Facts of the Case

The petitioner, Vishal, sought regular bail under Section 439 of the Code of Criminal Procedure, 1973 in connection with FIR No.475 dated 20.10.2020 registered at Police Station Gohana City, District Sonepat, initially under Sections 420, 467, 468 and 471 of the Indian Penal Code and Section 11 of the Central Sales Tax Act, 1956, later altered to include Section 132 of the Haryana Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017 in place of the Central Sales Tax Act charge. The prosecution alleged that the petitioner, along with his brother-in-law, had registered a fake firm and undertaken fake transactions for the purpose of tax evasion. The petitioner had been in custody since 04.06.2023, and the challan had already been filed before the trial court.

Issues Involved

  1. Whether regular bail could be granted to the petitioner accused of GST-related tax evasion through registration of a fake firm under Section 132 of the GST Act, 2017.
  2. Whether the petitioner's prolonged custody, medical condition, and completion of investigation (challan filed) justified bail without commenting on the merits of the case.

Petitioner's Arguments

  • The petitioner is innocent and has been falsely implicated; his firm is duly registered under the Haryana GST Act, 2017 and the Central GST Act, 2017 and had been regularly filing returns.
  • The petitioner has been in custody since 04.06.2023 and is suffering from an advanced stage of HIV, a serious medical condition warranting humane consideration.
  • The petitioner had never received any notice regarding the alleged tax evasion until the criminal case was registered against him.
  • Since the challan has already been presented in Court, the investigation stands completed and continued custody serves no further purpose.

Respondent's Arguments

  • The State opposed bail, submitting that the petitioner had created a fake firm along with his brother-in-law, Shanky, and had engaged in fake transactions for the purpose of evasion of tax.
  • The co-accused was yet to be arrested, though it was admitted that the challan had already been presented in Court.
  • Given the gravity of the offence of large-scale tax evasion through a bogus firm, the State prayed for dismissal of the bail petition.

Court Order/Findings

  • The Court noted that the petitioner had been in custody since 04.06.2023, that he was suffering from an advanced stage of HIV (a fact not controverted), and that the challan had already been presented, with no other case registered against him.
  • Holding that criminal liability, if any, could only be ascertained after conclusion of trial (which would take considerable time) and that no purpose would be served by keeping the petitioner behind bars any longer, the Court allowed the bail application, without commenting on the merits of the case.
  • Bail was granted subject to furnishing bail/surety bonds to the satisfaction of the trial court, an undertaking to regularly appear on every date, not to leave the country without permission, and not to tamper with prosecution evidence.
  • The Court clarified that its observations were not to be construed as an opinion on the merits of the case.

Important Clarification

  • In GST evasion prosecutions under Section 132, completion of investigation (filing of the challan) and prolonged pre-trial custody are relevant factors for grant of regular bail, particularly where trial is expected to take considerable time.
  • Serious medical conditions of the accused (here, advanced HIV) can weigh in favour of bail, even where the allegations involve creation of a fake firm and tax evasion.
  • Grant of bail in a GST fraud/evasion case does not amount to any finding on the merits of the allegations; the trial court remains free to decide guilt or innocence independently.

Sections Involved

  • Section 132 of the Central Goods and Services Tax Act, 2017/Haryana Goods and Services Tax Act, 2017 — penal provision creating offences for specified acts including issuance of fake invoices and fraudulent registration, with imprisonment on conviction.
  • Sections 420, 467, 468 and 471 of the Indian Penal Code, 1860 — cheating and forgery offences invoked alongside the GST charge in relation to the alleged fake firm.
  • Section 439 of the Code of Criminal Procedure, 1973 — confers power on the High Court/Sessions Court to grant bail in non-bailable offences.

Decision – In Favour of

Decided in favour of the Assessee/Accused — regular bail was granted to the petitioner, though strictly on considerations of custody period, health, and completed investigation, and expressly without any finding on the merits of the tax evasion allegations.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case No.: CRM-M No.45152 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Mr. Justice Sanjiv Berry
  • Decision Date: 30.11.2023
  • Disposal Nature: Regular bail granted

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