It has become increasingly common for Magistrate Courts to mechanically deny bail to individuals accused under Section 132 of the Central Goods and Services Tax Act, 2017 (“CGST Act”). This approach, often adopted without due consideration of the legal principles governing bail, warrants a critical examination in light of recent judicial pronouncements, including the landmark judgment of the Hon’ble Supreme Court in Vineet Jain v. Union of India, 2025 LiveLaw (SC) 513.
Before deliberating further, it would be trite to reproduce Section 132 of the CGST Act, which reads as under:
*Section 132. Punishment for certain offences.-
(1) 1[Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences], namely:-
(a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;
(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
(c) 2[avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;]
(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(e) evades tax 3[****]or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);
(f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act;
(g) 4[****];
(h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;
(i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
(j) 5[****];
(k) 6[****]; or
(l) attempts to commit, or abets the commission of any of the offences mentioned in 7[clauses (a) to (f) and clauses (h) and (i)] of this section, shall be punishable-
(i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine;
(ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine;
(iii) in the case of 8[an offence specified in clause (b),] where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine;
(iv) in cases where he commits or abets the commission of an offence specified in clause (f) 9[****], he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
(2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.
(3) The imprisonment referred to in clauses (i), (ii) and (iii) of sub-section (1) and sub-section (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under this Act, except the offences referred to in sub-section (5) shall be non- cognizable and bailable.
(5) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) and punishable under clause (i) of that sub-section shall be cognizable and non-bailable.
(6) A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner.
Explanation.- For the purposes of this section, the term ” tax” shall include the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or refund wrongly taken under the provisions of this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act and cess levied under the Goods and Services Tax (Compensation to States) Act.
From the plain reading of Section 132 of CGST Act it transpires that Section 132 of the CGST Act criminalizes specific acts of tax evasion and related offences. These include issuing fake invoices, availing input tax credit (ITC) fraudulently, collecting tax but failing to deposit it, and falsifying records with the intent to evade tax. Depending on the quantum of evasion, the punishment may range from six months to five years of imprisonment, often coupled with a fine.
Importantly, Section 132(4) provides that all offences under the Act are non-cognizable and bailable, except those specified in clauses (a) to (d) of sub-section (1) and punishable under clause (i) — i.e., involving evasion or wrongful ITC exceeding Rs. 5 crores, which are cognizable and non-bailable. Thus, offences below this threshold remain bailable.
The Courts have enunciated legal principles governing Bail. The general principles laid down in State of Rajasthan v. Balchand, (1977) 4 SCC 308 and reaffirmed in Sanjay Chandra v. CBI, (2012) 1 SCC 40 expounds that Bail is Rule while Jail is Exception. The Apex Court has categorically established the principle of India’s criminal justice system that bail should be the norm, not jail, except when there’s a substantial risk that the accused might flee, tamper with evidence, pose a threat to witnesses or Repeat offenses. The said cases highlight the importance of balancing the individual’s right to liberty enshrined in Article 21 of the Constitution with the need to ensure a fair trial and prevent the disruption of the judicial process.
Detention pending trial must be based on compelling reasons such as the risk of absconding, tampering with evidence, or influencing witnesses. However, in economic offences, the nature of evidence (documentary vs. testimonial), the stage of investigation, and past conduct of the accused are relevant. In CGST prosecutions, the evidence is primarily documentary and in the custody of the department itself. The scope for tampering is minimal. Thus, prolonged incarceration is not only unjustified but also oppressive.
Recently in Vineet Jain v. Union of India 2025 LiveLaw (SC) 513 the Apex Court strongly deprecated the routine denial of bail in CGST cases. The accused was charged under clauses (c), (f), and (h) of Section 132(1), which are serious but ultimately documentary offences. The brief facts are that
the charge-sheet in the instant case had already been filed and the accused had been in custody for nearly seven months.There were no prior antecedents but the High Court had refused to grant bail.
Saying that bail should be the normal in such cases, a bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan observed :
“We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels, including the High Court and ultimately, he was forced to approach this Court. These are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extra ordinary circumstances.”
The judgment in Vineet Jain has highlighted the need for a Reformed Bail Jurisprudence in GST offenced & mandated that Bail should be granted as a matter of course in documentary and non-violent economic offences under Section 132, barring exceptional circumstances.
