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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
MR. JUSTICE PRAVEER BHATNAGAR, J
Union Of India, Through Pr. Additional Director General Of Gst Intelligence Jaipur - Appellant
Versus
Lovkesh Kumar S/o Shri Guruvax Rai - Respondent
S.B. Criminal Bail Cancellation Application No. 110/2024
Decided On : 10-02-2025
(A) Central Goods and Services Tax Act, 2017 - Sections 132(1)(c), 132(1)(f), 122 - Cancellation of bail application - The Union of India challenged the bail granted to Lovkesh Kumar, citing serious allegations of fraudulent Input Tax Credit claims amounting to Rs. 8.59 crores - The trial court's findings were deemed erroneous as it failed to consider the gravity of the offences and the evidence against the respondent - The court emphasized that economic offences require a different approach in bail considerations. (Paras 1, 2, 11, 18, 21)
(B) Bail - Cancellation - The court outlined the principles for cancelling bail, including serious allegations, change in circumstances, and risks to public safety - The trial court's decision was found to be arbitrary and not based on the evidence presented. (Paras 9, 10, 21)
Facts of the case:
The bail application was filed against the order granting bail to Lovkesh Kumar, who was accused of fraudulently availing Input Tax Credit through non-existent firms, leading to significant financial loss to the government.
Findings of Court:
The court found that the trial court erred in granting bail, as the evidence indicated serious allegations against the respondent, warranting cancellation of bail.
Issues: The main issues included whether the trial court properly assessed the evidence and the nature of the allegations against the respondent.
Ratio Decidendi: The court ruled that the trial court's decision was flawed as it did not adequately consider the evidence of fraudulent activities and the serious nature of the charges under the CGST Act.
Result: The bail granted to Lovkesh Kumar was cancelled, and he was ordered to surrender before the trial court.
Key Points: - The bail cancellation appeal centers on whether the trial court properly considered the gravity of alleged fraudulent ITC and the evidence, and whether bail should be cancelled for economic offences under CGST Act (!) (!) (!) . - The court examines that Section 132 targets offences involving fraudulent ITC and non-existent firms, and distinguishes it from Section 122 penalties, focusing on punishment for specific offences under CGST Act (!) (!) (!) . - The judgement outlines tenets for cancelling bail, including serious allegations, change in circumstances, risk to public safety, failure to appear, and necessity in the interests of justice, among others (!) (!) (!) (!) . - It emphasizes that economic offences require a different approach in bail considerations and that merely aligning with co-accused or relying on prior bail orders is not sufficient (!) (!) (!) . - The court affirms that the respondent was found to have profited from fraudulent ITC totalling Rs. 8.59 crores, with evidence including WhatsApp chats and depositional facts, justifying bail cancellation (!) (!) . - The law distinguishes between Section 132 offences (punishment for specific CGST offences) and Section 122 penalties, and notes that the latter are distinct in nature and sanctions (!) (!) (!) . - The court directs surrender and cancellation of bail due to the gravity of the offence and evidentiary support for fraudulent ITC claims (!) . - The decision discusses the grounds of arrest and informs that grounds of arrest must be provided; discussions reference Section 69 of CGST Act, though the key outcome is bail cancellation (!) . - The order emphasizes ensuring the accused’s presence in trial by directing surrender and custody (!) .
| Table of Content |
|---|
| 1. cancellation bail application filed (Para 1) |
| 2. contradicting observations (Para 2 , 3 , 4) |
| 3. bail considerations (Para 5 , 6 , 7 , 8) |
| 4. principles for cancelling bail (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20) |
| 5. bail cancellation ordered (Para 21) |
Order :
1. The instant cancellation bail application has been filed under Section 483(3) Bhartiya Nagrik Suraksha Sanhita, 2023, preferred by the Union of India through Pr. Additional Director General Of GST Intelligence, Jaipur Zonal Unit against the order dated 05.04.2024 passed by learned Additional Sessions Judge No.1, Jaipur Metropolitan-II whereby, bail application No.115/2024 (CIS No.849/2024) in File No.DGGI/INV/GST/3480/2023/-Gr.H-O/o ADG-DGGI-ZU-Jaipur registered at DGGI Jaipur under Section 132(1)(c) and 132(1)(f) of Central Goods and Service Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’) was accepted.
