Bail granted in GST fraud case involving fake entities and bogus ITC claims worth Rs. 7.79 crores

HC allowed bail application in GST fraud case involving fake entities and bogus ITC claims worth Rs. 7,79,52,045/-. Despite prosecution allegations of creating non-existent entities to fraudulently obtain input tax credit and export refunds, court noted petitioner's four-month incarceration, five-year maximum punishment, pending trial completion, and primarily documentary evidence. Following SC precedent in similar GST fraud case, HC granted bail with stringent conditions, finding no risk of evidence tampering since proof was documentary and witnesses were departmental officials.

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Issues Involved:
1. Legality of the rejection of bail by the lower courts.
2. Examination of the petitioner's involvement and the evidence against him.
3. Consideration of the principles and precedents applicable to granting bail.

Summary:

1. Legality of the rejection of bail by the lower courts:
The petitioner challenged the order dated 22.08.2023, which rejected his bail application by the learned Special Judge (CBI) Court-I-cum-Addl. Sessions Judge, Bhubaneswar. The petition was filed under Section 439, Cr.P.C., arising from the order dated 11.07.2023 by the learned S.D.J.M., Bhubaneswar, related to offences under Section 69 of the Central Goods and Service Tax Act, 2017, read with Sections 132(1)(b), 132(1)(c), 132(1)(f) of the Act.

2. Examination of the petitioner's involvement and the evidence against him:
The prosecution alleged that certain entities with GSTINs were non-existent at their registered premises, created to fraudulently avail "Input Tax Credit" (ITC). The petitioner was accused of creating 111 fake GSTINs, generating bogus transactions, and claiming ITC amounting to Rs. 267,41,14,087/-, resulting in a fraudulent refund of Rs. 16,40,09,812/-. The petitioner argued that there was no material evidence linking him to the firms and that the allegations were baseless. He also contended that the ITC involved was less than Rs. 2 crores within Odisha, and the Department inflated the amount to make the offence non-bailable. The authorities relied on the retracted statement of accused no.2, and the petitioner emphasized that the offences were compoundable under Section 138 of the CGST Act, 2017.

3. Consideration of the principles and precedents applicable to granting bail:
The court considered the principles laid down by the Hon'ble Supreme Court in various judgments, emphasizing that "bail is the rule and jail is the exception," and the presumption of innocence until proven guilty. The court noted that the petitioner had been in custody since 11.07.2023 and that the evidence against him was primarily documentary and electronic, reducing the risk of tampering. The court also acknowledged that the petitioner was not a flight risk and was willing to cooperate with the investigation. Citing precedents, including Satender Kumar Antil v. CBI and Ratnambar Kaushik v. Union of India, the court granted bail to the petitioner with stringent conditions to ensure his cooperation and prevent any interference with the investigation.

Conclusion:
The court granted bail to the petitioner, imposing conditions such as surrendering his passport, cooperating with the investigation, and not tampering with evidence or indulging in similar activities. The BLAPL was disposed of, clarifying that the observations made in the judgment should not influence the pending trial's merits.

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