GST bail cancellation: prima facie material, fake invoices, and broader liability beyond formal office-bearers supported interference.

In cancellation of bail in a GST evasion matter, the court treated perversity, disregard of the seriousness of the offence, and failure to consider prima facie incriminating material as valid grounds for interference, and directed surrender. It held that the amended provision on fake invoices and wrongful input tax credit is broad enough to cover a person who causes the offence and derives its benefit, so proof that the accused was formally a manager or proprietor is not essential. Statutory examination statements, search recoveries, and electronic material were treated as usable at the investigation stage, and the challenge to arrest did not outweigh the material showing involvement.

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Issues: (i) Whether the order granting bail was liable to be cancelled on the ground that the court below ignored the gravity of the allegations and the incriminating material. (ii) Whether prosecution under the amended provision relating to fake invoices and wrongful availment of input tax credit required proof that the respondent was a manager or proprietor of the firms concerned. (iii) Whether the statements recorded under the statutory power of examination and the material recovered during search could be relied upon for assessing prima facie involvement and the legality of arrest.

Issue (i): Whether the order granting bail was liable to be cancelled on the ground that the court below ignored the gravity of the allegations and the incriminating material.

Analysis: Cancellation of bail is warranted where the original order is shown to be perverse, arbitrary, or based on irrelevant considerations, or where the court granting bail ignores material evidence and the seriousness of the offence. The record disclosed substantial allegations of organised GST evasion, recovery of documents and electronic material, and alleged wrongful availment of input tax credit. The court below failed to give due weight to the nature of the economic offence and the prima facie material collected during investigation.

Conclusion: The bail order suffered from perversity and was liable to be cancelled.

Issue (ii): Whether prosecution under the amended provision relating to fake invoices and wrongful availment of input tax credit required proof that the respondent was a manager or proprietor of the firms concerned.

Analysis: The amended provision expressly covers not only the person who directly commits the act, but also one who causes it to be committed and retains the benefit arising therefrom. The statutory language is broad enough to reach the actual offender behind the company structure where fake invoices are generated and input tax credit is fraudulently availed. Proof of formal designation as manager or proprietor is not a condition precedent for prosecution when the material indicates active involvement in the unlawful enterprise.

Conclusion: The absence of proof that the respondent was a manager or proprietor did not defeat the prosecution case.

Issue (iii): Whether the statements recorded under the statutory power of examination and the material recovered during search could be relied upon for assessing prima facie involvement and the legality of arrest.

Analysis: The statement recorded under the statutory power of examination was treated as usable material at the stage of investigation, and the search recovery, documents, and electronic evidence supported the department's prima facie case. The argument based on the legality of arrest was not accepted because the respondent had been informed of the grounds of arrest, and the challenge to arrest did not displace the material showing involvement in the offence. The court also held that the evidentiary objection drawn from the law relating to police confessions did not apply in the same manner to such statutory statements.

Conclusion: The statements and search material were capable of being relied upon for the purpose of the cancellation application, and the arrest challenge did not assist the respondent.

Final Conclusion: The cumulative effect of the statutory provisions and the investigation material justified interference with the earlier bail order, and the respondent was directed to surrender before the trial court.

Ratio Decidendi: In cancellation of bail involving serious economic offences under the GST law, the court may interfere where the grant of bail is perverse or ignores prima facie incriminating material, and liability is not confined only to formal office-bearers but extends to a person who causes the offence and derives the benefit of fraudulent input tax credit.

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