Dinesh Kumar vs Directorate General of GST Intelligence (District Court of Maharashtra)

Pune Additional Sessions Judge Grants Bail in GST Evasion Case

In the case of Dinesh Kumar vs Directorate General of GST Intelligence (4596/2024), the applicant, Dinesh Kumar, was arrested by the Directorate General of GST Intelligence, Pune Zonal Unit, for offenses under Section 132(1)(b), 132(1)(c), 132(1)(d), 132(2), and Section 132(5) of the Central Goods and Services Tax Act, 2017. Bail application was first filed before the Hon’ble Chief Judicial Magistrate, Pune, which was rejected on 25.07.2024.

Subsequently, a second bail application was moved before the Hon’ble Court of District Judge and Additional Sessions Judge, Pune. In the application, it was argued that the necessary investigation had been completed, and the applicant’s statement had already been recorded. Further, it was argued that the maximum punishment for the alleged offenses is imprisonment up to 5 years, and as such, the continued detention of the applicant was unnecessary. Reliance was also placed on the judgment of the Hon’ble Supreme Court in Ashutosh Garg vs Union of India, asserting that the evidence, being in electronic form, could not be tampered with, and thus, the applicant was entitled to be granted bail.

Taking into account the arguments and the case laws presented, the Hon’ble Additional Sessions Judge, Pune, passed an order on 10.10.2024, granting bail to Dinesh Kumar. The applicant was directed to execute a Personal Recognizance (P.R.) bond of Rs. 1,00,000/- (One Lakh Rupees) along with one or two solvent sureties in the same amount.

FULL TEXT OF THE ORDER

1. The applicant Dinesh Kumar is seeking regular bail on account of his arrest in Case No. DGG/INV/GST/1109/2024 – GrA – O/o ADG – DGGI – ZU – PUNE, Directorate General of GST Intelligence, Pune Zonal Unit, Bundgarden, Pune for the offences punishable under Section 132(1)(b), 132 (1)(c), 132(1)(1), 132(2) read with Section 132(5) of Central Goods and Services Act, 2017 (For short ‘CGST Act’).

2. The brief facts, which led to the filing of the proceeding can be summarized, as under – That applicant Dinesh Kumar colluded with his brother Krushna Kumar to create a web of fake firms by forging statutory documents such as Aadhar card, PAN card to be used to obtain multiple GSTIN registrations with an intent to fraudulently avail and pass on the ITC to fake firms and further to defraud the Government exchequer of its rightful revenue of Rs. 144.59 Cr. and derived benefit from the proceeds of the crime. Accordingly, he has committed an offence under Section 132(1)(b), 132 (1)(c), 132(1) (1), 132(2) read with Section 132(5) of ‘CGST Act’, receiving or issuing invoices without actual supply of goods. Accordingly, complaint was filed by the officers of Directorate General of GST Intelligence, Pune.

3. The applicant has moved the present bail application mainly on the ground of his innocence and total non-involvement in the commission of the alleged offences. It is contended that the present applicant Dinesh Kumar was arrested on 10/05/2024 at Jaipur, Rajasthan by senior Intelligence Officer (CGST), Pune. Since 12/05/2024, he is in judicial custody. The investigation in the matter is complete and a complaint has already been filed before the competent court. There is no reason for extension of his judicial custody as the present case is totally based upon documentary evidence. The maximum punishment provided for the offence is 5 years and therefore he deserves to be released on bail. He is a student aspiring for government competitive examination in Rajasthan and at the same time dealing with sale of mobile accessories. His family members are dependent upon him for their livelihood. The entire material in the present matter is in the form of electronic or documentary evidence, which is already in the custody of the Investigating agency and as such there is no scope for him for tampering. In the event of his release on bail, he will neither abscond nor indulge into any criminal activity. He is ready to abide by the terms & conditions imposed by this court while release him on bail. On these grounds, he has prayed for his release on bail by allowing his application.

4. The application was resisted by the respondent / complainant by filing reply dated 13/08/2024. It is alleged that applicant has caused availment of total inadmissible ITC worth Rs. 92.74 Cr. through M/s. R. K. Enterprizes, M/s S. K. Enterprizes, M/s Shree Mahalaxmi Impex and M/s Mahaveer Enterprizes without having any inward supply. Thus, he has committed the offences levelled in the complaint. He has caused passing on of inadmissible ITC worth Rs. 78.89 Cr. by above mentioned firms to multiple firms by issuance of invoices or bails without actual supply of goods leading to wrongful availment and utilization of ITC. He has created fictitious business entities by using forged / fake documents such as PAN and Aadhar Card to have GST registrations. The offences levelled against applicant are non-bailable in nature. Though complaint is filed, the further investigation is still in progress. Therefore, if he is released on bail, he may either abscond or tamper with the evidence. On these grounds, rejection of the application has been prayed for.

