Bail granted for alleged availment/passing of fake ITC to avoid prolonged detention beyond the statutory period

[CA Bimal Jain]

The Hon’ble Rajasthan High Court in the case of GAURAV KAKKAR S/O SHRI KISHAN LAL KAKKAR VERSUS DIRECTORATE GENERAL OF GST INTELLIGENCE, JAIPUR ZONAL UNIT - 2023 (2) TMI 978 - RAJASTHAN HIGH COURT has granted bail to the assessee in the matter of alleged creation of fake firms for availment and passing of fake/ ineligible Input Tax Credit (“ITC”) of INR 19.65 crores. Held that, the trial is expected to be prolonged and if the bail is not granted, the period in judicial custody for the assessee may surpass the maximum punishment of five years.

Facts:

Gaurav Kakkar (“the Petitioner”) was arrested for offence under clauses (c), (f), (k) and (l) of Section 132(1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) on November 4, 2022 for alleged creation of fake firms for availing and passing of ineligible ITC to facilitate existing beneficiary firms, to the tune of INR 19.65 crores based on fake invoices.

The Petitioner contended that the Petitioner has falsely been implicated and the arrest was made without determining the tax liability and by wrongfully calculating the alleged ITC availed, based on frivolous grounds. Further, there is no risk of tampering with evidence or influencing witnesses as the challan of the case was already presented, therefore the Petitioner should be granted bail as it would serve no useful purpose to keep them in jail.

The Revenue Department (“the Respondent”) contended that the Petitioner is alleged to be the mastermind behind creating fake firms for the purpose of fraudulently claiming ITC through false invoicing and that the evidence collected supports this and hence, the bail application should be rejected.

Issue:

Whether the Petitioner be granted bail as challan was already presented?

Held:

The Hon’ble Rajasthan High Court in GAURAV KAKKAR S/O SHRI KISHAN LAL KAKKAR VERSUS DIRECTORATE GENERAL OF GST INTELLIGENCE, JAIPUR ZONAL UNIT - 2023 (2) TMI 978 - RAJASTHAN HIGH COURT  held as under:

• Observed that, given the extensive investigation and evidence gathered, the trial is expected to be lengthy, and if bail is denied, the defendant's time in judicial custody may exceed the maximum sentence of five years.
• Relied on the judgment of the Hon’ble Supreme Court in the matter of VINAY KANT AMETA VERSUS UNION OF INDIA - 2022 (7) TMI 1106 - SC ORDER wherein, the accused was directed to deposit INR 200 crores as a condition for grant of bail.
• Granted bail to the Petitioner with a condition to deposit INR 3 crores before the Respondent.
• Directed that the Petitioner be released on bail, provided, the Petitioner executes a personal bond in a sum of INR 2,00,000/- with two sureties of INR 1,00,000/- each for its appearance before the court for every hearing and whenever called upon to do so till the end of the trial.
• Directed the trial court to take receipt of the deposition of INR 3 Crores before attesting the bail bonds.

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