2022 (3) TMI 546 - HC - GST

Seeking grant of bail - irregular availment of Input Tax Credit - purchases from the fake firms - offences under Sections 132 (1)(b) (C )(h) (L) read with Section (5) of CGST Act 2017 - HELD THAT - It is well-nigh settled that the provisions of bail are neither punitive nor preventive in nature. The gravity of the offence and the severity of punishment alone is not a factor to be considered while adjudicating the bail plea. There are several other aspects which are required to be considered simultaneously with the gravity of nature i.e. if there is any apprehension that if the accused will be released on bail he would hamper the prosecution evidence or would flee from justice or would not be readily available for the trial or otherwise hamper the course of smooth trial. Neither any apprehension has been shown by the counsel for the respondent nor any material has been made available from which an inference can be drawn regarding the aforesaid apprehension. The seriousness of the allegations or the availability of the material in respect thereof are not the only considerations for declining the bail. The case in which the petitioner is seeking bail is exclusively triable by the court of Magistrate. The case pertains to economic offence. The duped amount or tax evasion is fixed and calculated. It is well settled that the pre-conviction detention is not warranted by law. The petitioner is behind the bars in this matter since 19.11.2021. It is also well settled that at pre-conviction stage there is presumption of innocence. The object of keeping the person in custody is to ensure his availability to face the trial and to receive the sentence that may be passed. The detention is not supposed to be punitive or preventive; thus this court is of the considered view that since the accused is languishing in judicial custody his further incarceration would not serve any fruitful purpose. Thus this court deems it appropriate to enlarge the petitioner on bail. Bail application allowed.

Summary

Issues:
Bail application under Section 439 Cr.P.C. for accused-petitioner in custody for GST Act offences.

Analysis:
The accused-petitioner filed a criminal misc. bail application before the Rajasthan High Court concerning a case registered under Sections 132(1)(b), (C)(h), (L) read with Section 5 of the CGST Act, 2017. The petitioner was arrested by the Intelligence Officer of the Directorate General of GST Intelligence and sent to judicial custody. His regular bail application was dismissed by the Addl. Sessions Judge, leading to this application before the High Court.

The petitioner's counsel argued that all transactions were legitimate, with proper GST payments made, and all goods purchased were in compliance with rules. The petitioner's entity had paid taxes, submitted required forms, and followed GST regulations meticulously. The defense contended that the department's allegations of fake entities were baseless, as all suppliers were duly registered under the GST Act.

On the other hand, the GST Department vehemently opposed the bail plea, citing serious allegations of fake invoices and a substantial amount involved. The department highlighted previous instances where bail pleas in similar GST-related cases were rejected by a Coordinate Bench.

After hearing arguments from both sides and reviewing the material on record, the Court emphasized that bail provisions are not punitive but aim to ensure the accused's availability for trial. The Court noted that the case involved economic offenses, and the alleged amount could be recovered through appropriate proceedings. It was observed that the company/firm, not made an accused, could be held vicariously liable.

Considering the nature of the case, the Court found no grounds to believe that the accused, if released on bail, would obstruct justice or flee. The Court stressed that pre-conviction detention should not be punitive and that the accused had been in custody since November 2021. Therefore, the Court granted bail to the accused-petitioner, subject to certain conditions, including furnishing a personal bond and sureties for appearance before the trial Judge.

In conclusion, the High Court allowed the bail application under Section 439 Cr.P.C., noting that continued incarceration of the accused would not serve any useful purpose, as the presumption of innocence prevails at the pre-conviction stage.