5. Perused the e-application, e-reply as well as the case laws relied upon by the applicant as well as respondent / complainant. Extensively heard Ld. Adv. Shri. Sachin Kumar as well as Shri. L. S. Oswal for the applicant and Ld. Spl. P. P. Shri. Randeep Sharma for the respondent/complainant. The submissions of both the sides are nothing but, more or less, replica of the contents of the application and reply. Both the Ld. advocates have filed written arguments and have also relied upon several case laws. The relevance of the case laws is being discussed at the appropriate place in the later part of this order.

6. I have carefully gone through the submissions and record, including the written arguments as well as case laws that have been relied upon by the both the sides. The allegation against present applicant is that he is involved in issuing fake invoices to other business entities, without supply of any goods and thereby has violated the provisions of CGST Act and integrated Goods and services Act, 2017. It is a matter of record that on such allegations, the applicant came to be arrested on 10/05/2024 and the complaint has already been filed before the Ld. Magistrate. That means, for almost 5 months period the applicant is behind the bars. The maximum punishment provided for the offence is upto 5 years. It is also a matter of record that the day on which he was produced before the Chief Judicial Magistrate, his judicial custody was sought and the Ld. C.J.M. was pleased to grant the same. This aspect assumes importance to take a view favourable to applicant for grant of bail.

7. After considering the total allegations, it emerges that he is alleged to have operated bogus firms to avail and pass fake ITC. He is not shown as the owner of any bogus company / business entity. The piece of incriminating material which has been relied upon by the complainant is the statement of the present applicant recorded on 08/05/2024. The copy of the statement does not demonstrate that he has personally derived any financial benefit. Such statement is in the form of clue to the Investigation Authority to proceed further to unearth the alleged crime. Apart from this, there is no clear disclosure on record on the basis of reliable material showing the actual / exact pecuniary advantage / benefits derived by the present applicant, in the alleged transactions. That apart, the present case is totally based upon the documentary evidence which are completely in the custody of the competent authority and the nature of such evidence being in the electronic form and on the GST portal, there is no scope at all for the applicant to tamper with the same. The maximum punishment provided for the offence is upto 5 years. Since last five months the applicant is in the judicial custody and in the teeth of above circumstances, extension of his judicial custody till the conclusion of trial, which may take substantial time, may amount to pre-trial conviction. He has a fixed place of residence and therefore not likely to abscond.

8. In this respect, Ld. advocate for applicant has rightly placed his reliance on the case laws in the cases of

(a) Rahul vs. Director General of Goods and Services Tax Intelligence, Nagpur reported in 2024 (2) Mah. L. J. Cri. 491 wherein Hon’ble Bombay High Court (Nagpur Bench) has observed as under –

23. In the light of the above said observations, when facts of the present case are taken into consideration, it reveals that the applicant was arrested. Necessary investigation is carried out and the statement of the applicant is recorded. The maximum punishment provided is imprisonment upto five years. The facts of the case show that the dispute is regarding the tax evasion and the applicant has already paid Rs. 81.00 lacs towards the said tax amount. The ofence is under the CGST Act, 2017 except with the limited exceptions are compoundable.

24. In the light of the above facts, detention of the applicant in jail is not required. The applicant is not involved in a heinous crime like murder or terrorism. The basic rule is, ‘bail is rule and jail is exception’. The allegations of serious financial impropriety are levelled against the applicant.

25. In this view of the matter, further incarceration of the applicant is not required. Accordingly, I proceed to pass following order –

ORDER

(1) The criminal application is allowed.

(2)…………………..

(3)…………………

(4)…………………

(5) ………………..  

The application stands disposed of

Sd/-

(b) Ashutosh Garg Vs. Union of India in Petitions for Special Leave to Appeal (Cri) No(s) 8740/2024 decided on 26/07/2024 by Hon’ble Supreme Court of India,

wherein it is observed that bearing in mind that the offence carries a maximum punishment of five years of imprisonment and the period of custody already undergone, we do not consider it appropriate to keep the petitioner languishing in jail any further. The petitioner shall accordingly be released on bail, subject to such terms and conditions as may be imposed by the Trial Court.

