2025 (5) TMI 39 - HC - GST

Seeking grant of anticipatory bail - indulging in fake /bogus / non existent firms and indulged in fraudulently availing input tax credit and passed on inadmissible input tax credit on the strength of issuance of invoices without underlined supply of goods or service or both - HELD THAT - At the time of deciding the bail application the Court should refrain from appreciating the evidence. However considering the submissions made by the learned advocates for the respective parties and the fact and specific stand taken by the applicant to extend the benefit of parity as the co-accused is released on regular bail. Hence this Court has considered the material collect during the course of investigation with a view to examine the applicability of parity. The reference is required to be made in a cases of Tarun Kumar Vs. Asst. Director Directorate of Enforcement 2023 (11) TMI 904 - SUPREME COURT and Ramesh Bhavan Rathod vs. Vishanbhai Hirabhai Makwana 2021 (4) TMI 1276 - SUPREME COURT wherein the Hon ble Apex Court held that when deciding a bail application and extending the benefit of parity the Court has to examine the exact role attributed to the accused. If the accused played a similar role then the Court should extend the benefit of parity. Merely some words or any observation made in the order are not enough such approach is erroneous and inappropriate for considering the benefit of parity. As co-accused is released on regular bail the applicant is not entitled to claim parity in anticipatory bail. The object of anticipatory bail is that person should not be harassed or humiliated in order to satisfy the grudge or personal vendetta of the complainant. In present case no any such sort of allegation or bias is found out it is needless to say that order under Section 482 of the BNSS is not a passport to the commission of trial nor a shield against any serious accusation which adversely affects the society. Here duped and defrauded offence is not under the GST Act but offence of forgery under IPC/BNS is committed. Hence argument of learned counsel for the applicant that offence punishable under Section 132 is 5 years is not acceptable while larger societal interest is adversely affected and that extent of quantum of punishment is not a ground to allow the anticipatory bail. Conclusion - This Court has absolutely no doubt that if applicant is equipped with such an order before he is interrogated by the Police it would greatly harm the investigation and would impede the prospects of unearthing all the ramifications involved in the conspiracy. Having considered nature and seriousness of the charge prima facie involvement of accused and possibility of tempering with evidences it does not appear to be just and proper to exercise the discretion in favour of the applicant. The application for anticipatory bail is dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether anticipatory bail should be granted to the applicant accused in connection with FIR alleging offences under Sections 420, 465, 467, 468, 471 and 120B of the Indian Penal Code, 1860, relating to fraudulent availing and passing on of inadmissible input tax credit through bogus firms.

- Whether the applicant has been falsely implicated based solely on statements of co-accused without independent evidence.

- Whether custodial interrogation of the applicant is necessary for effective investigation.

- Whether the police have jurisdiction to file the complaint and investigate under IPC provisions in a case involving GST fraud.

- Whether the applicant can claim parity with co-accused who have been granted regular bail.

- The applicability of the principles governing anticipatory bail in serious economic offences involving large-scale fraud and forgery.

- Whether the nature and gravity of the offence justify denial of anticipatory bail at the preliminary stage of investigation.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Grant of anticipatory bail to the applicant accused

Relevant legal framework and precedents: The Court considered Section 482 of the BNSS (presumably the Code of Criminal Procedure equivalent), which deals with inherent powers of the High Court to prevent abuse of process and secure ends of justice, including anticipatory bail. The Court referred to Supreme Court decisions such as Mohammed Fasrin v. State, Pratibha Manchanda v. State of Haryana, and Vijay Madanlal Chaoudhary v. Union of India, which emphasize that anticipatory bail is not an absolute right and should be granted only in exceptional circumstances where the accused is prima facie not involved or is falsely implicated.

Court's interpretation and reasoning: The Court observed that the allegations are serious, involving a large-scale fraud of over Rs. 200 crore through creation of bogus firms and issuance of fake invoices to unlawfully avail input tax credit. The applicant is alleged to have handled billing and was actively involved in generating invoices and e-way bills without actual supply of goods. The investigation revealed recovery of incriminating materials such as laptops, mobile phones, and forged documents from co-accused, and WhatsApp chats linking the applicant to the conspiracy.

Key evidence and findings: Statements recorded under Section 70 of the CGST Act from co-accused accountants disclosed the modus operandi of generating fake invoices and e-way bills using multiple mobile numbers and laptops. Physical verification by CGST officers found that numerous firms did not exist at their declared business addresses. The applicant's involvement was established through recovered devices and digital evidence.

Application of law to facts: Given the prima facie involvement and the serious economic offence, the Court held that custodial interrogation of the applicant is necessary to uncover further evidence, identify other conspirators, and prevent tampering with evidence.

Treatment of competing arguments: The applicant contended that he was falsely implicated based on statements of co-accused without independent evidence and that no chargesheet or statement under Section 169 had been filed against him. The Court rejected this, noting that investigation is ongoing and reliance on co-accused statements is lawful to direct further inquiry. The applicant's argument that the offence falls under the CGST Act with limited punishment was dismissed because the complaint was filed under IPC for forgery and cheating, which are serious offences.

Conclusion: The Court refused anticipatory bail, emphasizing the necessity of custodial interrogation at this preliminary stage to protect the integrity of the investigation.

Issue 2: Jurisdiction of police to file complaint and investigate under IPC in GST-related fraud

Relevant legal framework and precedents: The Court considered that offences under IPC can be investigated by police even if related to GST fraud, particularly when offences like forgery and cheating are alleged, which fall outside the exclusive domain of the CGST Act.

