Facts of the Case

The petitions sought regular bail in connection with an FIR registered by the Vigilance Bureau, Punjab, alleging a large-scale GST evasion racket operating in the State of Punjab.

According to the prosecution, intelligence inputs indicated widespread evasion of Goods and Services Tax through a network involving GST Department officials, traders, transporters, and private individuals allegedly acting as intermediaries. After obtaining necessary approvals, the investigating agency intercepted mobile phone communications of certain accused persons.

The investigation alleged that government officials received monthly illegal gratification in exchange for facilitating unaccounted inter-State and intra-State transactions without payment of applicable GST. These transactions allegedly enabled fraudulent availment of bogus Input Tax Credit (ITC) through fabricated transactions.

The petitioners were arrested during September 2022 and sought regular bail after completion of investigation and filing of the challan.

 

Issues Involved

  1. Whether the petitioners were entitled to regular bail after completion of investigation.
  2. Whether filing of the challan reduced the necessity of continued judicial custody.
  3. Whether pendency of prosecution sanction against public servants justified grant of bail.
  4. Whether parity with similarly placed co-accused already granted bail should be extended to the petitioners.
  5. Whether the expected delay in conclusion of trial warranted release on bail.

 

Petitioners' Arguments

The petitioners contended that:

  • Investigation against them had already been completed.
  • The challan had been presented before the competent court.
  • They had primarily been implicated on the basis of disclosure statements made by co-accused during investigation.
  • No further custodial interrogation was required.
  • The trial was unlikely to commence or conclude expeditiously because sanction for prosecution of officials of the Excise and Taxation Department had not yet been granted.
  • Several similarly situated co-accused had already been granted regular bail by the High Court, and the petitioners were entitled to the benefit of parity.

 

Respondent's Arguments

The State opposed the grant of bail considering the seriousness of the allegations involving corruption and large-scale GST fraud.

However, the State fairly acknowledged before the Court that:

  • Investigation against the petitioners had been completed.
  • The challan had already been filed.
  • Sanction to prosecute the concerned departmental officials was still awaited.

 

Court Order / Findings

The Punjab and Haryana High Court allowed all the connected bail petitions.

The Court observed that:

  • Investigation qua the petitioners stood completed.
  • The challan had already been presented before the competent court.
  • Several co-accused had already been granted bail.
  • Sanction for prosecution of departmental officials had not yet been granted, making early conclusion of trial unlikely.
  • Continued incarceration was not justified merely because the trial would take considerable time.

Without expressing any opinion on the merits of the prosecution case, the Court directed that all petitioners be released on regular bail upon furnishing appropriate bail bonds to the satisfaction of the Chief Judicial Magistrate or Duty Magistrate concerned.

The Court further clarified that its observations were confined solely to the consideration of bail and should not influence the merits of the criminal trial.

 

Important Clarification

The judgment reiterates the following important legal principles:

  • Completion of investigation and filing of the charge-sheet are significant considerations while deciding regular bail.
  • Delay in commencement or conclusion of trial can favour grant of bail.
  • Awaiting prosecution sanction against public servants is a relevant circumstance indicating likely delay in trial.
  • The principle of parity applies where similarly situated co-accused have already been granted bail.
  • Bail orders should not be treated as findings on the merits of the criminal case.

Sections Involved

Prevention of Corruption Act, 1988

  • Section 7
  • Section 7A
  • Section 8

Indian Penal Code, 1860

  • Section 420
  • Section 465
  • Section 467
  • Section 468
  • Section 471
  • Section 201
  • Section 120-B

Link to download the order -

https://mytaxexpert.co.in/uploads/1782969495_173compressed.pdf

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