2025 (11) TMI 1178 - HC - GST

Bail granted to accused in Rs.35 crore GST evasion case; offences triable by Magistrate, release on conditions

The HC allowed the applicant's bail application and ordered release on conditions. Although accused of GST evasion of about Rs.35 crore, the offences are ... Seeking release of the applicant on bail - GST evasion on the basis of availment of ITC by creating fake firms - HELD THAT:- As per allegation, by fraudulent means, applicant committed GST evasion of more than about rupees 35 crore, but the alleged offences are triable by Magistrate and alleged offences are punishable with maximum punishment of five years - Further, investigation in the case has been concluded and complaint has been made. Considering the fact that the entire case of Commissionerate (Anti-Evasion) is based on documentary evidence, this Court finds merit in the argument advanced by learned counsel for the applicant that the trial of the case will take considerable period of time. The Apex Court in case of Ratnambar Kaushik vs. Union of India [2022 (12) TMI 263 - SUPREME COURT] enlarged the accused on bail considering the facts that prosecution case is based on documentary and electronic evidence and investigation has been completed and accused is in jail for four months and the Apex Court observed 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.' Thus, the applicant is entitled to be released on bail - bail application allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the applicant is entitled to bail in proceedings under Section 132(1) of the Central Goods and Services Tax Act where the alleged GST evasion is primarily based on documentary and electronic evidence. 2. Whether completion of investigation and filing of complaint/charge-sheet militates in favour of grant of bail in alleged tax evasion matters triable by a Magistrate with maximum punishment of five years. 3. Whether the absence of criminal antecedents and the period of pre-trial custody are relevant considerations in determining bail in offences under Section 132(1) C.G.S.T. Act. 4. Whether there is apprehension of tampering with evidence, intimidating witnesses or influencing the investigation/trial in cases where the prosecution case is documentary/electronic and ocular evidence is limited to official witnesses. 5. Appropriate bail conditions and the consequences of their breach in the context of such offences. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to bail where the prosecution case is based on documentary and electronic evidence Legal framework: Bail law requires balancing liberty against reasonable restrictions where the accused may flee, tamper with evidence, or pose danger. Section 132(1) offences under the C.G.S.T. Act include taxation and evasion offences punishable up to five years in specified clauses. Precedent treatment: The Court relied on apex authority(s) where bail was granted in tax-evasion cases on account of documentary/electronic character of evidence and completed investigation; such precedents were applied to the facts of the present matter. Interpretation and reasoning: Where the prosecution case predominantly comprises documentary and electronic material and ocular evidence is limited to official witnesses, the risk of tampering with non-documentary evidence or intimidating witnesses is attenuated. Given this evidentiary character, the Court found merit in treating the case as suitable for bail because the principal danger that bail-denial guards against - interference with witnesses or evidence - is less likely. Ratio vs. Obiter: Ratio - The documentary/electronic nature of the prosecution case is a material factor favoring bail in offences under Section 132(1) where other safeguards are present. Obiter - Observations on the general reliability of documentary evidence vis-à-vis tampering in all contexts. Conclusion: The documentary and electronic character of the prosecution case supports grant of bail, subject to appropriate conditions to safeguard the trial process. Issue 2 - Weight of completed investigation/filing of complaint in bail determination Legal framework: Completion of investigation and filing of complaint/charge-sheet reduce the need for continued custodial detention for investigatory purposes and are relevant to assessing necessity of pre-trial incarceration. Precedent treatment: The Court applied prior decisions where completion of investigation and a filed charge-sheet were treated as significant factors favoring bail in tax-evasion prosecutions triable by Magistrate. Interpretation and reasoning: Once investigation is complete and complaint is filed, the principal investigative purpose of custody ceases. When combined with the documentary nature of evidence and other mitigating factors (no criminal history, lesser maximum sentence), the necessity for continued detention diminishes because the accused's custody is no longer justified by ongoing investigative exigencies. Ratio vs. Obiter: Ratio - Completed investigation and filed complaint are substantive factors