2. Learned counsel for the petitioner submits that the learned court below committed an error while granting bail to the present respondent-Lovkesh Kumar. The court below has observed that respondent Lovkesh Kumar's statement was not recorded under normal circumstances. The Court also recorded that the proprietor of M/s. Guruvax Rai Praveen Kumar is Sushil Kumar, and no evidence is available on the record indicating that respondent Lovkesh Kumar is the operator of the firm M/s. Guruvax Rai Praveen Kumar. The court below also recorded the finding that the department unintentionally did not arrest the M/s Guruvax Rai Praveen Kumar proprietor to shift the liability on respondent Lovkesh Kumar. The Court observed that the respondent is the proprietor of two firms, M/s. Guruvax Rai Cotton Industries and M/s. Guruvax Rai & Sons have deposited the amount of Rs.65,00,000/-. Therefore, the remaining GST liability of the respondent is less than Rs.5,00,000,00/-, and the case comes under the category of a bailable offence. The said observation of the Court is misconceived and against the settled law canon. The provisions of Section 122 of the CGST and Section 132 of the CGST are entirely different from those of Section 122 of the CGST.
3. Under Section 132 of the CGST Act, if any person causes to effect to claim Input Tax Credit based on wrong information or fraudulently, then the department can prosecute such person under Section 132 of the CGST Act. The provisions of Section 132 of the CGST Act are for procuring punishment for the offences. It is vehemently argued that by depositing the Input Tax Credit, the respondent cannot be absolved from the proceedings initiated under Section 132 of the CGST Act, and the amount deposited cannot be taken into consideration for determining the offence committed by an accused. The court below has wrongly deducted the amount of Rs.65,00,000/- deposited by the respondent and observed that the offence of respondent's is bailable. It is also argued that the respondent's bail application was allowed by the Court below, considering that the other co-accused, Gautam Garg, has been granted bail by ADJ Court No.2, Jaipur Metropolitan-II. It is also argued that the bail granted to respondent Gautam Garg was cancelled by this Court in S.B. Criminal Misc. Cancellation Bail Application No.168/2023, vide order dated 03.12.2024.
4. Learned counsel for the petitioner further submits that the above observations in the bail application contradict the facts. It is contended that the Directorate General of Goods and Services Tax Intelligence, Jaipur Zonal Unit, after receiving the information that M/s. Gurbax Rai Cotton Industries, M/s. Gurbax Rai and Sons and M/s. Gurbax Rai Praveen Kumar was fraudulently availing Input Tax Credit based on invoices without actually receiving the goods, conducted the inquiry and searches were made at the premises of M/s. Gurbax Rai Cotton Industries, residential premises of the Respondent-Lovkesh Kumar, (proprietor of M/s. Gurbax Rai Cotton Industries and M/s. Gurbax Rai Praveen Kumar) an
The court emphasized that economic offences require a stringent approach in bail considerations, especially when serious allegations of fraud are involved.
The court ruled that economic offences require a stringent approach in bail matters, emphasizing the gravity of allegations and evidence against the accused.
The main legal point established is the importance of procedural compliance in arrest procedures and the need for substantiated allegations in cases of wrongful input tax credit availing.
The court reaffirmed that bail in economic offences must adhere to legal classifications; deposit of funds does not alter the non-bailable nature of offences exceeding specified monetary thresholds.
Detention without substantial evidence and the principle of equal treatment in bail applications necessitate granting bail, especially when co-accused are already released.
The court emphasized the necessity of substantial evidence for serious charges under the GST Act and the accused's right to a fair trial.
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