It would be apropos to refer to the case of Akshay Goyal v. Union of India, 2023:AHC:216283 wherein the Allahabad High Court granted bail and reiterated that economic offences, though serious, cannot justify indefinite custody, especially when the accused is not a habitual offender. The Court held thus:
“After considering the facts of the present case it prima facie appears that;
(a) The applicant has been arrested without assigning any reason to believe nor any satisfaction to justified his arrest as provided in the Act;
(b) Offences as alleged are punishable up-to 5 years imprisonment;
(c) No notice for recovery of G.S.T. has been issued against the applicant and he is illegally arrested;
(d) Till date penalty or taxes has not been ascertained as per Act;
(e) Offences are compoundable in nature and triable by Magistrate;
It is a settled law that while granting bail, the court has to keep in mind the nature of accusation, the nature of the evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, the circumstances which are peculiar to the accused, his role and involvement in the offence, his involvement in other cases and reasonable apprehension of the witnesses being tampered with.
Taking into account the totality of facts and keeping in mind, the ratio of the Apex Court’s judgment in the case of State of Rajasthan v. Balchand @ Baliay (1977) 4 SCC 308, Gudikanti Narasimhulu And Ors., v. Public Prosecutor, High Court Of Andhra Pradesh, AIR 1978 SC 429, Ram Govind Upadhyay v. Sudarshan Singh & Ors., (2002) 3 SCC 598, Prasanta Kumar Sarkar v. Ashis Chatterjee & Anr., (2010) 14 SCC 496 and Mahipal v. Rajesh Kumar & Anr., (2020) 2 SCC 118, the larger interest of the public/State and other circumstances, but without expressing any opinion on the merits, I am of the view that it is a fit case for grant of bail. Hence, the present bail application is allowed.”
It would be also relevant to refer to Punjab & Haryana High Court judgment in the case of
Vishal Chauhan vs Haryana State Gst Intelligence Unit Neutral Citation No:2024:PHHC:106121wherein granting bail to the accused, the Court observed thus:
“15. In the instant case, the petitioner is in custody since 20.02.2024. He has no criminal antecedents. He has a permanent abode. As such, there is no likelihood of the petitioner’s fleeing from the country. He is also ready to surrender his passport. The investigation has completed and a complaint under Section 132 of the HGST Act read with the provisions of IGST Act has been filed against him. The trial is likely to take time. Show cause notice issued under Section 74(1) of the HGST Act/CGST Act upon him is yet to be adjudicated upon and the exact liability of the petitioner/his firm is yet to be fixed. The sentence to be awarded in this case is directly linked with the quantum of evasion of tax and the prosecution of the petitioner is also linked with determination of evasion of tax because if there is no evasion of tax, there can be no criminal liability. The determination of tax liability is subject to the challenge before tribunals and courts and does not fall within the realm of criminal courts. Further in view of the fact that one M/s Tata Steels Ltd. has also been issued notice under Section 74(1) of the HGST Act/CGST Act jointly with the petitioner on the allegations of being major recipient of the ITC and its liability is also to be adjudicated upon, which obviously may reduce the liability to be imposed upon the petitioner, coupled with the fact that maximum period of punishment to be awarded under Section 132 of the HGST Act is 05 years and also in view of the ratio of law as laid down in afore-cited authorities and the discussion as made above, I am of the considered opinion that this petition deserves to be allowed.”
It is worthwhile to refer to the recent Allahabad High Court judgment in the case of
Vikrant Singhal And Another vs Union Of India decided on 25 February, 2025 ( Neutral Citation No. – 2025:AHC:26921) wherein granting bail to the accused, the Court made the following observation:
“14. By now, it is well settled law that the grant of bail is a rule, and denial is an exception, and this principle has been reiterated by the Hon’ble Supreme Court in the case of Sanjay Chandra Vs. CBI (2012) 1 SCC 40, and the relevant portion of the decision reads as under :-
“21. In bail applications, generally, it has been laid down from the earliest times that the object of bail is to secure the appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative. Deprivation of liberty must be considered a punishment, unless it is required to ensure that an accused person will stand his trial when called upon. The courts owe more than verbal respect to the principle that punishment begins after conviction, and that every man is deemed to be innocent until duly tried and duly found guilty.
22. From the earliest times, it was appreciated that detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands that some unconvicted persons should be held in custody pending trial to secure their attendance at the trial but in such cases, “necessity” is the operative test. In this country, it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty upon only the belief that he will tamper with the witnesses if left at liberty, save in the most extraordinary circumstances.
23. Apart from the question of prevention being the object of refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as a mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an unconvicted person for the purpose of giving him a taste of imprisonment as a lesson.”
