Date of Judgment:
7th March 2022.
Bench:
Gita Gopi, J.
Parties:
Appellant/Applicant – Mohsin Salimbhai Qureshi.
Respondent – The State of Gujarat.
Subject
The High Court of Gujarat while deciding a matter presented before them against the applicant for denial of bail U/s. 437 of Code of Criminal Procedure the Hon’ble Court observed that in deciding bail applications ‘delay in conduction of trial must be considered as a relevant factor, referring to Section 138 of the Central Goods and Services Tax Act coupled with substantial facts relevant about the false arrest, the court allowed the bail plea to the applicant.
Legal Provisions
- Section 439 of the Code of Criminal Procedure – states the special power of the High Court regarding bail that any person accused of a crime and in prison be released on bail and that if the offense is of the sort stated in paragraph (3) of section 437, the court may impose any condition it deems appropriate for the reasons specified in that subsection.
- section 69 of the CGST Act – states the Commissioner's powers to arrest by order if he believes a person has committed the crimes.
- Section 132 of the CGST Act – states the punishment for the commitment of certain acts mentioned under these provisions.
- Section 120 B of the Indian Penal Code – states that whoever is a party to a criminal conspiracy to commit an offense punishable by death, imprisonment for life, or rigorous imprisonment for a term of two years or more, here there is no stated provision in this Code for the punishment of such a plot, he must be punished in the same manner as if he had aided and abetted such offense.
- Section 437 of the Code of Criminal Procedure – states that Without an officer's warrant, a person detained for a non-bailable offense may be released on bail.
Overview
- The applicant in this matter was engaged in a business of dealing with metal scarps but supposedly an inquiry was conducted against one such firm namely (M/s. Ronak Traders), averred to the suspicion of the fact that the firm was non-existent and no eligible ITC (Input Tax Credit) was there with the firm to tax their incomes.
- Also, the fictitious firm GSTRA-2A (is a system-generated draft statement of inward supplies for a receiver taxpayer) was nil and on subsequent findings, it was revealed that M/s. Ronak Traders passed fraudulent transactions worth Rs.10.36 crore to another firm S.K. Traders by showing entire transaction in their GST returns.
- In this matter, the applicant was imprisoned under Section 69 of the CGST Act 2017 for establishing a network of fictitious enterprises without a tangible receipt through which he fraudulently obtained and used Input Tax Credit worth Rs. 10.29 crores and provided items to its consumers on false ITC.
- In addition, the aggrieved applicant was denied bail under Section 437 of the Criminal Procedure Code and a criminal miscellaneous application.
- The learned counsels for the applicant contended that after receiving the intimidation the applicant had appeared before the complainant on 31/08/2021 and was arrested on 01/09/2021 without the complainants providing any evidence regarding the basis of his arrest.
- Additionally, learned counsel for the petitioner submitted that the applicant was withholding proper GST registration for the two of the alleged firms namely M/s. Alina Traders and M/s. Galaxy Traders, and also pointed out that since the applicant was engaged in the business of dealing with metal, iron, and steel scraps and averred registration certificate issued under erstwhile VAT (Value Added Tax) Law for the alleged aforesaid firms which were later migrated to GST regime U/s. 139 of the GST Act, showcases that the applicant was a tax-paying citizen and was not involved in conducting fictitious businesses and managing shell companies.
- Furthermore, learned counsel for the applicant submitted that since Section. 69(1) of the acts suggests that it has to be read as a whole to draw out its true essence and then only its application can be understood.
- Also, he contended that in the current situation, the Act itself offers a method for recovering the money owed to the government; yet, no such steps have been taken by the government too far, further placing reliance on the case of Arnesh Kumar v. State of Bihar & Anr, in this case, the Hon’ble Supreme Court ruled that in circumstances where the offense is punished by imprisonment for a duration of fewer than seven years or a term of up to seven years, with or without fine, the accused may be arrested only if there is a need for arrest.
- Per contra, it was contended by the learned counsel for the respondents that the applicant's retail premises lacked a stock register, which is required under Section 35 of the CGST Act. It was also alleged that attempts were made to identify the core place of business, but the authorities were unable to locate it.
- Also, upon further investigation by the respondents to find the principal place of all the linked businesses or M/s. Ronak Traders, but it was found to be non-existent thus solidifying the fact that that business existed solely on the paper upon which a proper investigation was instituted and summons was sent to the applicants on 26/02/2021 for recording his statement regarding the same.
- To which the learned counsel points out that since that their inquiry was related to availing of fake ITC (Input Tax Credit) by M/s. Alina Traders and M/s. Alfa Enterprise following which M/s. Alina Traders made a payment of Rs.10,03,035 along with interest, which makes it clear that the applicant was involved in receiving and utilizing fake ITC.
- Further, alleging that the case referred to by the applicants to substantiate their position in this matter is of the pre-GST era and is not applicable in this tax regime as the facts and circumstances are different than the present matters.
- And referred to the case of Kalyan Chandra Sarkar v. Rajnesh Ranjan, where the learned counsel for the respondent submits that a person accused of a non-bailable offense is subject to detention in jail for the pendency of his trial unless he is granted bail under the law and pleaded to reject the bail application.
- Likewise, placing reliance on the case of Sanjay Chandra v. CBI, where the applicant was charged with defrauding and dishonestly inducing the delivery of property, as well as a forgery for passing off a fake document as real. In this case, the Supreme Court declared that the delay in completing the trial must be regarded as a relevant element in evaluating bail applications.
Issues Involved
- Whether delay in conducting the trial should be taken as an important factor while considering a bail plea?
Judgment
- The Hon’ble High Court in consideration of Section 138 of the CGST Act and the preceding case, Court stated that taking the provisions of law and the facts into consideration, the Commissioner was authorized to recover the due amount and propose for abatement of the litigation, and as the trial will take its own time to conclude, this Court finds this to be a fit case where it could exercise discretion in favour of the applicant.
- The Hon’ble Court allowed the application under the condition that a personal bond in the amount of Rs. 1,00,000 and one surety in the same amount be furnished.
- Additionally subjecting the applicant to certain conditions.
Conclusion
In this case, the Hon'ble Court considered the course of an investigation conducted by the relevant authority and the arrest made without any substantial evidence before the trial was instituted against the applicant, taking into account the provisions of law, and because the Commissioner has the authority to reclaim the overdue sum and recommend a stay of proceedings, and because the trial will take its own time to finish, the court deems fit to exercise its juristic powers prescribed U/s. 439 of the Code of Criminal Procedure.
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