TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Regular bail granted to petitioners in fake GST invoice racket under sections 132(1)(b) and 132(1)(c) of CGST Act 2017</h1> Punjab and Haryana HC granted regular bail to petitioners accused of running fake GST invoice racket under sections 132(1)(b) and 132(1)(c) of CGST Act, ... Seeking grant of regular bail - running a racket of issuing fake invoices in the name of other firms - offences u/s 132 (1) (b) and 132 (1) (C) of the Central Goods & Service Tax Act, 2017 - HELD THAT:- As per the allegations, the petitioners are involved in the racket of fake invoicing, thereby causing loss to the govt. exchequer through fraudulent GST input tax credit claims. However, the claims are yet to be determined by the competent authority of the respondent by making proper assessment/adjudication. As such, it is only after assessment/adjudication that the liability of the petitioners with regard to exact amount of evasion of tax is to be determined under the relevant provisions of CGST Act. A complaint has already been filed against the petitioners. They are in custody since 13.12.2024. Nothing has been shown to this Court which may justify the further detention of the petitioners in prison. Considering that the alleged offences are punishable with maximum punishment up to 05 years and also keeping in view that in such circumstances, the further detention of the petitioners may not at all be justified since in case of this nature, the evidence to be rendered by the respondent would essentially be documentary and electronic, which will be through official witnesses, due to which, there cannot be any apprehension of tampering, intimidating or influencing the witnesses and further as it appears justified to strike a fine balance between the need for further detention of the petitioner when no custodial interrogation has been claimed at all by the department, this Court considers that the petitioners are entitled to be released on bail but subject to certain conditions. Conclusion - The petitions moved by both the petitioners are hereby allowed and they are ordered to be released on regular bail on their furnishing personal bonds with two sureties in the like amount each to the satisfaction of the Court concerned/Duty Magistrate, subject to fulfilment of conditions imposed. Bail application allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court in these petitions are:Whether the petitioners, accused of offences under Section 132(1)(b) and 132(1)(c) of the Central Goods & Services Tax Act, 2017 (CGST Act), involving alleged fraudulent availing of Input Tax Credit (ITC) through fake invoices and causing loss to the government exchequer, are entitled to regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023.The applicability and interpretation of the statutory provisions under Section 132 of the CGST Act regarding punishment for offences involving tax evasion and wrongful availment of ITC.The principles and parameters governing the grant or refusal of bail in cases involving economic offences, particularly those punishable with imprisonment up to five years.The evaluation of the facts and circumstances of the case, including the nature of evidence, the gravity of the offence, and the potential risk of tampering with evidence or fleeing, in deciding the bail application.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Entitlement to Bail under Section 483 of Bharatiya Nagarik Suraksha Sanhita, 2023 in offences under Section 132(1)(b) and (c) of the CGST ActRelevant legal framework and precedents: Section 132 of the CGST Act prescribes punishment for offences such as issuing invoices without supply of goods or services and availing ITC fraudulently. The punishment varies with the amount of tax evaded or ITC wrongly availed, with imprisonment extending up to five years for amounts exceeding Rs. 5 crores. Section 138 of the CGST Act makes these offences compoundable. The petitions invoke Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, which governs bail procedures.Judicial precedents including Dataram Singh v. State of U.P. and others (2018) and Sanjay Chandra v. CBI (2012) emphasize the presumption of innocence, the rule that grant of bail is the norm and refusal the exception, and the necessity to balance the rights of the accused with the interests of justice. The Court also relied on Supreme Court rulings in P. Chidambaram v. Directorate of Enforcement (2020) and Satender Kumar Antil v. CBI (2022) which reaffirm these principles in economic offence contexts.Court's interpretation and reasoning: The Court observed that while the offences are serious and involve allegations of large-scale tax evasion through fake invoicing, the statutory maximum punishment is five years. The evidence is primarily documentary and electronic, reducing the risk of witness tampering or obstruction of justice. The petitioners have been in custody since 13.12.2024, and no custodial interrogation is claimed necessary by the investigating agency. The Court noted that the offences are triable by Magistrate, and the trial may take considerable time.Key evidence and findings: The complaint alleges the petitioners' involvement in a racket generating fake invoices to claim ITC amounting to Rs. 29.50 crores. Investigations revealed non-existent or closed firms, fraudulent use of proprietors' documents, and no actual movement of goods. E-way bills were generated for non-goods vehicles, indicating further fraud. However, the exact quantum of tax evaded is yet to be determined by competent authorities through assessment and adjudication.Application of law to facts: The Court applied the legal framework to the factual