2025 (3) TMI 734 - HC - GST

Gujarat HC grants anticipatory bail in fake input tax credit case involving 14 taxpayers

Gujarat HC granted anticipatory bail to applicant in case involving fake input tax credit passed to 14 taxpayers. Court applied established principles for ... Seeking grant of anticipatory bail - passing on fake input tax credit to 14 taxpayers including the present applicant’s firm - HELD THAT:- It is equally incumbent upon the Court to exercise its discretion judiciously, cautiously and strictly in compliance with the basic principles laid down in a plethora of decisions of the Hon’ble Apex Court on the point. It is well settled that, among other circumstances, the factors to be borne in mind while considering an application for bail are (i) the nature and gravity of the accusation; (ii) the antecedents of the applicant including the fact as to whether he has previously undergone imprisonment on conviction by a Court in respect of any cognizable offence; (iii) the possibility of the applicant to flee from justice; and (iv) where the accusation has been made with the object of injuring or humiliating the applicant by having him so arrested. Though at the stage of granting bail an elaborate examination of evidence and detailed reasons touching the merit of the case, which may prejudice the accused, should be avoided. The present application is allowed by directing that in the event of arrest / appearance of the applicant in connection with FIR registered with DCB Police Station, Rajkot City, the applicant shall be released on bail on furnishing a personal bond with one surety of like amount and subject to fulfilment of conditions imposed. ISSUES PRESENTED and CONSIDEREDThe primary issue considered by the Court was whether the applicant should be granted anticipatory bail under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023, in connection with an FIR registered for offenses under several sections of the Indian Penal Code, including fraud and conspiracy. The Court examined whether the applicant's involvement in the alleged systematic fraud warranted custodial interrogation or if bail could be granted given the circumstances presented.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe application for anticipatory bail was considered under the provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023. The Court referred to precedents set by the Hon'ble Apex Court, particularly the cases of Siddharam Satlingappa Mhetre vs. State of Maharashtra and Ors. and Sushila Aggarwal v. State (NCT of Delhi), which outline the principles for granting anticipatory bail, emphasizing the need for judicial discretion and caution.Court's Interpretation and ReasoningThe Court acknowledged the serious nature of the allegations, which involved the generation of fake e-way bills and wrongful availing of input tax credit, causing a loss to the public exchequer. However, it also considered the personal circumstances of the applicant, including her role as a proprietor of Arham Steel and her claim of non-involvement in the day-to-day operations managed by her husband.Key Evidence and FindingsThe investigation revealed that Parmar Enterprise, along with other companies, generated 55 fake e-way bills. The applicant's firm allegedly availed an input tax credit of Rs. 7,64,332/- based on these fraudulent bills. The applicant denied these allegations, asserting that she had not availed of the benefits and was willing to deposit the disputed amount to demonstrate her bona fides.Application of Law to FactsThe Court applied the principles of anticipatory bail, considering factors such as the nature of the accusation, the applicant's antecedents, and the potential for fleeing justice. It noted that the case was based on documentary evidence and that the applicant had shown willingness to cooperate with the investigation.Treatment of Competing ArgumentsThe prosecution argued against bail, citing the systematic nature of the fraud and the necessity of custodial interrogation. The applicant's counsel countered by emphasizing her lack of direct involvement and previous protection granted by a coordinate bench. The Court balanced these arguments by imposing conditions on the bail to ensure cooperation with the investigation.ConclusionsThe Court concluded that the applicant should be granted anticipatory bail, subject to conditions that ensure her cooperation with the investigation and prevent any obstruction to justice. The decision was influenced by the applicant's willingness to deposit the disputed amount and her commitment to participate in the investigation.SIGNIFICANT HOLDINGSThe Court held that the applicant's anticipatory bail was justified, provided she adhered to specific conditions designed to facilitate the ongoing investigation. It emphasized the importance of judicial discretion in bail matters, particularly in cases involving complex economic offenses.Preserve Verbatim Quotes of Crucial Legal ReasoningThe Court reiterated principles from the Apex Court's decisions, highlighting the need for 'judiciously, cautiously and strictly' exercising discretion in bail applications, especially when the case involves documentary evidence and the applicant's willingness to cooperate.Core Principles EstablishedThe judgment reinforced the principle that anticipatory bail can be granted in economic offenses when the accused demonstrates a willingness to cooperate and the case is predominantly based on documentary evidence. It also underscored the importance of balancing the gravity of accusations with individual rights and procedural fairness.Final Determinations on Each IssueThe Court determined that the applicant should be released on bail upon furnishing a personal bond and adhering to conditions that include cooperating with the investigation, not influencing witnesses, and depositing the disputed amount with the court. The decision ensures that the investigation proceeds without unnecessary hindrance while safeguarding the applicant's rights.