Confession of Co-Accused shall be Considered in Economic Offences: Allahabad HC rejects Bail to GST Fraud Accused [Read Order]

In a recent ruling, the Allahabad High Court refused to grant bail to an accused in the GST (Goods and Services Tax) fraud. The court noted the apex court ruling that the confession of a co-accused can be taken into account while deciding bail applications in economic offences.

The bench observed that “With respect to economic offences, there are several decisions of

the Supreme Court, wherein the Apex Court has held that the statement of co-accused as well as confessional statements are required to be considered while considering bail application of an accused.”

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While hearing two bail applications filed by the applicant Kunal Mehta alias Goldee in connection with Case Crime Nos. 203 and 255 of 2023, under Sections 420, 467, 468, 471, and 120B of the IPC, the court rejected the plea for bail. The applicant is accused in a multi-crore GST fraud involving the registration of fake firms using forged Aadhaar and PAN cards.

The applicant contended that he was not named in the FIR and that his alleged involvement surfaced only through the confessional statement of co-accused Arvind Kumar Yadav. He argued that such confessions are not admissible as evidence and that no recovery was made from him.

The counsel of the petitioner, relied on the Supreme Court's judgment in Sanjay Chandra v. CBI, stating the principle that continued detention after filing of the charge sheet is unwarranted.

The state or the defendant relied on judgement in  Rajiv Jindal v. State of U.P., where similar bail applications were previously considered. The AGA submitted that the documents with regard to fake GST Firm have been recovered from the applicant. From the aforesaid, the court got a clear view that the applicant is also involved in getting benefit of GST after registration of a fake firm.

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Further, the bench rejected the submissions of the petitioner, citing the recovery of documents pertaining to a fake GST firm from the applicant's possession and noted the seriousness of economic offences that impact the financial fabric of society.

The Court observed a landmark ruling in Pulukuri Kotayya v. King Emperor, to clarify the admissibility of confessions under Section 27 of the Indian Evidence Act. The provision allows for the admissibility of any information given by an accused in custody that leads directly to the discovery of a fact, distinguishing such information from a general confession, which is otherwise inadmissible under Sections 25 and 26.

In the present case, after the arrest of two co-accused based on a tip-off, police discovered an office used for fraudulent activities, where electronic devices and fake documents were recovered. These findings, according to the Court, were the result of disclosures made during custodial interrogation and thus fell within the scope of admissible evidence under Section 27.

While acknowledging the general rule of "bail is the rule, jail is the exception", the bench of Justice Manju Rani Chauhan held that economic offences, especially those involving white-collar crime and large-scale fraud, form a valid exception. The involvement of a huge money trail and the use of forged identities to claim GST benefits constituted a grave economic offence that warranted custodial interrogation and justified the denial of bail.

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The Court also noted that the applicant’s case was not distinguishable from those of other accused whose bail had already been rejected in Rajiv Jindal  v. State of U.P .

With regards to citing the Sanjay Chandra v. CBI, the bench observed that merely citing the period of detention was insufficient ground for bail, particularly when the offence in question posed a serious threat to the economic interests of the nation. It observed that such precedent is not applicable in the present case.

Accordingly, the Court dismissed both bail applications filed by Kunal Mehta alias Goldee.

To Read the full text of the Order CLICK HERE

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