While considering a petition for grant of bail in economic offences, which by their very nature pose a threat to the State’s financial stability and deserve to be dealt with sternly, the Punjab & Haryana High Court (Chandigarh Bench) clarified that the economic offences cannot be categorised in one group, and the Court should not proceed on the presumption that “Denial of Bail is the Rule and grant being the exception”.
Taking a lenient view that the Court seized of the matter has to go through the gravity of the offence, the object of the concerned Act, and the attending circumstances, the High Court granted bail to the petitioner, subject to furnishing of bail/surety bonds and compliance with conditions including surrender of passport, non-tampering with evidence, non-intimidation of witnesses, regular appearance, and non-commission of similar offences.
At the same time, the Court cautioned that any breach of these conditions allows the State to seek cancellation of bail.
Reference was made to the decision in the case of Ashutosh Garg Vs. Union of India [(2024) 20 Centax 595 (SC)], wherein the Apex Court had granted bail in a matter where the accused defrauded the State exchequer of Rs. 1032 crores as Input Tax Credit by creating 294 fake firms, citing long custody of 09 months as well as the fact that maximum punishment in the offence under Section 132 CGST Act is 05 years.
A Single Judge Bench of Justice Aaradhna Sawhney observed that the offences alleged under Section 132 of the CGST Act are serious, involving wrongfully availing and passing of ITC amounting to Rs 23.66 crores. At the same time, the Bench noted that the evidence to be rendered by the complainant department is primarily documentary and electronic.
Therefore, observing that the petitioner has been in custody for a significant period, and further detention may violate his rights under Article 21 of the Constitution, including his right to a speedy trial, the Bench allowed the bail application.
Briefly, the CGST, Faridabad, lodged a complaint alleging that the petitioner had been running a syndicate of 9 taxpayer firms with a criminal intention of availing and passing of fraudulent ITC, by issuing goods-less invoices without actual supply of goods of taxable value of Rs. 130.33 crores, and hence passed on fraudulent/fake ITC of Rs. 23.66 crores to various taxpayers within and outside the jurisdiction of CGST, Faridabad Commissionerate.
On perusal of e-way bills, the complainant found that there was no coordination between the weight of goods and the capacity of vehicles used for the transportation of goods. Further, in statements recorded under Section 70 of the CGST Act, 2017, various concerned persons admitted that the entire amount of the invoice was received back in cash paid against such goods-less invoices. Thus, being actively involved with the mens rea to defraud the State Exchequer, the petitioner was said to have committed an offence under Clause (b), (c), (f) and (l) of Section 132(1) of the CGST Act, 2017, punishable under Section 132 (1)(i) of the CGST Act.
Resultantly, the petitioner was arrested and has been in custody since January 28, 2025. As the application for the grant of bail moved by the petitioner before the Additional Sessions Judge was dismissed, the petitioner approached the High Court.
Appearances:
Advocates Deepak Gautam and Bhavishay Sharma, for the Petitioner/ Taxpayer
AAG Vishal Singh, Senior Advocate Ajay Kalra, and Advocate Isha Janjua, for the Respondent/ Revenue
