2025 (10) TMI 596 - HC - GST

Bail granted where offence attracts up to five years, charge-sheet filed, prosecution documentary, no antecedents or tampering risk

HC allowed the bail application and ordered the applicant's release subject to conditions. The court relied on precedent that where the offence carries a ... Seeking release on bail - it is alleged that applicant through input tax credit committed the tax evasion of more than Rs. Twenty Crores - for offences maximum punishment of five years have been provided - HELD THAT:- The Apex Court in the case of Vineet Jain Vs. Union of India [2025 (5) TMI 925 - SC ORDER] held that 'The maximum sentence is of 5 years with fine. A charge-sheet has been filed. The appellant is in custody for a period of almost 7 months. The case is triable by a Court of a Judicial Magistrate. The sentence is limited and in any case, the prosecution is based on documentary evidence. There are no antecedents We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels, including the High Court and ultimately, he was forced to approach this Court.' Further considering the fact that entire case of GST is based on documentary evidence, therefore, considerable period of time will be consumed in deciding the trial, Apex Court in the case of Ratnambar Kaushik Vs. Union of India [2022 (12) TMI 263 - SUPREME COURT] held that 'Needless to mention that the petitioner if released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Further, in a case of the present nature, the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses, due to which there can be no apprehension of tampering, intimidating or influencing. Therefore, keeping all these aspects in perspective, in the facts and circumstances of the present case, we find it proper to grant the prayer made by the petitioner.' Therefore, considering the facts and circumstances of the case and the law laid down by the Apex Court in the above noted cases, in view of this Court, applicant is entitled to be released on bail - Accordingly, without expressing any opinion on the merits of the case, the instant bail application is allowed. The applicant is allowed to be released on bail subject to fulfilment of conditions imposed - bail application allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the accused is entitled to grant of bail in offences alleged under Sections 132(1)(b), 132(1)(c) and 132(1)(i) of the Central Goods and Services Tax Act, 2017, where the alleged tax evasion exceeds Rs. Twenty Crores. 2. Whether the completion of investigation and filing of complaint/charge-sheet affects the necessity of continued custodial detention and the entitlement to bail. 3. Whether the statutory maximum punishment (imprisonment up to five years) and triability by a Magistrate materially weigh against grant of bail in such revenue/economic offences. 4. Whether the documentary/electronic nature of evidence and absence of antecedents justify grant of bail and what conditions are appropriate to safeguard the prosecution during trial. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Bail entitlement under Sections 132(1)(b), (c) & (i) of the CGST Act for alleged large-scale tax evasion Legal framework: The questioned provisions attract penal consequences for tax evasion; maximum prescribed sentence for the offences charged is up to five years and fine. Precedent treatment: The Court relied upon controlling Supreme Court authority(s) which have held that where the sentence is limited and prosecution is documentary in nature, ordinarily bail should not be denied at all stages unless extraordinary circumstances exist. Those authorities were applied and not distinguished or overruled. Interpretation and reasoning: The Court observed that the gravity of alleged tax evasion (numerical magnitude) is a relevant factor but is not decisive where statutory maximum imprisonment is limited, investigation is complete and evidence is documentary/electronic. The Court balanced the magnitude of alleged evasion against statutory sentencing limits and the nature of evidence, concluding that magnitude alone does not preclude bail. Ratio vs. Obiter: Ratio - where (a) investigation is complete and complaint/charge-sheet is filed, (b) maximum punishment is limited (five years), and (c) evidence is documentary/electronic, accused may ordinarily be granted bail unless extraordinary circumstances exist. Observations about the moral opprobrium of large-scale tax fraud are obiter to the extent they do not negate the above ratio. Conclusion: The accused is entitled to bail notwithstanding allegations of evasion exceeding Rs. Twenty Crores, subject to appropriate conditions and absence of extraordinary circumstances to the contrary. Issue 2 - Effect of completion of investigation and filing of complaint/charge-sheet on necessity of custody Legal framework: Custodial