2024 (3) TMI 541 - HC - GST

Bail denied for accused in fake firms scheme involving GST evasion under Section 132 CGST Act

Ashutosh Garg S/o Sh. Krishna Gopal Garg Versus Union of India, through Special Public Prosecutor

The Rajasthan HC dismissed a bail application for an accused involved in creating 294 fake firms and evading GST. The petitioner argued entitlement to ... Seeking grant of bail - creation and operation of 294 fake firms and has evaded a tax - impleadment on the basis of confessional statement recorded under Section 70 of the Goods and Services Tax Act, 2017 - maximum punishment for the offence - offence triable by the Court of Magistrate (First Class) - HELD THAT:- This Court finds no substance in the arguments of the counsel for the petitioner that the petitioner is entitled to get bail merely because the alleged offence under Section 132 of the CGST Act, 2017 is punishable with an imprisonment of five years and the same is triable by the Court of Magistrate First Class. There cannot be any straight jacket formula to decide the bail applications in favour to the accused merely because the alleged offence is triable by the Court of Judicial Magistrate First Class and the same is punishable with an imprisonment of five years only. Every bail application is required to be decided on its own facts and circumstances and the merits of the case. Every case has different facts and allegations and while deciding the bail applications, the Court has to keep the nature of evidence and accusation in mind and then decide the bail applications accordingly. Hon’ble Apex Court in the case of Nimmagadda Prasad vs. Central Bureau of Investigation [2013 (5) TMI 920 - SUPREME COURT] has held While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. Considering the facts and circumstances of the case, the nature of allegations levelled against the petitioner and evidence collected by DGGI, seriousness of the offence and further considering the fact that the bail application of the similarly placed accused Anil Kumar has been rejected by the Co-ordinate Bench of this Court, this Court is not inclined to release the petitioner on bail. Bail application dismissed. Issues Involved:1. Admissibility of confessional statement under Section 70 of the CGST Act, 2017.2. Consideration for granting bail to the petitioner.3. Nature and gravity of economic offences under the CGST Act, 2017.Summary:Admissibility of Confessional Statement:Counsel for the petitioner argued that the confessional statement recorded under Section 70 of the CGST Act, 2017, is not admissible in evidence at this stage due to lack of adjudication on the merits of the allegations as per Section 136 of the CGST Act, 2017. The petitioner was arrested on 02.11.2023, and a complaint was filed against him on 30.12.2023 for offences under Section 132(1)(b)(c)(f)(j)(l) of the CGST Act, 2017. The maximum punishment for these offences is five years, and they are triable by the Court of Magistrate (First Class).Consideration for Granting Bail:The petitioner's counsel requested bail, citing the period of incarceration and the nature of the offence being triable by a Magistrate. Several precedents were cited to support the bail application. However, the counsel for the Union of India opposed the bail, highlighting that the petitioner operated 294 fake firms and evaded Rs. 1,032 Crores in taxes. The bail application of a co-accused, Anil Kumar, was already rejected by the Co-ordinate Bench on 19.02.2024. The court noted that the petitioner's actions caused significant financial loss to the government and the bail application of a similarly situated co-accused had been denied.Nature and Gravity of Economic Offences:The court emphasized that economic offences, particularly those involving deep-rooted conspiracies and substantial public exchequer losses, are grave and affect the nation's financial health. The court referenced the Hon'ble Apex Court's stance that economic offences require a different approach in bail matters due to their severe impact on the community and the economy. The court also noted that each bail application must be decided on its own facts and circumstances, considering the nature of the evidence and accusations.Conclusion:The court found no merit in the petitioner's arguments for bail, given the seriousness of the offence and the substantial evidence collected. The bail application was rejected, and the trial court was instructed to expedite the trial. The court clarified that its observations were solely for deciding the bail application and should not influence the trial court's independent judgment based on the evidence.