Court's interpretation and reasoning: The Court rejected the applicant's contention that the DCB Police had no authority to file the complaint or investigate, since the complaint involved IPC offences and not solely CGST Act violations. The Court noted that police have jurisdiction to investigate offences punishable under IPC regardless of the GST nexus.

Key evidence and findings: The complaint originated from intelligence received from CGST authorities, but the police registered FIR under IPC sections. Investigation revealed use of forged documents and fictitious firms, which are criminal offences under IPC.

Application of law to facts: The Court held that the police were entitled to investigate the offences under IPC and the involvement of the applicant in the conspiracy.

Conclusion: The police had jurisdiction to investigate and file the complaint under IPC provisions.

Issue 3: Claim of false implication and absence of chargesheet against applicant

Relevant legal framework and precedents: The Court relied on the principle that anticipatory bail is not to be granted merely because the accused claims false implication, especially when investigation is ongoing. Reference was made to Mohammed Fasrin v. State, which holds that statements of co-accused guide investigation and are not conclusive proof of guilt or innocence.

Court's interpretation and reasoning: The Court observed that the chargesheet has not yet been filed against the applicant as investigation is in progress. Lack of mention in the chargesheet at this stage does not imply absence of involvement. The Court found the applicant's argument premature.

Application of law to facts: The Court held that the applicant's claim of false implication based on absence in the chargesheet or lack of statement under Section 169 was not a ground for anticipatory bail at this stage.

Conclusion: The applicant's contention was rejected as premature and unsubstantiated.

Issue 4: Necessity of custodial interrogation

Relevant legal framework and precedents: The Court referred to Supreme Court decisions including State Rep. by CBI v. Anil Sharma, Adri Dharan Das v. State of W.B., P. Chidambaram v. Directorate of Enforcement, and Central Bureau of Investigation v. Vikas Mishra, which emphasize the importance of custodial interrogation in economic offences to unearth the truth, trace diverted funds, and prevent tampering with evidence.

Court's interpretation and reasoning: The Court noted the complexity of the offence involving multiple fictitious firms, forged documents, and use of over 200 mobile numbers. Recovery of electronic devices and digital evidence from co-accused indicated a sophisticated conspiracy. Custodial interrogation of the applicant was deemed essential to identify other involved persons, recover evidence, and prevent destruction or tampering.

Application of law to facts: The Court held that granting anticipatory bail would jeopardize investigation and allow the applicant to tamper with evidence or influence witnesses.

Conclusion: Custodial interrogation was necessary and anticipatory bail was refused.

Issue 5: Parity with co-accused released on regular bail

Relevant legal framework and precedents: The Court relied on Tarun Kumar v. Asst. Director, Directorate of Enforcement and Ramesh Bhavan Rathod v. Vishanbhai Hirabhai Makwana, which hold that parity in bail can be granted only if the accused have similar roles and circumstances. Mere mention or observation in bail orders is insufficient; exact role and involvement must be considered.

Court's interpretation and reasoning: The Court found that the applicant's role was distinct and active in the conspiracy, unlike some co-accused who were released on regular bail. The applicant could not claim parity in anticipatory bail merely because co-accused were granted bail.

Application of law to facts: The Court examined the investigation material and concluded that the applicant's involvement was prima facie established and not comparable to co-accused released on bail.

Conclusion: Parity was not applicable to the applicant's anticipatory bail application.

Issue 6: Balancing individual liberty and public interest in anticipatory bail

Relevant legal framework and precedents: The Court referred to Pratibha Manchanda v. State of Haryana, which highlights the delicate balance between safeguarding individual rights and protecting public interest, especially in serious offences. It also cited Siddharam Satlingappa Mhetre v. State of Maharashtra and Jai Prakash Singh v. State of Bihar, emphasizing that anticipatory bail is an exceptional remedy and must be granted only when the accused is prima facie not involved or falsely implicated.

Court's interpretation and reasoning: The Court recognized the importance of personal liberty but emphasized that the larger societal interest in prosecuting serious economic crimes must prevail. The offence involved a large-scale fraud adversely affecting the national economy. The Court noted that anticipatory bail is not a right but a discretion to be exercised judiciously.

Application of law to facts: Considering the gravity of the offence, prima facie involvement of the applicant, and potential harm to investigation, the Court declined anticipatory bail.

Conclusion: The Court struck a balance in favor of public interest and denied anticipatory bail.

3. SIGNIFICANT HOLDINGS

- "The confessions of a co-accused gives a clue to the investigating authorities as to how to investigate the matter and against whom to investigate the matter. Thereafter, it is for the investigating officers to collect evidence against the said person who has been made by the co-accused."

- "The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white colour crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest."

- "The relief of Anticipatory Bail is aimed at safeguarding individual rights. While it serves as a crucial tool to prevent the misuse of the power of arrest and protects innocent individuals from harassment, it also presents challenges in maintaining a delicate balance between individual rights and the interests of justice. The tight rope we must walk lies in striking a balance between safeguarding individual rights and protecting public interest."

- "Parameters for grant of anticipatory bail in a serious offence are required to be satisfied and further while granting such relief, the court must record the reasons therefore. Anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been enroped in the crime and would not misuse his liberty."

- The Court held that custodial interrogation is an important tool in economic offences to trace diverted amounts, recover evidence, and prevent tampering, and anticipatory bail should not be granted at the preliminary stage when investigation is ongoing and involvement is prima facie established.

- The Court concluded that granting anticipatory bail to the applicant at this stage would adversely affect the prosecution's case and hamper investigation, and therefore, the application was dismissed.