants: The counsel for the applicants argued that the non-applicant Department failed to provide concrete evidence connecting the applicants to the alleged offence. They highlighted the delay in trial proceedings and the lack of charges being framed against the applicants. The counsel relied on a Supreme Court decision to support their argument for granting bail.3. Contentions of the Non-applicant Department: The counsel for the non-applicant Department opposed the bail application, emphasizing the serious nature of the allegations against the applicants. They presented voluminous documents before the Court, indicating the prima facie involvement of the applicants in the offence. The Department highlighted that one of the applicants had admitted to availing input tax credits through issuing invoices.4. Judicial Analysis and Precedents: The Court noted that the first bail application was rejected on merits when the investigation was incomplete. Considering the prolonged detention of the applicants without charges being framed, the Court referred to relevant Supreme Court judgments. It cited a case where bail was granted due to the completion of investigation and filing of the charge sheet, stating that the presence of the accused in custody may not be necessary for further investigation.5. Decision and Conditions: Based on the Supreme Court precedents and the specific circumstances of the case, including the completion of investigation and the absence of a minimum prescribed sentence under Section 132 of the GST Act, the Court granted regular bail to the applicants. The Court directed the release of the applicants on bail upon furnishing a personal bond and surety, with conditions to appear before the trial Court regularly and not tamper with prosecution witnesses.6. Conclusion: The High Court, considering the prolonged detention of the applicants, the completion of investigation, and the absence of a minimum prescribed sentence, granted regular bail to the applicants under Section 439 of the Code of Criminal Procedure, 1973 in connection with the case under Section 132 of the Goods and Services Tax Act, 2017.