detention post-investigation is justified only if further custodial interrogation is necessary for investigation; otherwise, presence in custody is not necessary for investigation. Precedent treatment: The Court followed precedents that considered completed investigation and filing of charge-sheet as strong factors militating in favor of bail, particularly in economic/documentary cases. Interpretation and reasoning: The Court noted the investigation was complete and complaint filed, reducing the need for continued custody to secure further investigation. That factor was weighed heavily in favor of bail because custodial detention was no longer necessary for investigative purposes. Ratio vs. Obiter: Ratio - completion of investigation and filing of charge-sheet materially supports grant of bail where continued custody is not needed for investigation. Observations about timing and trial duration are explanatory/illustrative. Conclusion: Completion of investigation and filing of complaint/charge-sheet justify release on bail absent other compelling reasons for continued custody. Issue 3 - Relevance of statutory maximum punishment and triability by Magistrate in bail consideration Legal framework: Sentencing provisions and forum of trial are relevant to bail assessment; limited maximum sentence and triability by a Magistrate are factors to consider. Precedent treatment: The Court applied authority(s) holding that limited statutory maximum punishment and trial before a Magistrate weigh in favor of bail in economic offences unless there are exceptional circumstances. Interpretation and reasoning: The Court reasoned that where the maximum imprisonment is five years and offences are triable by a Magistrate, the risk of remand being necessary for investigation or for ensuring presence at trial is diminished; hence these aspects favor bail. The Court expressly noted these features in concluding bail entitlement. Ratio vs. Obiter: Ratio - limited statutory maximum punishment and triability by Magistrate are relevant factors favoring bail in appropriate cases. Any general statements about sentencing policy are obiter to the extent they extend beyond the case facts. Conclusion: The limited maximum sentence and magistrate-triability favor grant of bail in the present circumstances. Issue 4 - Documentary/electronic nature of evidence, absence of antecedents and conditions to secure trial integrity Legal framework: Bail may be granted subject to conditions sufficient to allay prosecution's apprehensions of tampering, tampering with witnesses, or absconding; nature of evidence (documentary/electronic) affects risk assessment regarding tampering/intimidation. Precedent treatment: The Court followed precedents recognizing that where evidence is primarily documentary/electronic and ocular evidence consists of official witnesses, the risk of tampering or influencing testimony is low and therefore lessens resistance to bail, subject to suitable conditions. Interpretation and reasoning: The Court noted that the prosecution's evidence is essentially documentary and electronic, ocular testimony would be by official witnesses, and the accused had no prior criminal history. Combining these factors, the Court found no substantial apprehension of tampering or influencing and accordingly imposed stringent conditional bail to protect the trial process. Ratio vs. Obiter: Ratio - documentary/electronic character of prosecution evidence and absence of antecedents are material to the grant of bail and support conditional release where appropriate conditions can adequately protect the prosecution's case. Remarks on the anticipated duration of trial and types of evidence anticipated are explanatory. Conclusion: Documentary/electronic evidence and lack of antecedents justify bail on conditions that (inter alia) require appearance at trial, prohibition on inducement/threat/promise to witnesses, and restraint from criminal/anti-social activity; breach will permit cancellation application by prosecution. Cross-reference on Conditions and Enforcement Interpretation and reasoning: The Court explicitly limited its relief to bail subject to a personal bond and two sureties, and specific conditions to ensure attendance and prevent tampering; it retained jurisdiction to cancel bail on breach. The Court clarified that its observations are confined to bail disposal and bear no on merits at trial. Ratio vs. Obiter: Ratio - imposition of enumerated protective conditions is integral to grant of bail in such cases; clarification limiting observations to bail proceedings is procedural and binding on interpretation of the order, not on merits of the substantive case. Conclusion: Bail is granted on stated conditions with liberty to prosecution to seek cancellation upon breach; judicial observations are confined to bail context and do not influence trial merits.