INDERJIT SINGH, J.

Vinod S. Bhardwaj, Adv. for the Petitioner. Sunish Bindlish, Standing Counsel for the Respondent.

JUDGEMENT

Inderjit Singh, J. – Petitioner has filed this second petition under Section 439 of the Code of Criminal Procedure, 1973 for grant of regular bail in a complaint case bearing No.COMA-137 dated 13.11.2018, titled as ‘Shankar Prasad Sarma Versus MICA Industries and others’, under Section 132 of the CGST Act, 2017 read with Section 10 of the IGST in exercise of the powers conferred under Section 69 of the CGST Act, 2017.

2. Notice of motion was issued. Learned counsel appeared and filed a reply on behalf of the respondent-State and contested this petition.

3. I have heard learned counsel for the petitioner as well as learned counsel for the respondent and gone through the record.

4. Perusal of record shows that there are serious allegations against the present petitioner, who is the main accused, that he alongwith co-accused, by falsely showing bogus billing etc., adjusted the amount without any actual transportation of the goods or sale of goods etc. Only paper transactions were done and the accused have wrongly claimed the relief of more than Rs. 80 crore. The case is at preliminary stage.

5. In State of Bihar and Another v. Amit Kumar @ Bacha Rai, 2017(3) R.C.R. (Criminal) 690, the Hon’ble Supreme Court has held that the accused charged with economic offence of huge magnitude and is alleged to be the kingpin of crime, is not entitled to the benefit of bail.

6. Keeping in view the serious nature and gravity of the offence and in view of the fact that the petitioner-accused has been charged with economic offence of huge magnitude, I do not find it a fit case where the petitioner is entitled to the benefit of regular bail.

7. Therefore, finding no merit in the present petition, the same is dismissed.

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VEVEK PURI, J.

R.S. Rai, Sr. Adv. Rohit Gupta, Piyush Gupta, Ms. Amandeep Kaur Sabharwal, Hemant Bajaj, and Amar Partap Singh, Advs. for the Petitioner. T.K. Joshi, and Ram Pal, Advs. for the Respondent.

ORDER

Vivek Puri, J. – The present petition is for grant of regular bail to the petitioner who was arrested on 07-10-2019 under section 69 read with section 132 of the Central Goods and Services Tax Act, 2017 (for short, ‘the Act’).

2. Briefly, the allegations against the petitioner are to the effect that he alongwith Gulshan Dhingra and others were involved in the business of generation and selling of fake tax invoices without supplying the goods through various firms/companies. These firms/companies were either under their control or were created by them in the name of  their employees or known persons. The input tax credit has been availed by the said firms/companies on the basis of fake invoices issued by various non-existent firms/companies. By generating and selling fake invoices, the accused have facilitated irregular availment and utilization of input tax credit by various entities leading to substantial and  wrongful loss to the government revenue. Accordingly, the arrest of the petitioner was effected on 07-10-2019 on the  allegation that by creating fake invoices, liability to the tune of Rs. 127 crores has been created for the government.

3. I have heard learned counsel for the parties and perused the paper book.

4. Learned senior counsel on behalf of the petitioner has argued that at the time of arrest and production in the Court, only police remand of the petitioner was sought and as such confining him in further custody is not required. The complaint has already been presented and no notice under section 74 of the Act has been issued for determination of the tax. Furthermore, as per the allegations in the complaint, the evasion to the tune of Rs. 13 crores has been mentioned qua M/s. Kwality Limited pertaining to the petitioner.

5. On the contrary, it has been contended by the learned counsel for the respondent that merely because the accused has been remanded to judicial custody, it cannot be said that he becomes entitled to bail. There is no absolute bar to arrest and launch prosecution before adjudication or assessment or before issuance of any prior notice to the petitioner. Furthermore, the petitioner is also the king-pin and other concerns, as mentioned in the complaint, are under the control of the petitioner.

6. The allegations against the petitioner are serious and magnitude of fraud is to the extent of Rs. 127 crores. It is to early to conclude that arrest can’t be effected or prosecution can’t be launched without issuing notice under section 74 of the Act particularly when the power of arrest has been given under section 69 of the Act. Furthermore, merely because no police remand of the petitioner was sought and he has been remanded to judicial custody, it cannot be construed as a circumstance which may entitle him to be released on bail. The allegations against the petitioner are with regard to commission of economic offence of high magnitude and in this regard it will be appropriate to refer to the decision rendered by the Supreme Court in Nimmagadda Prasad v. Central Bureau of Investigation 2013 (3) SCC (Criminal) 575, wherein it has been held as under:—

“28. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences, affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”

7. Furthermore, in the aforesaid decision and also in Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation 2013 (3) R.C.R. (Criminal) 108it has been held that while granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tempered with, the larger interests of the public and the State and other similarly considerations.

