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Rajasthan High Court
GST

Five-Year, Magistrate-Triable GST Offence Is No Automatic Ground for Bail: Rajasthan High Court

Published: · NyayVidhan

The Rajasthan High Court refused bail to a man accused of running 294 fake firms to pass about Rs.1,032 crores of inadmissible input tax credit (paras 4, 14). That an offence under Section 132 of the CGST Act carries five years and is triable by a Magistrate is no automatic ground for bail; each application turns on its own facts and evidence (para 12). Economic offences call for a different approach, and a similarly placed co-accused had been refused bail (paras 7-9, 13).

Five-Year, Magistrate-Triable GST Offence Is No Automatic Ground for Bail: Rajasthan High Court

Judgment Intelligence

Bail Rejected
Ashutosh Garg v. Union of India
S.B. Criminal Miscellaneous Bail Application No. 548/2024
Court
Rajasthan High Court
Date of Decision
6 March 2024
Bench
Justice Anoop Kumar Dhand
Relevant Acts & Sections
Central Goods and Services Tax Act, 2017 — Sections 70, 132(1)(b), (c), (f), (j), (l), 136
Final Outcome

The bail application was rejected (paras 13-14). The trial court was expected to expedite the trial, and the observations were made only for deciding the bail application; the trial court is to decide the case independently on the evidence (paras 15-16).

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Key holdings

  1. No straitjacket formula: a five-year, Magistrate-triable offence under Section 132 of the CGST Act is not by itself a ground for bail (para 12).
  2. Bail turns on the nature of the accusation and evidence, the severity of punishment, the risk of absconding or witness tampering and the public interest (para 12).
  3. Economic offences with deep-rooted conspiracies and huge loss to the public exchequer are grave and call for a different approach in bail (paras 8-9).
  4. The refusal of bail to a similarly situated co-accused by a co-ordinate bench weighed against granting bail (paras 7, 13).

Case explainer by NyayVidhan: an account of this judgment and the law it laid down, not the court's text. The judgment itself is the authoritative version.

Brief Facts

On information about fake invoices of menthol issued without supply of goods, the Directorate General of GST Intelligence, Jaipur, found that many fake firms were run by the petitioner (para 4). In statements under Section 70 of the CGST Act he allegedly admitted creating 181 fake firms to pass inadmissible input tax credit of Rs.679 crores; the figures later rose to 294 firms and Rs.1,032 crores (para 4). He was arrested on 02.11.2023, and a complaint under Section 132(1)(b), (c), (f), (j) and (l) followed on 30.12.2023 (para 1). He sought bail on the five-year maximum sentence, Magistrate trial and his custody period; the Union of India opposed it (paras 1-2).

Court's Findings

A co-accused, alleged to have bought and run some of the petitioner's firms, had been refused bail by a co-ordinate bench on 19.02.2024, which treated economic offences as a class apart (paras 5-6). Given the alleged loss of about Rs.1,032 crores to the Government, the Court saw no reason to take a different view (para 7). Citizens pay CGST and SGST for the nation's development; creating fake firms obstructs it, and such economic offences must be dealt with by a different approach in bail (para 8). Economic offences with deep-rooted conspiracies and huge loss to the exchequer are grave, threaten the country's financial health and are committed with calculated design (para 9); the Court also spoke of white-collar crime (paras 10-11). It rejected the plea that bail must follow because the offence carries five years and is triable by a Magistrate: "There cannot be any straight jacket formula to decide the bail applications" on that basis; each application turns on its own facts, evidence and accusation, applying the factors in Nimmagadda Prasad (para 12). Weighing the allegations, the DGGI's evidence, the seriousness of the offence and the co-accused's refusal, it declined bail (para 13).

Legal Principle

That an offence under Section 132 of the CGST Act is punishable with five years and triable by a Judicial Magistrate does not by itself entitle the accused to bail. Each application turns on its own facts, accusation and evidence, applying the Nimmagadda Prasad factors; economic offences against the exchequer call for a different approach (paras 8-9, 12).

Precedents Relied Upon

  1. Nimmagadda Prasad v. Central Bureau of Investigation 2013(7) SCC 466
    Relied Upon Discussed at ¶ 12

    While granting bail the court must keep in mind the nature of the accusations and evidence, the severity of punishment, the character and circumstances of the accused, the possibility of securing presence at trial, the apprehension of witness tampering and the larger interests of the public/State.

