Monetising fraudulent input tax credit: grant of regular bail ordered subject to furnishing bail bonds and surety.

Grant of regular bail was sought in proceedings alleging monetisation of input tax credit obtained fraudulently. The statutory provision under section 132 prescribes a maximum punishment of five years, and the petitioner had already undergone over one year of incarceration; credibility of allegations will be determined at trial on evidence led by both sides. Confined to bail relief, the court found grounds for regular bail and ordered release upon furnishing bail/surety bonds to the satisfaction of the trial court or duty magistrate.

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Issues Involved:
1. False Implication and Role of Petitioner
2. Arrest Procedure and Alleged Highhandedness
3. Evidence and Investigation Status
4. Bail Consideration and Legal Provisions

Summary:

1. False Implication and Role of Petitioner:
The petitioner contended that he was falsely implicated as a scapegoat in the case and was merely an employee of Gurbax Lal @ Happy Nagpal. The petitioner was accused of being an abettor and having firms registered in his name, controlled by Yashpal Mehta, but no evidence substantiated these allegations. The petitioner argued that co-accused Gurbax Lal @ Happy Nagpal, who was granted bail, and Yashpal Mehta, who received anticipatory bail, were the main accused.

2. Arrest Procedure and Alleged Highhandedness:
The petitioner claimed that he was arrested without any warrant/summons/notice as mandated by Sections 69 and 70 of the CGST Act and was treated inhumanely by CGST officials. His wife filed a habeas corpus petition, and a Warrant Officer found the petitioner tortured by CGST officials. The petitioner alleged that the CGST officials implicated him in connivance with co-accused Gurbax Lal @ Happy Nagpal.

3. Evidence and Investigation Status:
The respondent-CGST opposed the bail, detailing the petitioner's active role in creating bogus firms and availing fraudulent ITC amounting to over Rs. 215 crores. The investigation revealed that the petitioner was a partner in M/s AR International and proprietor of M/s RA Enterprises, which were found to be bogus. The petitioner allegedly connived with others to monetize ITC fraudulently. The investigation was complete, and the trial had commenced, with 22 prosecution witnesses yet to be examined.

4. Bail Consideration and Legal Provisions:
The court noted that the petitioner had been in custody for over a year, and the main accused were already on bail. Section 132 of the CGST Act, which outlines punishments for certain offences, was considered. The court refrained from commenting on the merits of the case but found that the petitioner made a case for regular bail. The petition was allowed, and the petitioner was ordered to be released on bail upon furnishing bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate.

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