8. In the instant case, there are serious allegations against the petitioner that fake invoices of approximately Rs. 931 crores involving GST of approximately Rs. 127 crores without movement of goods have been issued and input tax credit has been availed.

9. Keeping in view the entire facts and circumstances of the case, no justified ground is made out to grant concession of bail to the petitioner.

10. Dismissed.

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A.J. DESAI, J.

N.D. Nanavaty, Sr. Adv. and Chetan K. Pandya for the Applicant. Ms. Krina Calla, APP and Ankit Shah for the Respondent.

ORDER

1. This application is filed under Section 439 of the Code of Criminal Procedure for regular bail in connection with File No.DGGI/AZU/GR.D/12(4)-30/2019-20 registered with Directorate General of GST Intelligence, Zonal Unit, Ahmedabad for the offences punishable under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax Act, 2017.

2. Pursuant to the notice issued by this Court, learned Standing Counsel Mr. Ankit Shah has appeared for respondent No.2 and has opposed grant of any relief as prayed for.

3. Mr. N.D. Nanavaty, learned Senior Counsel appearing with Mr. Chetan K. Pandya, learned advocate appearing for the applicant, on instructions, states that the applicant is ready and willing to file an undertaking to the effect that he shall not transfer or alienate or in any manner create third party rights over those immovable properties which belong to him and shall also supply the details of all the immovable properties belonging to the applicant to the Directorate General of GST Intelligence, Zonal Unit, Ahmedabad. He further states that the immovable properties referred to in the undertaking shall not be transferred or alienated in any manner to third party till the authority established under the Central Goods and Services Tax Act, 2017 ascertain the amount of Goods and Services Tax, if any, levied against the applicant. He would further submit that considering the nature of offence, the applicant may be enlarged on regular bail by imposing suitable conditions. GST offender Taxpayer

4. The learned APP as well as learned Standing Counsel Mr. Ankit Shah oppose the grant of bail looking to the nature and gravity of offences.

5. Learned advocates appearing on behalf of the respective parties do not press for further reasoned order.

6. Having heard learned advocates appearing for the parties and after perusing the material collected so far revealed following aspects are considered:—

(i)		The applicant is facing charges under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax Act, 2017, for which maximum sentence is of five years.
(ii)		The applicant is arrested on 21.07.2019 and almost 55 days are over and complaint is yet not filed by respondent no. 2 against the present applicant.
(iii)		The respondent no. 2 complainant has not requested the Trial Court for any remand of the applicant.
(iv)		Investigation is almost over.

7. I have heard learned advocates appearing for the parties. Considering the offence as alleged in the FIR and also considering the nature of allegations made in the FIR, I am of the opinion that this is a fit case to exercise the discretion to enlarge the applicant on bail. Hence, the application is allowed and the applicant is ordered to be released on bail in connection with File No. DGGI/AZU/Gr.D/12(4)-30/2019-20 registered with Directorate General of GST Intelligence, Zonal Unit, Ahmedabad,, on executing a bond of Rs.50,000/- (Rupees Fifty Thousand only) with two local sureties of Rs. 25,000/- each to the satisfaction of the trial Court and subject to the conditions that he shall;

[a]		not take undue advantage of liberty or misuse liberty;
[b]		not act in a manner injurious to the interest of the prosecution;
[c]		surrender passport, if any, to the lower court within a week;
[d]		not leave the State of Gujarat without prior permission of the Sessions Judge concerned;
[e]		mark presence with the respondent no. 2 on every Monday of each English Calendar month for a period of two months between 11.00 a.m. and 2.00 p.m and shall co-operate with investigation and shall remain present as and when he is summoned,
[f]		furnish the present address of residence to the I.O. and also to the Court at the time of execution of the bond and shall not change the residence without prior permission of this Court;
[g]		file an undertaking before this Court as well as with the respondent No.2 on or before 18.9.2019 to the effect that he shall not transfer or alienate or in any manner create third party rights over those immovable properties which belong to him and shall also supply the details of all the immovable properties belonging to him to the Directorate General of GST Intelligence, Zonal Unit, Ahmedabad. He shall also state in the undertaking that the immovable properties referred to in the undertaking shall not be transferred or alienated in any manner to third party till the authority established under the Central Goods and Services Tax Act, 2017 ascertain the amount of Goods and Services Tax, if any, levied against the applicant.

8. The Authorities will release the applicant only if he is not required in connection with any other offence for the time being. If breach of any of the above conditions is committed, the Sessions Judge concerned will be free to issue warrant or take appropriate action in the matter. Bail bond to be executed before the lower court having jurisdiction to try the case. It will be open for the concerned Court to delete, modify and/or relax any of the above conditions in accordance with law. At the trial, the trial court shall not be influenced by the observations of preliminary nature, qua the evidence at this stage, made by this Court while enlarging the applicant on bail. GST offender Taxpayer

9. Rule made absolute to the aforesaid extent. Direct service is permitted.

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