  2. Anil Kumar v. Union of India S.B. Criminal Miscellaneous Bail Application No.15833/2023, decided on 19.02.2024
    Followed Discussed at ¶ 2, 6, 7, 13

    A co-ordinate bench refused bail to a co-accused alleged to have generated fake input tax credit, holding that economic offences constitute a class apart; the Court saw no reason to take a different view.

  3. Ratnambar Kaushik v. Union of India 2023 (2) SCC Online 621
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

View all precedents (21)
  1. Rishabh Jain v. State of Rajasthan and Anr. S.B. Criminal Miscellaneous Bail Application No.10718/2023, decided on 04.12.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  2. Ravindra Kumar v. Union of India and Anr. S.B. Criminal Miscellaneous Bail Application No.2937/2022, decided on 08.02.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  3. Nikhil Gupta v. Union of India and Anr. S.B. Criminal Miscellaneous II Bail Application No.17510/2022, decided 10.02.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  4. Shubham Jindal v. Union of India S.B. Criminal Miscellaneous Bail Application No.11285/2023, decided on 06.10.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  5. Babulal Qazi v. Union of India S.B. Criminal Miscellaneous Bail Application No.12786/2022, decided on 13.02.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  6. Mohammad Shadab Kadri v. Union of India S.B. Criminal Miscellaneous Bail Application No.2299/2022, decided on 06.04.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  7. Shri Mohammed Ali Akram Khan v. Union of India and Ors. S.B. Criminal Miscellaneous Bail Application No.13860/2022, decided on 06.04.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  8. Vineet Gupta v. Union of India S.B. Criminal Miscellaneous Bail Application No.7162/2023, decided on 20.07.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  9. Saurabh Jindal v. Union of India S.B. Criminal Miscellaneous Bail Application No.14791/2022, decided on 16.12.2022
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  10. Vikas Bajoria v. Union of India S.B. Criminal Miscellaneous Bail Application No.17349/2022, decided on 06.01.2023
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  11. Abhishek Singhal v. Union of India S.B. Criminal Miscellaneous Bail Application No.14211/2021, decided on 11.11.2021
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  12. Laxman Chaudhary v. Union of India S.B. Criminal Miscellaneous Bail Application No.16422/2021, decided on 06.10.2021
    Referred To Discussed at ¶ 1

    Cited by counsel for the petitioner in support of the bail application (listed in para 1).

  13. Surjeet Singh Chhabra v. Union of India and Ors. 1997 (1) SCC 508
    Referred To Discussed at ¶ 2

    Cited by counsel for the Union of India in opposition to bail (listed in para 2).

  14. Naresh J. Sukhawani v. Union of India 1995 Supp (4) SCC 663
    Referred To Discussed at ¶ 2

    Cited by counsel for the Union of India in opposition to bail (listed in para 2).

  15. Sandeep Goyal v. Union of India Special Leave to Appeal (Crl.) No.1803/2020
    Referred To Discussed at ¶ 2

    Cited by counsel for the Union of India in opposition to bail (listed in para 2).

  16. Sandeep Goyal v. Union of India S.B. Criminal Miscellaneous III Bail Application No.1521/2020, decided on 05.02.2020
    Referred To Discussed at ¶ 2

    Cited by counsel for the Union of India in opposition to bail (listed in para 2).

  17. Basudev Mittal v. Union of India MCRC No.3919/2022, decided on 15.07.2022 (Chhattisgarh High Court)
    Referred To Discussed at ¶ 2

    Cited by counsel for the Union of India in opposition to bail (listed in para 2).

  18. Lalit Goyal v. Union of India and Ors. S. B. Criminal Miscellaneous Bail Application No.13042/2021, decided on 07.09.2021
    Referred To Discussed at ¶ 2

    Cited by counsel for the Union of India in opposition to bail (listed in para 2).

Topics: Bail Economic Offences Parity in Bail Prosecution for Tax Offences
NyayVidhan
Court Judgments · 3 min read
Decided: March 6, 2024 Justice Anoop Kumar Dhand
PDF

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