matrix, recognizing the seriousness but also the procedural safeguards and the nature of evidence. It balanced the gravity of the offence against the absence of custodial interrogation needs and the documentary nature of evidence.Treatment of competing arguments: The petitioners argued false implication, genuineness of their manufacturing business, absence of criminal antecedents, and readiness to abide by bail conditions. The State argued the massive scale of evasion, risk of fleeing or tampering with evidence, and loss to government revenue. The Court found the petitioners' arguments persuasive given the circumstances and the safeguards that can be imposed.Conclusion: The Court concluded that the petitioners are entitled to bail subject to strict conditions to ensure cooperation and prevent tampering or fleeing.Issue 2: Principles governing grant of bail in economic offencesRelevant legal framework and precedents: The Court extensively discussed the principles laid down by the Supreme Court in various judgments, including Dataram Singh, Sanjay Chandra, P. Chidambaram, and others. These emphasize that bail is the rule and jail the exception, even in economic offences. The factors to be considered include prima facie case, nature and gravity of offence, severity of punishment, risk of absconding, character and standing of accused, likelihood of repeating offence, and risk of tampering with evidence.Court's interpretation and reasoning: The Court reiterated that economic offences cannot be categorically denied bail. Each case must be examined on its facts. The Court underscored that the maximum punishment prescribed, the nature of evidence, and the stage of trial are critical. The Court noted that the petitioners had been in custody for over two months and that the evidence was documentary and electronic, reducing concerns about tampering.Key evidence and findings: The Court reviewed the nature of evidence and the petitioners' conduct. It found no material indicating risk of absconding or tampering, especially given the petitioners' permanent business establishments and absence of criminal antecedents.Application of law to facts: Applying the principles, the Court found no exceptional circumstances warranting continued detention. The petitioners' release on bail with conditions was appropriate to balance the interests of justice and the rights of the accused.Treatment of competing arguments: The State's apprehensions of risk were acknowledged but found insufficient to override the presumption in favor of bail, especially given the safeguards that could be imposed.Conclusion: The Court held that bail should be granted subject to conditions and safeguards.Issue 3: Consideration of precedents cited by petitionersRelevant legal framework and precedents: The petitioners relied on multiple precedents where bail was granted in similar cases involving GST offences and economic crimes punishable with up to five years' imprisonment, including Ratnambar Kaushik, Ashutosh Garg, Vipin Garg alias Bindu, Yash Goyal, Vineet Jain, and others.Court's interpretation and reasoning: The Court analyzed these precedents, noting that in each, the Supreme Court or High Courts granted bail considering factors such as the accused's custodial period, nature of evidence, maximum punishment, and trial duration. The Court highlighted Vineet Jain's case where the Supreme Court expressed surprise at denial of bail in such cases and emphasized that bail should ordinarily be granted unless extraordinary circumstances exist.Key evidence and findings: The Court found these precedents analogous and supportive of the petitioners' case for bail.Application of law to facts: The Court applied the principles and reasoning from these precedents to the facts at hand, reinforcing the entitlement to bail.Treatment of competing arguments: The petitioners' reliance on these authorities was accepted as valid and persuasive.Conclusion: The precedents reinforced the Court's decision to grant bail.3. SIGNIFICANT HOLDINGS'A fundamental postulate of criminal jurisprudence is the presumption of innocence, meaning thereby that a person is believed to be innocent until found guilty... grant of bail is the general rule and putting a person in jail... is an exception.''While considering the prayer for grant of bail in any offence, including economic offences, it is not a rule that bail should be denied in every case where the allegation is one of grave economic offences... The broad parameters to be considered... include prima facie case, nature and gravity of charge, severity of punishment, risk of absconding, character of accused, likelihood of repetition, apprehension of witness tampering, and danger of justice being thwarted.''In cases where the evidence to be rendered is essentially documentary and electronic... there cannot be any apprehension of tampering, intimidating or influencing the witnesses.''We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels... These are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extraordinary circumstances.'Final determinations:The petitioners, accused under Section 132(1)(b) and (c) of the CGST Act for alleged fraudulent availing of ITC, are entitled to regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023.Bail is granted subject to furnishing personal bonds with two sureties and conditions including deposit of passports, cooperation in trial, prohibition on tampering with evidence, restraint on disposal of property under investigation, and prohibition on committing further crimes.The Court emphasized that these observations are confined to bail considerations and do not express any opinion on the merits of the case.
TaxTMI 
TaxTMI 
