Deposit of ₹5 Crore Cannot Convert Non-Bailable GST Offence into Bailable, but Bail can be Granted: Rajasthan HC [Read Order]
The Court observed that the co-accused had been granted bail by higher courts, the accused had already deposited ₹5 crore in keeping with the bail decision, therefore the same need not be cancelled.
The Rajasthan High Court has held that a deposit of ₹5 crore cannot change the statutory nature of a non-bailable offence under the GST ( Goods and ServicesTax ) Act into a bailable one, however the bail can be granted. The Court refused to cancel bail granted to the accused.
A bail cancellation application was filed by the Union of India against Arun Jindal, who was accused of huge GST evasion amounting to ₹9.39 crore through clandestine supply of iron ingots without issuance of invoices.
The prosecution alleged that over 1.49 crore kilograms of goods were supplied using fake invoices and e-way bills, resulting in substantial loss to the public exchequer.
The accused was also charged with multiple clauses of Section 132 of the Central Goods and Services Tax Act, 2017, offences involving tax evasion exceeding ₹5 crore are classified as cognizable and non-bailable.
The Department challenged the trial court’s bail order, arguing that it was legally flawed as bail had been granted on the accused’s willingness to deposit ₹5 crore.
It was contended that the trial court wrongly assumed that partial deposit could bring the case within the compounding framework under Section 138 of the CGST Act, making the offence bailable.
The court noted Sections 132 and 138 of the CGST Act. It held that deposit of any amount does not alter the classification of the offence.
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The bench clarified that where alleged tax evasion exceeds ₹5 crore, the offence remains non-bailable and non-compoundable, irrespective of any partial payment made during investigation or trial.
The bench said that “The provisions outlined in section 132 of the act clearly specify that if the tax violation amount is up to Rs.5 Crores, the offence is non-cognizable. However, once the violation exceeds Rs.5 Crores, the offence becomes both cognizable and non- bailable. In this case, the deposit of Rs.5 Crores from an allegedly evaded Rs.9,39,79,589/- does not alter the classification of the offence as either non-cognisable or bailable.”
“Additionally, under section 138 of the act, tax evasion up to 5 crores is compoundable, whereas amounts above 5 crores are not compoundable. Therefore, the analogy used by the trial court is flawed and cannot justify granting bail to the respondent” said the bench of Justice Praveer Bhatnagar.
The Rajasthan Court observed that the co-accused had been granted bail by higher courts, the accused had already deposited ₹5 crore in keeping with the bail decision, the Act's maximum sentence was five years, and there was no accusation of witness tampering or misuse of liberty.
Accordingly, the bail cancellation application by the department was dismissed.Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