in favour of bail when there is no continuing investigative need for custody. Obiter - Comments on administrative convenience or trial duration. Conclusion: Completion of investigation and filing of the complaint weigh in favour of bail, absent contrary exceptional circumstances. Issue 3 - Relevance of triability by Magistrate, statutory maximum sentence (five years), absence of antecedents, and duration of custody Legal framework: Severity of sentence, the court competent to try the offence, antecedents of the accused, and length of pre-trial incarceration are relevant to the exercise of discretion on bail. Precedent treatment: The Court followed precedents holding that offences triable by a Magistrate with limited maximum sentence, no antecedents and substantial pre-trial custody ordinarily tilt the balance in favour of bail unless exceptional circumstances exist. Interpretation and reasoning: The combination of (a) triability before a Magistrate, (b) maximum sentence limited to five years, (c) absence of criminal history, and (d) significant period already spent in custody collectively indicate that custodial detention is disproportionate and that release on bail is appropriate to prevent undue deprivation of liberty while ensuring attendance at trial. Ratio vs. Obiter: Ratio - These combined factors are material and ordinarily counsel in favour of bail in Section 132(1) prosecutions. Obiter - Statements suggesting that such accused 'should' get bail in normal course absent extraordinary circumstances. Conclusion: The triability by a Magistrate, limited statutory punishment, absence of antecedents, and prolonged pre-trial custody support grant of bail in the present circumstances. Issue 4 - Apprehension of tampering, influencing or intimidating witnesses in documentary cases Legal framework: Bail may be denied if there is real apprehension of tampering with witnesses or evidence; the character of evidence and identity of witnesses inform this assessment. Precedent treatment: The Court applied authorities recognizing that where evidence is documentary/electronic and ocular testimony is limited to official witnesses, the risk of tampering or intimidation is reduced and thus less likely to justify continued detention. Interpretation and reasoning: Because the evidence is documentary/electronic and official witnesses would provide ocular testimony, the Court found little reason to fear that the accused, if released on bail under appropriate conditions, would be able to intimidate or influence the essential evidence or witnesses materially affecting the prosecution case. Ratio vs. Obiter: Ratio - Reduced risk of tampering/intimidation where prosecution relies on documentary/electronic evidence and official witnesses justifies consideration for bail. Obiter - Broader remarks on the integrity of documentary evidence generally. Conclusion: There is insufficient reason to deny bail on suspicion of tampering or witness intimidation in view of the evidentiary character of the prosecution case. Issue 5 - Appropriate bail conditions and remedy for breach Legal framework: Bail may be granted subject to conditions necessary to secure appearance at trial and prevent interference with the process; breach of conditions may invite cancellation of bail. Precedent treatment: The Court followed established practice of imposing conditions (personal bond, sureties, attendance, non-interference with witnesses/evidence, prohibition on criminal activity) and providing the prosecution liberty to move for cancellation on breach. Interpretation and reasoning: Conditional release balances the accused's liberty and the integrity of the trial. Requiring a personal bond and sureties, mandatory attendance at trial, prohibition on inducement/threat/promise to persons acquainted with the facts, and a bar on criminal/anti-social activity are tailored to ensure the accused's presence and non-interference with the judicial process. Granting the prosecution liberty to seek cancellation preserves remedy against breach. Ratio vs. Obiter: Ratio - Bail may be granted subject to enumerated conditions and with liberty to the prosecution to move for cancellation if conditions are breached. Obiter - None significant beyond standard practice. Conclusion: Release on bail should be subject to conditions ensuring attendance and prevention of interference; breach permits prosecutorial application for cancellation of bail. OVERALL CONCLUSION The Court concluded that, on the facts before it - documentary/electronic nature of the prosecution case, completion of investigation and filing of complaint, triability by Magistrate with maximum sentence of five years, absence of antecedents, and substantial pre-trial custody - the applicant is entitled to bail. The Court followed applicable apex precedents addressing similar factual matrices, imposing standard conditions of bail and preserving prosecution's right to move for cancellation upon breach. The observations were expressly confined to the limited context of bail and declared not to affect merits at trial.