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2025 (5) TMI 919 - HC - GSTSeeking grant of pre-arrest bail - bailable or non-bailable offence - fraudulent availment of Input Tax Credit (ITC) - protection of the right to life and liberty under Article 21 of the Constitution - HELD THAT - It is an admitted position that the petitioner appeared before the Investigating Officer after obtaining the order of interim pre-arrest bail though initially he tried to appear through his engaged counsel after receiving the Notice under Section 70 of the CGST Act. Further it is seen that after the preliminary investigation and analysis of the GST Returns from the available data it was found that prima facie the petitioner filed ineligible ITC amounting to approximately Rs. 3.42 Crores during the relevant financial period which were predominantly based on invoices received from mainly two entities namely M/S Nilima Hardware and M/S P.S Enterprise. It is also an admitted fact that after obtaining the order of interim pre-arrest bail the petitioner appeared before the Investigating Officer and extended his co-operation in further investigation of this case - However as submitted by the learned Standing Counsel GST it is seen from the Case Diary that the petitioner did not extend his full co-operation in the preliminary investigation made by the Office of the GST. But presently there cannot be any situation or circumstances to hold that there is any apprehension of arrest of the present petitioner when admittedly the case falls under the bailable offence and the ineligible ITC amounts to approximately Rs. 3.42 Crores which is less than Rs. 5 Crores. The present anticipatory bail application is not maintainable in the present form and accordingly the same stands rejected at this stage with a direction to the present petitioner to extend his full cooperation in the further investigation of the case. Conclusion - The anticipatory bail application is not maintainable at the current investigative stage the offence is bailable and the petitioner had no reasonable apprehension of arrest. This anticipatory bail application stands disposed of.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Entitlement to Pre-Arrest Bail under Section 482 of BNSS, 2023 Legal framework and precedents: Section 482 of BNSS, 2023 confers inherent powers on the High Court to grant anticipatory bail in appropriate cases. The CGST Act, 2017 governs offences related to goods and services tax, including fraudulent availment of Input Tax Credit (ITC). The Supreme Court in Radhika Agarwal clarified that anticipatory bail can be granted when there is a reasonable apprehension of arrest, even before FIR registration. The Court emphasized protection of the right to life and liberty under Article 21 of the Constitution. Court's interpretation and reasoning: The Court examined whether the petitioner had a reasonable apprehension of arrest. It was noted that the petitioner initially sought to appear through counsel upon receipt of a Section 70 notice but was not allowed. After obtaining interim pre-arrest bail, the petitioner personally appeared and cooperated with the investigation. The Court found no circumstances indicating imminent arrest, especially since the offence was bailable. Key evidence and findings: The petitioner's cooperation post-interim bail, the issuance of a Section 70 notice (summoning for documents), and the absence of any arrest or formal FIR were significant. The investigation revealed alleged ineligible ITC of Rs. 3.42 Crores, less than the Rs. 5 Crores threshold for non-bailable offences under the CGST Act. Application of law to facts: Since the offence was bailable and the petitioner had cooperated, the Court held that the anticipatory bail application was not maintainable at this stage. The absence of arrest or formal FIR meant no immediate threat to liberty requiring anticipatory bail protection. Treatment of competing arguments: The petitioner argued the need for anticipatory bail to secure his liberty and cooperation. The respondent contended that the petitioner was not cooperating fully and that anticipatory bail was premature. The Court balanced these views, noting partial cooperation but emphasizing the bailable nature of the offence and lack of arrest threat. Conclusion: The Court rejected the anticipatory bail application as not maintainable at this stage, vacated the interim bail order, and directed full cooperation in investigation. Issue 2: Classification of the Offence as Bailable or Non-Bailable Legal framework and precedents: Under the CGST Act, offences involving tax evasion exceeding Rs. 5 Crores are non-bailable, while lesser amounts attract bailable offences. The Court considered this threshold in light of the alleged Rs. 3.42 Crores ineligible ITC. Court's interpretation and reasoning: The Court noted that the alleged tax evasion was below Rs. 5 Crores and thus constituted a bailable offence. This classification influenced the Court's view that anticipatory bail was not necessary to protect the petitioner's liberty. Key evidence and findings: The investigation and GST return analysis indicated Rs. 3.42 Crores of ineligible ITC, primarily based on invoices from two entities. Application of law to facts: Since the offence was bailable, the Court reasoned that the petitioner could be granted bail as a matter of right upon arrest, reducing the need for anticipatory bail. Treatment of competing arguments: The petitioner highlighted the bailable nature to support bail, while the respondent argued the gravity of the offence. The Court sided with the petitioner's position based on the statutory threshold. Conclusion: The offence was held to be bailable, diminishing the justification for anticipatory bail at this stage. Issue 3: Applicability of Precedents on