Facts of the Case

The Punjab & Haryana High Court heard a batch of seven connected regular bail petitions arising out of FIR No. 8 dated 21.08.2020, registered at Police Station Vigilance Bureau, Phase-I, SAS Nagar, Mohali, under Sections 7, 7A and 8 of the Prevention of Corruption Act, 1988 and Sections 420, 465, 467, 468, 471, 201 and 120-B of the Indian Penal Code, 1860.

The prosecution alleged a large-scale GST evasion racket operating in the State of Punjab. Based on intelligence inputs and legally intercepted mobile phone conversations, officials of the GST Department, traders, transporters and intermediaries (passers) were alleged to have formed a conspiracy involving payment of monthly bribes to GST officials, suppression of taxable transactions, non-payment of GST, and fraudulent availment of bogus Input Tax Credit (ITC) through sham transactions.

The petitioners sought regular bail after completion of investigation and filing of the challan.

Issues Involved

  1. Whether the petitioners were entitled to regular bail in a case involving alleged GST evasion, corruption and bogus Input Tax Credit.
  2. Whether completion of investigation and filing of the challan justified grant of regular bail.
  3. Whether the pendency of sanction for prosecution against government officials was a relevant factor while considering bail.
  4. Whether parity with co-accused already granted bail entitled the petitioners to similar relief.

Petitioners' Arguments

  • The petitioners contended that they had remained in judicial custody for a considerable period.
  • Investigation had already been completed and the challan had been presented before the competent court.
  • They argued that they had been implicated mainly on the basis of statements made by co-accused during investigation.
  • It was further submitted that the trial was unlikely to commence or conclude expeditiously because sanction to prosecute the concerned officials of the Excise and Taxation Department had not yet been granted.
  • The petitioners also relied upon the fact that similarly placed co-accused had already been granted regular bail by the High Court.

Respondent's Arguments

  • The State opposed the grant of bail considering the seriousness of the allegations relating to GST fraud, corruption and bogus Input Tax Credit.
  • However, the State fairly conceded that:
    • investigation against the petitioners had been completed;
    • the challan had already been presented; and
    • sanction for prosecution of the concerned departmental officials was still awaited.

Court Order / Findings

The Punjab & Haryana High Court observed that:

  • investigation against the petitioners stood completed;
  • the challan had already been filed;
  • similarly placed co-accused had been granted regular bail;
  • the trial was likely to consume considerable time, particularly because sanction for prosecution of the departmental officials was still awaited.

Without expressing any opinion on the merits of the allegations, the Court held that continued incarceration of the petitioners was not warranted.

Accordingly, the Court allowed all seven bail petitions and directed that the petitioners be released on regular bail, subject to furnishing appropriate bail bonds to the satisfaction of the concerned Chief Judicial Magistrate/Duty Magistrate.

The Court clarified that the observations made in the order were confined solely to the consideration of bail and would not influence the trial on merits.

Important Clarification

  • Grant of regular bail does not amount to acquittal or adjudication on the merits of the allegations.
  • Completion of investigation, filing of the challan, parity with co-accused and likely delay in conclusion of trial are relevant considerations for grant of bail.
  • The Court expressly refrained from expressing any opinion regarding the alleged GST evasion or bogus Input Tax Credit transactions.
  • The judgment reiterates that prolonged custody is ordinarily unwarranted where investigation is complete and trial is likely to take considerable time.

Sections Involved

  • Sections 7, 7A & 8 of the Prevention of Corruption Act, 1988.
  • Sections 420, 465, 467, 468, 471, 201 & 120-B of the Indian Penal Code, 1860.
  • Section 439 of the Code of Criminal Procedure, 1973 (Regular Bail).
  • Allegations relating to fraudulent Goods and Services Tax (GST) evasion and Bogus Input Tax Credit (ITC).

Link to download the order - https://mytaxexpert.co.in/uploads/1782895095_216compressed.pdf

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