2025 (12) TMI 304 - DSC - GST

Provisional bail granted in GST evasion case, citing cooperation, no antecedents, and unnecessary custody for compoundable offences

The ACJM granted provisional bail to Accused A in a GST evasion case, emphasizing settled bail principles: the court must assess risk of tampering with ... Seeking release on bail - alleged evasion of tax pertains to the period which is barred by law of limitation - the case is based on documentary evidence - HELD THAT:- While dealing with bail application court has to see whether the person if not restricted is likely to tamper the course of further investigation or is likely to tamper with evidence or intimidate or influence witnesses. The Court has to see whether the presence of accused is necessary for further investigation and to prevent the possibility of tempering with evidence or intimidating or influencing witnesses. Here in case at hand there was sufficient opportunity with the respondent for interrogating with accused. The respondent has already collected the documentary evidence from the possession of accused. The power to prosecute the tax payer under GST Act are ancillary and incidental to the power to levy and collect Goods and Services Tax. The MGST authority is investigating the matter in respect of GST transactions for the period from 01.07.2017 to 23.05.2023. The statement of accused/applicant are seems to be recorded. The applicant has assured to co-operate further investigation. No criminal antecedents shown against accused. The offence in question is triable by this court. Subject to certain restrictions the offences under GST Acts are of compoundable nature. Further more as argued by the counsel for applicant the directors of other related companies whose statements are recorded in this crime are already released on bail. The accused/applicant has duly responded to the summons issued by GST officers and appeared before them for recording her statement. The accused/applicant is in custody since her arrest dt. 11.11.2025. It is for respondent to conduct investigation in detail. It will take time to complete the investigation and to file the complaint. No prior criminal antecedents brought on record. Further physical presence of accused/applicant is not seems to be necessary for conducting investigation in the crime. So far as apprehension regarding tampering the evidence or fleeing from justice is concerned stringent conditions can be imposed against the accused. Thus considering the circumstances on record accused is seems to be entitle for bail. The Accused is allowed to be provisionally released on bail subject to fulfilment of conditions imposed - bail application allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, having regard to Section 480 of the Bharatiya Nagarik Suraksha Sanhita, 2023, bail should be granted in a prosecution under Section 132 of the Goods and Services Tax Act, 2017. 1.2 Whether the stage and nature of investigation, including the primarily documentary character of the case and completion of key investigative steps, justified continued custodial detention of the applicant. 1.3 Whether there existed a real likelihood of the applicant absconding, tampering with evidence, or influencing witnesses so as to warrant denial of bail. 1.4 Whether the ancillary and compoundable nature of offences under the GST law, absence of criminal antecedents, and parity with other similarly placed accused favoured grant of bail subject to conditions. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Grant of bail under Section 480 BNSS, 2023 in a prosecution under Section 132 of the GST Act Interpretation and reasoning 2.1 The Court considered the bail application under Section 480 of the Bharatiya Nagarik Suraksha Sanhita, 2023 in the context of allegations of fraudulent availment and passing of ineligible input tax credit under Section 132 of the Goods and Services Tax Act, 2017. 2.2 The Court noted that, though the allegations of wrongful availment and passing of ineligible ITC involving substantial amounts were 'very serious', the assessment for bail had to be guided by the parameters laid down by the Hon'ble Supreme Court in the relied-upon decision, and not by the gravity of the accusation alone. 2.3 The Court evaluated the period of custody (since 11.11.2025), the stage of investigation, and the nature of the evidence, in light of those guidelines and the statutory discretion under Section 480 BNSS. Conclusions 2.4 Despite the seriousness of the alleged offence under Section 132 of the GST Act, the Court held that the circumstances of the case, viewed in light of the applicable bail parameters, justified grant of bail with stringent conditions. Issue 2: Necessity of continued custody in light of the nature and stage of investigation Interpretation and reasoning 2.5 The Court found that the case is 'mainly based on documentary evidence' and that the GST authorities had already conducted search of the business premises and seized the necessary documents. 2.6 The Court observed that the statement of the applicant and other witnesses 'seems to be completed', and that the respondent had 'already collected the documentary evidence from the possession of accused'. 2.7 It was noted that the applicant had duly responded to summons, appeared before the officers, and given statements, and that there was 'sufficient opportunity' with the respondent to interrogate the accused while in custody. 2.8 The Court observed that investigation in respect of GST transactions for the specified period is ongoing and may take time, but held that the 'physical presence of accused/applicant is not seems to be necessary for conducting investigation' further. Conclusions 2.9 The Court concluded that custodial interrogation was already completed, key documentary evidence had been collected, and, in these circumstances, further detention was not necessary for purposes of investigation. Issue 3: Risk of absconding, tampering with evidence, or influencing witnesses Legal framework as discussed 2.10 The Court expressly stated that, while dealing with a bail application, it must consider whether the accused, if not restricted, is likely to tamper with the course of further investigation, tamper with evidence, or intimidate or influence witnesses, and whether presence of the accused is necessary for further investigation. Interpretation and reasoning 2.11 The respondent expressed apprehension that release on bail could lead to absconding or tampering with evidence, but no prior criminal antecedents of the applicant were shown on record. 2.12 The Court recorded that the applicant is a permanent resident, had appeared in response to summons, had co-operated in the investigation so far, and, through a written pursis, assured continued co-operation. 2.13 The Court held that given these factors and the completion of seizure and recording of statements, the risk of tampering with evidence or fleeing from justice could be adequately addressed through 'stringent conditions'. Conclusions 2.14 The Court concluded that there was no demonstrated necessity to keep the applicant behind bars to prevent tampering or absconding, and that appropriate conditions (including bond, sureties, co-operation with investigation, travel restrictions, and contact details) would sufficiently mitigate any such risk. Issue 4: Effect of the nature of GST offences, absence of antecedents, and parity with similarly placed accused Interpretation and reasoning 2.15 The Court recorded that the 'power to prosecute the tax payer under GST Act are ancillary and incidental to the power to levy and collect Goods and Services Tax', indicating that prosecution is a means to secure compliance with tax collection. 2.16 It was noted that the offences under the GST Acts, 'subject to certain restrictions', are of a compoundable nature and that the offence in question is triable by the Magistrate's Court. 2.17 The Court took into account that no criminal antecedents were shown against the applicant and that directors of other related companies, whose statements were recorded in the same crime, 'are already released on bail', thereby invoking parity in treatment. 2.18 Personal circumstances, including the applicant being a permanent resident and a single mother, and her expressed readiness to co-operate, were also noticed as part of the overall assessment. Conclusions 2.19 The Court held that, viewed cumulatively-the ancillary and compoundable nature of the GST offence, absence of criminal antecedents, the applicant's co-operation, and parity with other similarly placed accused-the applicant was entitled to bail. 2.20 Bail was accordingly granted subject to conditions including execution of bond with sureties or provisional cash bail, non-tampering with evidence or witnesses, co-operation with investigation, appearance as and when called, surrender and regulated use of passport, restrictions on foreign travel without court permission, and disclosure and non-change of residential and contact details (including details of two nearest relatives) without prior intimation.