2023 (11) TMI 96 - HC - GST

Bail Granted in GST Input Tax Credit Case: Procedural Safeguards Prevail Under Section 439, Cr.P.C.

Rakesh Kumar Gupta S/O Shri Prakash Chand Gupta Versus Union of India GST Officer Unit Gwalior

HC granted bail in GST-related case under Section 439, Cr.P.C. Despite allegations of illegal input tax credit activities, the court found no substantial ... Seeking grant of bail - respondent claims that they have followed the procedure while detaining the applicant by issuance of summons - HELD THAT:- Perusal of the case diary reveals that the applicant was given summon for his appearance on different dates, therefore, at this stage, his detention cannot be termed as illegal. The facts available in case diary indicates that applicant has co-operated in the investigation by making himself available as and when summons issued against him and his statement was also recorded even in the jail - The respondent has not expressed any apprehension of flight risk for the applicant and has also not moved any application for police remand so also has not expressed any fear of tampering with the evidence or influencing the witnesses. This application is allowed and it is directed that the applicant be released on bail on furnishing a personal bond in the sum of Rs. 10,00,000/- (Rupees Ten Lakhs only) with two local solvent sureties in the like amount to the satisfaction of the trial Court/committal Court, and subject to further conditions imposed. Issues involved: Bail application under Section 439, Cr.P.C. for offences under Section 132 (1) (b) and (c) of GST Act, legality of detention by CGST officers, compliance with procedural safeguards, involvement in illegal activities related to input tax credit, gravity of the offence, entitlement to bail.Bail Application: The applicant filed a bail application under Section 439, Cr.P.C. contending innocence and false implication. It was argued that the applicant was wrongly detained by CGST officers beyond the permissible period. The applicant's GST liability for the relevant period was less than five crores, making the arrest unjustified. Reference was made to the Apex Court's ruling emphasizing safeguards before arresting a person for a cognizable offence.Detention Legality: The case diary revealed that the applicant was summoned on different dates, indicating cooperation with the investigation. The respondent did not express any flight risk or move for police remand, nor did they cite tampering with evidence or witness influence. Considering these factors, the court found the detention not illegal at that stage.Procedural Safeguards: The court emphasized the importance of procedural safeguards before arresting a person for a non-bailable offence under the GST Act, citing the need to follow the provisions of Section 41 and 41-A of the Code of Criminal Procedure. It was highlighted that the respondent did not provide any valid reason for the continued detention of the applicant.Involvement in Illegal Activities: The respondent alleged the applicant's involvement in creating invoices and selling grains to IT companies. However, the applicant's defense highlighted the legitimate business activities of the vendor involved, arguing against any illegal benefit of input tax credit. The lack of interrogation need or apprehension of flight risk was stressed as grounds for releasing the applicant on bail.Gravity of Offence: The respondent opposed the bail plea based on the gravity of the offence and the role attributed to the applicant. Despite this opposition, the court, after considering the facts and circumstances, granted bail to the applicant on the condition of a substantial personal bond and other specified terms to ensure compliance and cooperation during the trial.Conclusion: The court allowed the bail application, directing the release of the applicant upon fulfilling the specified conditions. These conditions included compliance with the bond terms, cooperation in the investigation/trial, refraining from criminal activities, and not leaving the country without permission. The court also instructed the State counsel to inform the concerned Police Station and trial Court about the bail order for necessary action.