Facts of the Case

The petitioner, Amit Kaushik, approached the High Court of Punjab and Haryana under Section 439 Cr.P.C. seeking regular bail in FIR No. 405 dated 24.10.2020, registered at Police Station Faridabad Central, District Faridabad, under Sections 420, 467, 468 and 471 IPC (Sections 201 and 120-B IPC added later). The FIR arose from a complaint by Rajesh Kumar Yadav, Excise and Taxation Officer, alleging that M/s A.S. Enterprises, registered at Flat No. 68, ECWS Ground Floor, Sector 81, Faridabad, holding GSTIN 06BWTPA3969E1ZA, had fraudulently availed bogus Input Tax Credit through fake documents. Physical verification found no actual business at the declared premises; the firm existed only on paper, registered by one Ashok, son of Raj Kumar. It had neither received nor supplied any goods, claiming ITC entirely on paper transactions with other non-existent firms, allegedly causing a loss of Rs. 2,05,79,076 to the exchequer in contravention of the proviso to Section 132(1)(B)(C) of the Haryana Goods and Services Tax Act, 2017. The petitioner was arrested on 29.09.2022, nearly two years after the FIR, and, per the Court's own recital, has remained in custody since 20.09.2022. An earlier bail plea was dismissed by the same Court on 08.02.2023, after which charges were framed on 02.03.2023 under Sections 120-B, 420, 467, 468, 471 and 201 IPC. By the present hearing, six material witnesses had been examined without any material surfacing against the petitioner.

Issues Involved

  1. Whether the petitioner, in custody over a year with the trial progressing slowly, is entitled to regular bail under Section 439 Cr.P.C.
  2. Whether an FIR under general IPC provisions is maintainable where allegations concern fraudulent GST registration and bogus ITC, matters otherwise covered by the special CGST/HGST Act regime.
  3. Whether the quantum of the alleged tax loss and the nearly two-year delay in effecting arrest are relevant to bail.

Petitioner's Arguments

  • The petitioner has been falsely implicated; M/s A.S. Enterprises, alleged to have availed bogus ITC, was owned and controlled by co-accused Ashok, to whom the petitioner is not even remotely related.
  • The FIR was registered on 24.10.2020 but the petitioner was arrested only on 29.09.2022, an unexplained delay of nearly two years, undermining the urgency claimed by the prosecution.
  • No assessment order has been passed and no penalty verified against the firm till date, yet the challan was filed only after considerable delay.
  • The alleged evasion of Rs. 2,05,79,076 is less than the five-crore threshold under the CGST Act associated with mandatory arrest, so the petitioner ought not to have been arrested at all.
  • Offences relating to fraudulent ITC fall squarely within Section 132 of the CGST/HGST Act, making an FIR under general IPC provisions non-maintainable; reliance was placed on the same Court's earlier ruling in CWP-1393-2021 holding GST a special fiscal enactment traceable to Article 246-A.
  • Despite six witnesses examined after framing of charges, no evidence has emerged implicating the petitioner, who has remained in custody for over a year as the trial proceeds slowly.

Respondent's Arguments

  • The petitioner caused a huge loss to the government exchequer and such economic offences ought to be treated seriously.
  • The petitioner was very much part of the systematic fraud perpetrated along with his co-accused and does not deserve the concession of bail.

Court Order/Findings

  • The Court noted all the offences alleged are triable by a Magistrate and the trial is likely to take considerable time to conclude.
  • Whether the FIR is maintainable given the special CGST/HGST Act regime was left open, to be adjudicated by the Trial Court during trial.
  • The Court held that the petitioner's custody of over a year, with the slow pace of the ongoing trial, by itself constituted sufficient ground to grant bail, without going into the maintainability dispute.
  • The petitioner was ordered released on bail subject to furnishing bail/surety bonds to the Trial Court/Duty Magistrate/CJM's satisfaction.

Important Clarification

  • Bail courts need not resolve unsettled jurisdictional questions — such as whether an IPC FIR can coexist with CGST/HGST Act prosecution for the same conduct — at the bail stage; that is best left to the Trial Court.
  • Prolonged pre-trial incarceration, especially with a slow trial, remains an independent ground for bail even in serious economic offences involving bogus ITC running into crores.

Sections Involved

  • Section 132(1)(B)(C), Central/Haryana GST Act, 2017 — Penalises fraudulent availment of ITC using invoices without actual supply of goods or services.
  • Section 69, CGST Act, 2017 — Empowers the Commissioner to authorise arrest for a specified offence under Section 132.
  • Sections 420, 467, 468, 471, 201, 120-B, IPC — Cheating, forgery, use of forged documents, disappearance of evidence, and criminal conspiracy.
  • Section 439, Cr.P.C., 1973 — Empowers the High Court/Sessions Court to grant bail.
  • Article 246-A, Constitution of India — Confers concurrent power on Parliament and States to legislate on GST.

Decision – In Favour of

The decision is in favour of the accused to the extent that regular bail was granted on account of prolonged custody and slow trial progress, but the Court declined to decide whether the IPC FIR could be sustained alongside the CGST/HGST Act, leaving that to the Trial Court. This is best described as a bail order granted on custody grounds, without any finding on the merits of the tax-fraud 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-47866-2023
  • CNR: 2023:PHHC:146692
  • Coram: Hon'ble Mr. Justice N.S. Shekhawat
  • Decision Date: 03.11.2023
  • Disposal Nature: Bail petition allowed

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