2025 (6) TMI 252 - HC - GST

Admission on bail after having spent only 13 days in custody - huge amounts of tax evasion - claiming fraudulent IGST refund - HELD THAT - The learned Trial Court in the opinion of this Court rightly noted that for the investigation in regard to allegations of evasion of GST claim of false Input Tax Credit and IGST refund the investigation agency has to only look at the records of the GST Department Bank apart from other material and ample power has been given to the Investigating Officer to seize the said records. It was further rightly observed that the respondent is a permanent resident of Delhi and nothing has been placed on record to show his previous involvement or that he is a habitual tax offender. On being pointedly asked it is informed that despite the fact that the investigation was taken up by the Department way back in the year 2020 no criminal complaint has been filed till date. Thus even otherwise had the respondent been in custody he would have been entitled for default bail on the department not completing the investigation. It is not alleged anywhere that the respondent pursuant to being admitted to bail had misused the liberty. Petition dismissed.

Summary

The Delhi High Court, through Justice Amit Mahajan, dismissed the Department's petition challenging the bail order dated 26.08.2020 granted by the Chief Metropolitan Magistrate to the respondent. The Department alleged large-scale tax evasion involving fraudulent input tax credit of Rs. 20 crores and IGST refund claims exceeding Rs. 10 crores by companies controlled by the respondent. The Trial Court admitted bail noting the respondent's judicial custody since 17.08.2020 and absence of any custodial interrogation request by the investigating agency.The Court emphasized that investigation primarily relies on GST Department and bank records, which the Investigating Officer is empowered to seize. The respondent had resigned from the accused companies prior to the GST Act's enforcement, supported by Form DIR 12 filed on 23.02.2017. The respondent is a permanent Delhi resident with no prior record of habitual tax offenses. Despite investigation commencing in 2020, no criminal complaint has been filed, entitling the respondent to default bail had he remained in custody. There was no allegation of bail misuse. Hence, the Court held the petition lacked merit and dismissed it.