2025 (12) TMI 318 - HC - GST

Bail Granted in ?40 Crore GST Evasion Case Citing Documentary Evidence, Low Tampering Risk and Trial Delay

Lokesh @ Lokesh Hasija Versus Union Of India Through Director General, G.S.T. Intelligence

HC allowed the bail application of the accused in a GST evasion case involving alleged tax fraud exceeding ?40 crores. Noting that the prosecution is ... Seeking release of the applicant on bail - GST evasion in the tune of more than 40 crores - entire prosecution case is based on documentary evidence - HELD THAT:- 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 'The petitioner has already undergone incarceration for more than four months and completion of trial, in any event, would take some time. 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.' The application is allowed to be released on bail subject to fulfilment of conditions imposed - bail application allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the applicant accused of offences under Section 132(1)(b) and 132(1)(i) of the GST Act, 2017, alleged to involve GST fraud of about forty crores, is entitled to grant of bail. 2. ISSUE-WISE DETAILED ANALYSIS 2.1 Bail in respect of alleged GST fraud under Section 132(1) of the GST Act, 2017 Legal framework (as discussed) 2.1.1 The alleged offences fall under Section 132(1)(b) and 132(1)(i) of the GST Act, 2017, which provide a maximum sentence of five years' imprisonment with fine. The offences are triable by a Magistrate. 2.1.2 The Court referred to the decisions of the Supreme Court in Ratnambar Kaushik v. Union of India and Vineet Jain v. Union of India, where bail was granted in GST evasion matters considering factors such as the maximum sentence, period of incarceration, completion of investigation, and documentary nature of evidence. Interpretation and reasoning 2.1.3 The Court noted that, although the case involves an alleged GST fraud of about forty crores, the statutory maximum punishment is only up to five years, and the matter is triable by a Magistrate. 2.1.4 It was observed that investigation has been completed and a complaint has been filed, and the entire prosecution case is based on documentary evidence, which implies that the trial is likely to take considerable time to conclude. 2.1.5 The Court took into account that the applicant is in custody since 02.10.2025 (about two months) and has no criminal history apart from the present case. 2.1.6 The Court recorded that the prosecution opposed bail but did not dispute the factual aspects advanced on behalf of the applicant regarding maximum sentence, period of custody, completion of investigation, documentary nature of evidence, and lack of criminal antecedents. 2.1.7 Relying on Ratnambar Kaushik, the Court applied the principle that where the maximum punishment is five years, investigation is complete, the accused has undergone a substantial period of incarceration, and the evidence is essentially documentary and electronic with official witnesses, there is minimal apprehension of tampering, thus favouring grant of bail. 2.1.8 Referring to Vineet Jain, the Court emphasized the Supreme Court's observation that in prosecutions under Section 132(1) of the CGST Act, where the maximum sentence is five years, chargesheet is filed, the case is triable by a Magistrate, the evidence is documentary, and there are no antecedents, bail ought ordinarily to be granted unless there are extraordinary circumstances. 2.1.9 On these analogies, the Court inferred that, in similar factual matrices under Section 132(1) of the CGST/GST Act, the normal rule is to enlarge the accused on bail, and there was nothing on record to suggest any extraordinary circumstance to deny bail in the present matter. Conclusions 2.1.10 The Court held that, considering the limited maximum sentence, the applicant's period of incarceration, the completion of investigation and filing of complaint, the documentary nature of the prosecution evidence, the absence of criminal history, and the guidance from the Supreme Court in Ratnambar Kaushik and Vineet Jain, the applicant is entitled to be released on bail. 2.1.11 The bail application was allowed, and the applicant was ordered to be released on personal bond and sureties, subject to conditions relating to appearance before the trial court, non-tampering with evidence or witnesses, and abstaining from criminal or anti-social activity, with liberty to the prosecution to seek cancellation of bail in case of breach of conditions.