Anticipatory Bail in Economic Offences Legal framework and precedents: The Court examined the Supreme Court's ruling in P. Chidambaram v. Directorate of Enforcement, which dealt with economic offences and anticipatory bail, and the recent Radhika Agarwal judgment that clarified anticipatory bail principles under GST laws. Court's interpretation and reasoning: The Court found that the P. Chidambaram judgment, while authoritative, dealt with more serious economic offences and was not directly applicable to the present facts. The Radhika Agarwal judgment was more pertinent, emphasizing anticipatory bail's protective function and that it can be granted even before FIR registration if apprehension of arrest is reasonable. Key evidence and findings: The Court noted that the petitioner's apprehension was not based on vague allegations but on a notice under Section 70 and ongoing investigation without arrest. Application of law to facts: Applying these precedents, the Court concluded that anticipatory bail is a discretionary remedy and must be granted based on the nature of the offence and the factual matrix. Here, the offence was bailable, and no arrest was imminent. Treatment of competing arguments: The petitioner relied on these precedents to argue for anticipatory bail, while the respondent emphasized the need for investigation without interference. The Court balanced the competing interests, focusing on cooperation and the bailable nature of the offence. Conclusion: The precedents supported the view that anticipatory bail is not an automatic right and must be considered contextually; here, denial was appropriate. Issue 4: Cooperation of the Petitioner with Investigation and Its Impact on Bail Legal framework and precedents: Cooperation with investigation is a relevant factor in bail considerations. The Court referred to the case diary and statements recorded by the Investigating Officer. Court's interpretation and reasoning: The Court acknowledged that the petitioner initially attempted to appear through counsel but was not accepted. After interim bail, he personally appeared and cooperated. However, the respondent alleged incomplete cooperation and non-disclosure of documents. Key evidence and findings: The case diary indicated partial cooperation but also noted gaps. The petitioner's willingness to cooperate post-interim bail was undisputed. Application of law to facts: The Court found that while full cooperation is desirable, the petitioner's cooperation post-interim bail mitigated concerns. The absence of arrest threat and bailable nature of offence further reduced the need for anticipatory bail. Treatment of competing arguments: The petitioner emphasized his cooperation and willingness to continue cooperating. The respondent stressed incomplete cooperation. The Court directed the petitioner to extend full cooperation going forward. Conclusion: Cooperation was a positive factor but insufficient to justify anticipatory bail given the overall circumstances. Issue 5: Maintainability of Anticipatory Bail Application Post-Notice under Section 70 of CGST Act Legal framework and precedents: Section 70 of the CGST Act empowers officers to summon persons for documents or information. Arrest under the Act requires compliance with Section 69. The Supreme Court in Radhika Agarwal clarified that anticipatory bail applications can be filed even before FIR registration if apprehension is reasonable. Court's interpretation and reasoning: The Court observed that issuance of a Section 70 notice alone does not justify apprehension of arrest. Arrest can only be made after following procedural safeguards under Section 69. The petitioner's anticipatory bail application filed after the notice was premature. Key evidence and findings: The petitioner was summoned under Section 70, and no arrest had been made. The respondent argued that anticipatory bail was not maintainable at this stage. Application of law to facts: The Court held that anticipatory bail application filed only after issuance of Section 70 notice, without arrest or FIR, is not maintainable if no reasonable apprehension of arrest exists. Treatment of competing arguments: The petitioner argued for anticipatory bail to secure liberty and cooperation. The respondent submitted that investigation must proceed without interference and anticipatory bail was premature. Conclusion: The anticipatory bail application was held not maintainable merely on the basis of a Section 70 notice. 3. SIGNIFICANT HOLDINGS "It is an admitted position that the petitioner appeared before the Investigating Officer after obtaining the order of interim pre-arrest bail... the ineligible ITC amounts to only Rs. 3.42 Crores which is admittedly less than Rs. 5 Crores and prima facie it is seen that the case is of bailable offence." "There is no other circumstances brought by the present petitioner for apprehending arrest in connection with this case... presently, there cannot be any situation or circumstances to hold that there is any apprehension of arrest of the present petitioner when admittedly the case falls under the bailable offence." "The present anticipatory bail application is not maintainable in the present form and accordingly, the same stands rejected at this stage with a direction to the present petitioner to extend his full cooperation in the further investigation of the case." Core principles established include:
Final determinations on each issue were that the anticipatory bail application was not maintainable at the current investigative stage, the offence was bailable, and the petitioner had no reasonable apprehension of arrest. Consequently, the anticipatory bail was rejected, and the interim bail order vacated, with a direction for full cooperation in investigation.
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