2024 (12) TMI 1072 - HC - GST

GST fraud accused gets bail condition relaxed, Rs 1 crore deposit requirement removed under Sections 122 and 132

The Karnataka HC allowed a petition seeking relaxation of bail conditions in a GST fraud case involving Rs. 8 crores. The petitioner challenged the trial ... Seeking relaxation of condition No. 1 imposed by the trial court whereby direction for release on bail was given - fraudulent availment of Input Tax Credit (ITC) - offences punishable under Sections 122 and 132 of the Central Good and Services Tax Act, 2017 - HELD THAT:- The plain reading of Section 437 of Cr.P.C. makes it evident that the condition which are required to be imposed are to make sure that the presence of accused be secured so that he should face the trial and also prevent him from committing any offences and also prevent him from threatening and tampering him with the witnesses. Though these provision does not specifically prohibit directing the accused to deposit cash security, Section 445 of Cr.P.C. gives an indication to this effect. It provides that where any persons is required by any Court or officer to execute a bond with or without sureties, such Court or officer may (except in case of a bond for good behaviour) permit him to deposit a sum of money or Government promissory notes to such amount as the Court or officer may fix in lieu of executing such bond. There may be cases where the accused is not in a position to furnish sureties and offer to deposit a certain sum of money which convince the Court that he may not abscond or else, the amount in deposit would be forfeit to the State. Thus, the general rule is that the accused be released on bail on his executing personal bond as well as furnishing sureties. Only when he is unable to furnish surety and offers cash security the Court may accept the same and impose condition to that effect. In RAMESH KUMAR VERSUS THE STATE OF NCT OF DELHI [2023 (7) TMI 1516 - SUPREME COURT], the Hon’ble supreme Court has held that the direction to deposit certain sums for granting bail should not be resorted to. It also clarified that when in cases of misappropriation, the accused makes an offer to deposit the whole or part of public money allegedly misappropriated by him, it would be open to the Court to impose such a condition - In the present case, despite the fact that the amount involved is nearly 8 crores, still the trial Court is not justified in directing the petitioner to deposit Rs. 1 crore. Therefore, this condition is required to be relaxed. However, having regard to the gravity of the offence committed by the petitioner, in order to ensure that he shall not leave the jurisdiction of the Court, it would be necessary to direct him to submit his passport before the trial Court and not to leave India without the permission of the trial Court. This Court is of the considered opinion that the condition to deposit Rs. 1 crore is liable to be relaxed. Instead of the said condition, the petitioner is directed to produce his passport before the trial Court and he shall not leave India without permission of the trial Court - The condition imposed by the trial Court directing the petitioner to deposit a sum of Rs. 1 crore is set aside - Petition filed under Section 482 of Cr.P.C. is allowed. Issues Involved:1. Legality of the condition imposed by the trial court requiring the petitioner to deposit Rs. 1 crore for bail.2. The appropriateness of imposing financial conditions on bail in cases involving fraudulent Input Tax Credit (ITC) under the Central Goods and Services Tax Act, 2017.3. The role of criminal proceedings in the recovery of disputed dues.Detailed Analysis:1. Legality of the Condition Imposed by the Trial Court:The petitioner sought relaxation of a condition imposed by the trial court, which required him to deposit Rs. 1 crore as a prerequisite for bail. The petitioner argued that this condition was unjustified and made it impossible for him to secure his release on bail. The court examined the imposition of such conditions in light of precedents set by the Hon'ble Supreme Court, which emphasized that bail conditions should not be so onerous as to effectively deny bail. The court noted that the trial court's imposition of a Rs. 1 crore deposit was excessive, particularly given the circumstances of the case.2. Appropriateness of Imposing Financial Conditions on Bail:The court explored the legal framework surrounding the imposition of conditions on bail, particularly under Section 437 of the Criminal Procedure Code (Cr.P.C.), which allows for certain conditions to ensure the accused's presence at trial and prevent further offenses. The court highlighted that while Section 437 does not explicitly prohibit cash security, the general rule is to release the accused on personal bond and sureties unless they offer cash security themselves. The court referenced the Supreme Court's stance that conditions should not be harsh, onerous, or excessive and should not transform the court into a recovery agent for disputed dues.3. Role of Criminal Proceedings in Recovery of Disputed Dues:The court reiterated the principle that criminal proceedings are not intended for the realization of disputed dues. It referenced the Supreme Court's judgment in Ramesh Kumar, which stated that criminal courts should not act as recovery agents. The court underscored that the presumption of innocence entitles the accused to fundamental rights, including liberty, and conditions imposed should not infringe upon these rights. The judgment clarified that while courts can impose conditions to ensure attendance and prevent witness tampering, they should not impose financial conditions as a substitute for civil recovery processes.Conclusion and Order:The court concluded that the trial court's condition requiring a Rs. 1 crore deposit was unjustified and needed to be relaxed. Instead, the court directed the petitioner to submit his passport to the trial court and prohibited him from leaving India without the court's permission. This order balanced the need to ensure the petitioner's presence during trial with the protection of his fundamental rights, thereby setting aside the financial condition initially imposed.