2025 (12) TMI 1592 - HC - GST

Alleged clandestine cigarette supplies causing ?72 crore GST evasion: bail cancellation bid u/s132 rejected, bail continues.

Cancellation of bail under s.132 CGST Act was sought on the ground of alleged GST evasion of about Rs.72 crore through clandestine cigarette supplies and ... Cancellation of bail which was granted in the proceedings u/s 132 of the Central Goods and Services Act, 2017 - evasion of GST to the tune of approximately ₹72 crores by clandestine supply of cigarettes - HELD THAT:- The learned CMM appears to have failed to take a prima facie view of the allegations and given undue consideration to deposit of a paltry sum that pales in comparison to the actual scope of the offence, which is alleged to be around ₹72 crores. The learned CMM fell in error in granting bail at the nascent stage in a case of such nature, when the investigation was admittedly not complete and possibility of the accused tampering with evidence could not be ruled out. It is undisputed that financial offences are serious in nature and have wide repercussions on the economy of the nation. Economic offences are to be treated with a different approach as the same stem out of cool calculation and deliberate design with flagrant disregard for the interest of community at large. The Hon’ble Apex Court in the case of Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation [2013 (5) TMI 896 - SUPREME COURT] held that financial offences ought to be considered as grave and serious and have to be approached differently at the time of bail. Thus, the learned CMM made an error in taking an insouciant attitude towards the nature of the crime and treating the case as a routine one for grant of bail. Be that as it may, it is imperative to note that on being asked, it is stated that investigation is still not complete and even after a lapse of more than five years, no complaint has been filed against the respondent till date. Despite the fact that the investigation was taken up by the petitioner department way back in the year 2020, no criminal complaint has been filed till date. Even today, it is stated that the department is still in the process of filing the complaint - Although the learned CMM ought to have given more deference to the gravity of offence, the lackadaisical and lethargic approach of the department do not merit interference in the liberty granted to the respondent at this juncture. This Court finds no reason to cancel the bail granted to the respondent after more than five years - Petition dismissed. Issues: Whether the bail granted to the accused under proceedings initiated under Section 132 of the CGST Act should be cancelled in view of the alleged large-scale GST evasion and whether the trial court erred in granting bail at an early stage when investigation was incomplete.Analysis: The impugned order granted bail primarily relying on the accused's undisputed claim of depositing a sum towards GST, the absence of a departmental endorsement for further custodial interrogation, the accused's medical condition, and the fact that the complaint had not been filed with trial likely to be delayed. The gravity of alleged economic offences and the need for a prima facie appreciation of allegations at bail stage are relevant considerations, including risk of tampering with evidence and the wider public interest in economic offences. However, the prolonged delay in completing investigation and filing a complaint, absence of any material showing misuse of bail, and the prospect of default bail if custody had continued weigh against cancelling bail. The balance of these factors must account for both the serious nature of financial offences and the consequences of inaction by the investigating agency.Conclusion: Bail shall not be cancelled; the petition seeking cancellation of bail is dismissed and the bail granted earlier remains undisturbed in favour of the accused.Ratio Decidendi: Where investigation into a serious economic offence remains incomplete for an inordinate period and there is no material showing misuse of liberty or necessity of continued custody, delay and inaction by the investigating agency justify refusal to cancel an existing bail despite the grave nature of the allegations.