2025 (7) TMI 133 - HC - GST

Seeking grant of bail - sale of tyres and tubes on prices lower than their values - evasion of tax - offence u/s 132(l)(a) (e) (f) and (I) read with Section 132(l)(i) 132(iv)(5) of the Central Goods and Services Tax Act 2017 - HELD THAT - Taking into consideration the facts and circumstances of the case and the precedents of the Hon ble Supreme Court in the matter of Vineet Jain 2025 (5) TMI 925 - SC ORDER Vishal Agarwal 2024 (10) TMI 1672 - SC ORDER (LB) Ashutosh Garg 2024 (8) TMI 189 - SC ORDER Ratnambar Kaushik 2022 (12) TMI 263 - SUPREME COURT and considering the fact that petitioner is in judicial custody since 04.04.2025 and that the charge-sheet has been filed against the petitioner on 27.05.2025. Even if it is taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132 the punishment provided is imprisonment which may extent to five years and fine. The petitioner has already undergone incarceration of almost two and half months and completion of trial any event would take some time. Further in a case of the present nature the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses due to which there can be no apprehension of tampering intimidating or Influencing. The trial of the case may take considerable time. Taking into consideration the Judgment of Hon ble Supreme Court in the case of Vineet Jain the arguments advanced by the learned counsel for both the parties and overall facts and circumstances of the case that the present petitioner is in custody since 4-4-2025. The petitioner is suffering from age related issues. Charge-sheet has already been filed against the petitioner. Without expressing anything on the merits/demerits of the case it is deemed just and proper to enlarge the petitioner on bail. The bail application under Section 483 BNSS is allowed and it is ordered that the petitioner Ankur Agrawal S/o Late Shri Naresh Chandra shall be enlarged on bail provided he furnishes a personal bond in the sum of Rs. 5, 00, 000/- along with two sureties of the like amount to the satisfaction of the trial Court and subject to fulfilment of conditions impsed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this bail application under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, arising from alleged offences under Sections 132(1)(a), (e), (f), (i) read with Sections 132(1)(i) and 132(4)(5) of the Central Goods and Services Tax Act, 2017, are as follows:

• Whether the petitioner, accused of tax evasion involving sale of tyres and tubes without proper invoicing and issuing invoices meant for different goods, is entitled to bail despite serious allegations involving substantial tax evasion amounting to Rs. 8.75 crore.
• Whether the nature of evidence (documentary and official witnesses) and the stage of trial (charge-sheet filed) justify grant of bail.
• Whether the petitioner's custodial detention is necessary to prevent tampering with evidence or influencing witnesses.
• Whether the precedents laid down by the Hon'ble Supreme Court and High Courts in similar GST and tax evasion cases support grant or denial of bail.
• The applicability of the maximum punishment prescribed under the relevant GST provisions and its impact on the bail decision.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Bail in Serious GST Offences Involving Tax Evasion

Relevant Legal Framework and Precedents:
The offences are under Section 132 of the Central Goods and Services Tax Act, 2017, which prescribe punishment of imprisonment up to five years and fine for tax evasion and related fraudulent activities. The bail application is under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The Court considered authoritative precedents including Vineet Jain v. Union of India (2025), Vishal Agarwal v. Union of India (2024), Ashutosh Garg v. Union of India (2024), and Ratnambar Kaushik v. Union of India (2022), which emphasize that in cases where the maximum sentence is limited and the prosecution is documentary in nature, bail should ordinarily be granted unless extraordinary circumstances exist.

Court's Interpretation and Reasoning:
The Court noted that the maximum punishment prescribed is five years, which is relatively moderate. The petitioner has been in custody since 04.04.2025 and the charge-sheet was filed on 27.05.2025, indicating that the trial is at an early stage but progressing. The Court observed that the prosecution's evidence is primarily documentary and electronic, with official witnesses, reducing the risk of witness tampering or intimidation. The Court relied heavily on the Supreme Court's ruling in Vineet Jain, where bail was granted in similar circumstances, underscoring that denial of bail at all levels was unwarranted in cases based on documentary evidence with no antecedents.

Key Evidence and Findings:
The petitioner is accused of selling motorcycle tyres and tubes using invoices meant for cycles and at prices lower than actual values, causing tax evasion of Rs. 8.75 crore. The charge-sheet is voluminous, indicating a complex trial likely to be prolonged. The petitioner suffers from age-related health issues, which was also a factor considered by the Court.

Application of Law to Facts:
Applying the principles from Vineet Jain and related precedents, the Court found that the petitioner's custodial detention was not necessary to secure the trial or prevent interference with evidence. The nature of evidence (documentary and official witnesses) and the absence of any antecedents or risk factors favored bail. The Court balanced the statutory punishment with the petitioner's incarceration period and trial duration, concluding that further custody was not justified.

Treatment of Competing Arguments:
The respondent opposed bail, emphasizing the gravity of the offence, substantial tax evasion amount, and the possibility of misuse of bail to influence witnesses or tamper with evidence. The respondent relied on Supreme Court decisions in Y.S. Jaganmohan Reddy v. CBI and Nimmagadda Prasad v. CBI, which uphold stringent bail conditions in serious economic offences. However, the Court distinguished these precedents on facts, noting that those cases involved different factual matrices and risks. The Court also distinguished Ashish Goyal and Dheeraj Singhal cases cited by the respondent, holding that the present facts do not warrant denial of bail.

Conclusions:
The Court concluded that the petitioner is entitled to bail considering the limited punishment, nature of evidence, no risk of witness tampering, and the petitioner's health and custody period. Bail was granted with stringent conditions to ensure cooperation and presence during trial.

Issue 2: Conditions and Safeguards Imposed on Bail

Relevant Legal Framework and Precedents:
Granting bail in economic offences often includes conditions to prevent flight risk and ensure trial attendance. The Court imposed conditions consistent with established jurisprudence, including personal bond, sureties, and restrictions on travel.

Court's Interpretation and Reasoning:
The Court ordered the petitioner to furnish a personal bond of Rs. 5,00,000 and two sureties of the same amount. Conditions included prohibition on leaving the country without prior permission, surrender of passport, and mandatory cooperation and attendance at trial hearings. The Court emphasized that failure to comply would empower the prosecution to seek cancellation of bail.

Application of Law to Facts:
These conditions were tailored to mitigate any risk of absconding or interference with the trial, balancing the petitioner's right to liberty with the interest of justice.

Conclusions:
The Court's imposition of conditions reflects a calibrated approach to safeguard the trial process while granting bail.

3. SIGNIFICANT HOLDINGS

The Court held:

"These are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extraordinary circumstances."

"Even if it is taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132, the punishment provided is imprisonment which may extend to five years and fine."

"The evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses, due to which there can be no apprehension of tampering, intimidating or influencing."

"Without expressing anything on the merits/demerits of the case, I deem it just and proper to enlarge the petitioner on bail."

Core principles established include that in GST-related offences where the maximum punishment is limited to five years and the prosecution case is documentary in nature with official witnesses, bail should ordinarily be granted unless exceptional circumstances exist. The Court reaffirmed that prolonged pre-trial detention is not justified when the trial is likely to be lengthy and the accused has already undergone substantial incarceration.

The final determination was to allow bail subject to stringent conditions ensuring the petitioner's presence and cooperation during trial, thereby balancing the rights of the accused and the interests of justice.