Facts of the Case

The petitioner, Sujay Maitra, filed his second bail application under Section 439 of the Code of Criminal Procedure after being arrested in connection with offences under Section 132(1)(b), Section 132(1)(c), and Section 132(1) of the Odisha Goods and Services Tax Act, 2017 (OGST Act). The prosecution alleged that the petitioner created and operated several fictitious business entities, issued fake invoices, and wrongfully claimed, utilized, and passed on bogus Input Tax Credit (ITC) without any actual movement or receipt of goods.

According to the prosecution, the petitioner, along with other accused persons, allegedly availed bogus ITC amounting to approximately ₹14.40 crore and passed on fake ITC of around ₹18.08 crore, thereby causing substantial loss to the State exchequer.

 Issues Involved

  1. Whether the petitioner was entitled to bail despite allegations of fraudulent availment and passing of bogus Input Tax Credit through fake firms.
  2. Whether continued judicial custody was necessary after completion of investigation.
  3. Whether the documentary nature of evidence reduced the possibility of tampering with evidence.
  4. Whether the grant of bail to a co-accused justified reconsideration of the petitioner's bail application.

 Petitioner’s Arguments

  • The petitioner denied involvement in the alleged GST fraud and disputed the accusations of creating fictitious firms and fraudulently availing Input Tax Credit.
  • It was submitted that the prosecution case was entirely based on documentary evidence, which had already been seized and remained in the custody of the investigating authorities and the Court.
  • Since the investigation had been completed, there was no possibility of tampering with evidence.
  • The petitioner had remained in custody since 16 July 2021, and further detention would serve no useful purpose.
  • It was also argued that one of the co-accused had already been granted bail and the principle of parity should be applied.

 Respondent’s Arguments

The State opposed the bail application and contended that:

  • The earlier bail application had already been rejected and there was no substantial change in circumstances.
  • The petitioner was actively involved in a serious economic offence involving fraudulent GST transactions through fake firms and fake invoices.
  • The alleged acts resulted in substantial loss to the Government revenue.
  • Considering the gravity of the economic offence, the petitioner should not be released on bail merely because he had remained in custody for a considerable period.

 Court Order / Findings

The Orissa High Court observed that:

  • The prosecution case was primarily based on documentary evidence already seized and under the control of the investigating agency or the Court.
  • The investigation had been completed and no further custodial interrogation was necessary.
  • The maximum punishment prescribed under the relevant provisions of the OGST Act was five years' imprisonment where the tax evaded or ITC wrongly availed exceeded the prescribed monetary threshold.
  • Since a co-accused had already been granted bail and no allegation of violation of bail conditions had been placed before the Court, parity also weighed in favour of the petitioner.
  • The prosecution failed to produce any material demonstrating that continued detention of the petitioner remained necessary.

Accordingly, the Court allowed the second bail application and directed release of the petitioner on furnishing bail of ₹50,00,000 with two sureties of the like amount, subject to stringent conditions including:

  • Not influencing or threatening prosecution witnesses.
  • Not tampering with evidence.
  • Not engaging in similar activities.
  • Surrender of passport (if any).
  • Restriction on leaving India without prior permission.
  • Restriction on leaving the jurisdiction of Sundargarh District until conclusion of trial.
  • Regular appearance before the investigating authority and the trial court.
  • Bail liable to cancellation upon violation of any condition.

 Important Clarification

The High Court did not examine the merits of the allegations relating to wrongful availment of Input Tax Credit. The order was confined to consideration of bail after taking into account:

  • completion of investigation,
  • documentary nature of evidence,
  • absence of risk of evidence tampering,
  • prolonged custody,
  • and grant of bail to a co-accused.

The observations made in the bail order shall not affect the merits of the criminal trial.

 Sections Involved

  • Section 132(1)(b), Odisha Goods and Services Tax Act, 2017
  • Section 132(1)(c), Odisha Goods and Services Tax Act, 2017
  • Section 132, Odisha Goods and Services Tax Act, 2017
  • Section 439, Code of Criminal Procedure

 Link to Download the Order-https://mytaxexpert.co.in/uploads/1783922474_4011compressed.pdf

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