The Allahabad High Court has, recently while granting bail to a GST accused, held that seriousness of the offences alone cannot be conclusive of the applicant’s entitlement to bail.
The aforesaid observation was made by the Tribunal when a bail application had been filed on behalf of the applicant, Subodh Kumar Garg, with a prayer to release him on bail in File No. DGGI/ARU/Gr.B/S. Traders/23/2021, ,under Sections 132(1)(c) of the Central Goods and Service Tax Act,2017 DistrictAgra, during pendency of trial.
The facts of the case were that the applicant was a proprietor of M/s Shree Traders, having its principal place of business at Araon Road Sirsaganj, Firozabad, apart from three other places of business at Manish Nagar Bodla Agra, Moja Kotta , Mathura and 41, Saryu Vihar, Kamla Nagar, Agra. And the firm of the applicant was engaged in business of trading of iron and scrap and being duly registered with the GST Department.
The applicant’s firm received goods from registered dealers after payment of GST and had also filed returns with GST Department. The returns from July 2017 to March 2018 could not be filed due to negligence of GST consultant firm of the applicant, which was closed with effect from December, 2022 and he applied for cancellation of GST registration on 2.2.2021 which was rejected by the Department. Thereafter he again applied on 31.1.2022 for cancellation of GST registration which was allowed on 8.4.2022.
During the pendency of the cancellation of application, the search in dispute was conducted by the DGGI, Regional Unit, Agra on 15.3.2022, wherein the applicant presented himself in response to summons dated 15.3.2022, his statements being recorded from night of 15.3.2022 to evening 16.3.2022 and thereafter an arrest memo being served upon him on 17.3.2022, followed by his arrest, without lodging any complaint.
The applicant stated in his statement that he purchased goods on proper Invoice, E-bill, etc., from duly registered suppliers. The application was made before Special C.J.M.Agra for taking the applicant in judicial custody for further investigation along with complaint alleging that applicant had availed input tax credit(I.T.C.) of Rs.8.76 corers and committed offence under section 132(1) (c) CGST Act, which is non bailable and cognizable offence, providing for five years maximum punishment.
With Ms. Pragya Pandey, the counsel for the applicant submitting that the entire case of the prosecution rests on the statement of the applicant recorded by the officials of DGGI , and further that the bail was rejected by the court below without application of mind, Per contra, the counsel for the opposite party, Shri Dhanjay Awasthi, vehemently opposed the bail application and submitted that the firm of the applicant had taken credit from 21 non existing firms whose GST registrations had been obtained by submitting false/ forged documents of amount of 87,645 lacs in GST as per section 29(3) of CGST Act 2017 , and further that the cancellation of the registrations of such firms shall not effect the liability of the applicant to pay tax and other dues.
The offence committed by the applicant being one which falls under section 132(1) (c) of CGST Act, which is cognizable and non bailable offence since he has availed illegal ITC. worth of Rs. 8.76 Crore, the counsel for the Revenue strongly argued that the applicant is thus not entitled to bail, keeping in view the seriousness of economic offence committed by him.
Hearing the opposing contentions of both the sides and perusing the materials available on record, the Allahabad High Court observed :
“The seriousness of the offences alone is not conclusive of the applicant’s entitlement to bail, as held by the Supreme Court inter alia in Sanjay Chandra vs. Central Bureau of Investigation”.
Thus granting bail to the applicant, Justice Siddharth ruled :
“Keeping in view the nature of the offence, argument advanced on behalf of the parties, evidence on record regarding complicity of the accused, larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of Dataram Singh Vs. State of U.P. and another reported in (2018)3 SCC 22 and recent judgement dated 11.7.2022 of the Apex Court in the case of Satendra Kumar Antil Vs. C.B.I., and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is thus allowed”.
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