Facts of the Case

The Directorate General of GST Intelligence (DGGI) intercepted 21 containers containing smoking mixtures at Mundra Port. Laboratory analysis revealed that the goods were allegedly spurious and unfit for human consumption.

Investigation suggested involvement of firms including M/s Harsha International (owned by the respondent Jitender Kumar) and M/s Radiant Traders. It was alleged that:

  • No genuine business activity was conducted at the registered premises
  • Fake transactions were used to claim Input Tax Credit (ITC)
  • GST refunds worth approximately ₹198 crores were obtained

The co-accused was arrested, while the respondent obtained anticipatory bail. The DGGI challenged:

  1. Grant of anticipatory bail
  2. Rejection of cancellation of bail

Issues Involved

  1. Whether anticipatory bail under Section 438 CrPC is maintainable in offences under the CGST Act
  2. Whether anticipatory bail granted to the respondent should be set aside
  3. Whether bail conditions were violated warranting cancellation

Petitioner’s Arguments (DGGI)

  • Anticipatory bail is not maintainable in GST offences in light of State of Gujarat v. Choodamani Parmeshwaran Iyer
  • The respondent was involved in a serious economic offence involving GST evasion of ₹218 crores
  • Fraudulent ITC was claimed through non-existent business transactions
  • The seized goods were spurious and unfit for consumption
  • Bail conditions were violated, including lack of cooperation and non-compliance

Respondent’s Arguments (Jitender Kumar)

  • The Supreme Court judgment relied upon is distinguishable and not retrospectively applicable
  • There was a genuine apprehension of arrest as a co-accused had already been arrested
  • The laboratory report was inconclusive
  • GST on purchases was duly paid; no fake invoices were alleged
  • ITC amount was reversed
  • The respondent cooperated with the investigation and complied with bail conditions
  • Protection was also granted by the Supreme Court against coercive action

Court Findings / Analysis

  • The Supreme Court judgment in Choodamani Parmeshwaran Iyer does not apply retrospectively
  • Anticipatory bail can still be granted under Article 226 of the Constitution
  • The respondent had a reasonable apprehension of arrest
  • He was not the main accused and acted under instructions of others
  • He had clean antecedents and cooperated with investigation
  • No substantial violation of bail conditions was established

Court Order

  • The Delhi High Court upheld the anticipatory bail granted to Jitender Kumar
  • Petitions filed by DGGI were dismissed
  • Liberty granted to DGGI to seek cancellation if conditions are violated in future
  • Respondent directed to strictly comply with bail conditions

Important Clarifications by Court

  • Anticipatory bail is not completely barred in GST offences
  • Article 226 empowers High Courts to grant pre-arrest protection
  • Subsequent judgments cannot invalidate prior bail orders retrospectively
  • Bail cancellation requires clear evidence of violation

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/ABL19012024CRLMM45282023_155147.pdf

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