9. Now let us deal with the other case laws which have been relied upon by the applicant.

a. Satender Kumar Antil Vs. C.B. I. reported in 2022 AIR Supreme Court 3386

b. Sanjay Chandra Vs. C.B.I. reported in 2011 (4) R.C.R. (Criminal) 898

c. Pankaj Kumar Vs. State of Punjab in Crim-M-43188-2023 (O & M) dated 16/01/2024 by Hon’ble Supreme Court of India

d. Manish Sisodia Vs. Directorate of Enforcement reported in 2024 (3) R.C.R. (Criminal) 877

e. Dhirendra Singh @ Chintu S/o Shri. Surya Baksh Singh and others Vs. Union of India and others reported in 2023 (3) RLW 2408

f. Chidambaram Vs. Directorate of Enforcement reported in 2019 (4) Crimes 253

g. Prahlat Singh Bhati Vs. N. C. T., Delhi and Anr. reported in 2001 (2) Supreme 550

10. I have carefully gone through all the above case laws. On careful reading of the same, it reveals that the issue of bail in GST matter was not under consideration therein and therefore they can be distinguished.

11. Now, let us deal with the case laws which have been relied upon by complainant/respondent –

a. Hira Gobind Bhatia Vs. State of Central Goods and Services Tax reported in 2023 (78) GSTL 81 (Bom) (Hon’ble High Court of Bombay)

b. Sheetal Mittal Vs. State of Rajasthan reported in 2023 (74) GSTL 03 (S.C.) Supreme Court of India

c. Sanjay Drolia @ Sanjay Kumar Drolia Vs. Nil reported in AIRONLINE 2019 CAL 466

So far as all these case laws are concerned, they deal with the parameters for consideration of an anticipatory bail in relation with the offences covered under CGST Act. In the matter at our hand we are dealing with the regular bail and therefore the above three case laws can be distinguished.

d. State of Gujrat Vs. Choodamani Iyer in Criminal Appeal Nos. 4212-4213 of 2019 decided on 17/07/2023 by Hon’ble Supreme Court

So far as this case law is concerned, the power to arrest under Section 69(1) of the Commissioner and scope of Section 41 as well as 41-A of Cr. P. C. has been discussed therein. In the matter at our hand, applicant has not seriously challenged his arrest. Therefore, the issue involved in the case law being different will not have any application.

e. Amit Beriwal Vs. State of Odisha in BLAPL No. 2217/2020 decided on 27/07/2020 by Hon’ble High Court of Orissa : Cuttack

f. Basudev Mittal Vs. Union of India reported in AIRONLINE 2022 CHH 107

g. Vikas Goel & another Vs. Central Goods and Services Tax Commissionerate Gurgaon in CRM No. M 45649 of 2018 decided on 13/12/2018 by Hon’ble High Court of Punjab and Haryana at Chandigarh

h. Chhatar Singh Niku Singh Vs. State of Odisha reported in 2023 Cri. L. J. (NOC) 333 (ORI)

In all the above case laws, the Hon’ble Orissa High Court , Hon’ble Chhattisgarh High Court and Punjab & Haryana High Court have declined to grant regular bail by holding that the grave offences affecting economy of the country as a whole posing serious threat to the financial health of the country have been committed.

These case laws being of different High Courts, they have persuasive value and as such they have no binding force. Additionally, a contrary view i.e. favourable to the accused against whom offences under GST Act have been levelled, has been taken by our Hon’ble High Court in the case of Rahul (cited supra), which will prevail.

i. Nimmagadda Prasad Vs. CBI reported in 2013 AIR SCW 3795 (Supreme Court of India

So far as this case law is concerned, the bail application arising out of GST Act was not at all under consideration therein and therefore the said case law can be distinguished.

12. Considering all the above aspects and totality of facts as well as circumstances of the matter at our hand, this court is of the clear opinion that the applicant is certainly entitled to have his release on bail. Hence, following order is passed to meet the proper ends of justice –

ORDER

1. Criminal Bail Application No. 4596/2024 in Pvt. RCC No. 3008/2024 in case No. DGG/INV/GST/1109/2024 – GrA – O/o ADG – DGGI – ZU – PUNE registered with DGGI, Zonal Unit, Pune is hereby allowed as under :

2. The applicant Dinesh Kumar arrested in Pvt. R.C.C. No. 3008/2024 arising out of Case No. DGG/INV/GST/1109/2024 – GrA – O/o ADG – DGGI – ZU – PUNE for the offence punishable under Section 132(1)(b), 132 (1)(c), 132(1)(1) and 132(2) R/w Sec. 132 (5) of Central Goods and Services Act, 2017, be released on executing P. R. bond of Rs. 1,00,000/- (Rupees One Lac only) with one or two solvent sureties in the like amount.

3. The applicant shall attend the office of the respondent / complainant as and when required for the investigation purpose, only under written intimation.

4. The applicant shall surrender his passport before learned Chief Judicial Magistrate, Pune within a week from the date of his release from the jail and also provide his mobile number with address proof alongwith mobile numbers & address proofs of two of his relatives and surety to the Investigating Officer.

5. The applicant shall not leave India without prior permission of the trial court.

6. Bail compliance before Ld. Chief Judicial Magistrate, Pune.