…………
15. Admittedly, the alleged offences are triable by magistrate and carry a maximum punishment of five years. As far as the investigation relating to the applicants is concerned, the same has been completed, as the complaint/ charge sheet dated 13.12.2024 has been filed against the applicants and their firms, whereupon the cognizance order dated 13.12.2024 has also been passed. However, the charges against the accused-applicants have not been framed and trial is yet to start. The pendency of the investigation relating to other accused persons would not be a valid ground to deny the concession of regular bail to the applicants. Most importantly, the entire case of the prosecution either hinges upon the documentary evidence or the admission/confession of the accused, and majority of the prosecution witnesses are official witnesses, and at present there does not seem to be any possibility of their being won over. Thus, keeping in view the nature of the trial, period of more than five months undergone by the applicants as an undertrial as well as the fact that there is no likelihood of conclusion of trial in near future, this Court deems it appropriate to extend the concession of regular bail to the applicants, as their further detention behind the bars would not serve any useful purpose.
16. Resultantly, without meaning any expression of opinion on the merits of the case, the bail application is allowed and it is ordered that the applicants-Vikrant Singhal and Sachin Singhal be released on regular bail in the above case subject to their furnishing the requisite bail bonds and surety bonds to the satisfaction of the trial court. It is further directed that the accused-applicants shall also abide by the terms and conditions of bail, which shall be imposed by the trial court at the time of acceptance of their bail bonds and surety bonds.”
It would be apposite to refer to the Allahabad High Court judgment in the case of Lalit Kumar Chaudhary vs Union Of India And Another decided on 2 August, 2024 (Neutral Citation No. – 2024:AHC:126718) wherein the Court dealt with the issue in hand in detail and held thus:
“9. The attention of the Court is also drawn to a relevant pronouncement made by Hon’ble Apex Court in Satender Kumar Antil vs. Central Bureau of Investigation, (2022) 10 SCC 51 wherein dealing specifically with the economic offences, it has been held by the Hon’ble Apex Court that (paragraph 90 of the said judgment):
“90. What is left for us now to discuss are the economic offences. The question for consideration is whether it should be treated as a class of its own or otherwise. This issue has already been dealt with by this Court in P. Chidambaram v. Directorate of Enforcement [P. Chidambaram v. Directorate of Enforcement, (2020) 13 SCC 791 : (2020) 4 SCC (Cri) 646] , after taking note of the earlier decisions governing the field. The gravity of the offence, the object of the Special Act, and the attending circumstances are a few of the factors to be taken note of, along with the period of sentence. After all, an economic offence cannot be classified as such, as it may involve various activities and may differ from one case to another. Therefore, it is not advisable on the part of the court to categorise all the offences into one group and deny bail on that basis. Suffice it to state that law, as laid down in the following judgments, will govern the field.”
10. Also in P. Chidambaram vs. Directorate of Enforcement, (2019) 9 SCC 24, the Hon’ble Apex Court held as under (paragraph 23 of the said judgment) :
“23. Thus, from cumulative perusal of the judgments cited on either side including the one rendered by the Constitution Bench [Gurbaksh Singh Sibbia v. State of Punjab, (1980) 2 SCC 565 : 1980 SCC (Cri) 465] of this Court, it could be deduced that the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of “grave offence” and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration will have to be on case-to-case basis on the facts involved therein and securing the presence of the accused to stand trial.”
11. In Sanjay Chandra v. CBI, (2012) 1 SCC 40, the Hon’ble Apex Court noticed that it was a case of fraud wherein by cheating and dishonestly inducing delivery of property by using as genuine a forged document was involved but the punishment for the offence was imprisonment for a term which may extend to seven years. The Hon’ble Apex Court held that it is, no doubt, true that the nature of the charge may be relevant but at the same time the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration. It was further held that :
“40. The grant or refusal to grant bail lies within the discretion of the court. The grant or denial is regulated, to a large extent, by the facts and circumstances of each particular case. But at the same time, right to bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the court, whether before or after conviction, to assure that he will submit to the jurisdiction of the court and be in attendance thereon whenever his presence is required.”
12. In view of the above discussions and considering the entire facts and circumstances of the case and keeping in view the fact that in the instant matter trial has not started even yet and the complicity of the accused applicant is yet to be determined in trial and everything relevant to the matter is under control of the department itself and there is probably nothing on record to demonstrate that the applicant, if enlarged on bail, would in any way adversely affect the trial; further no final verdict of any Court / Authority for any criminal liability to the credit of the applicant has been brought to the notice of this Court and noticing that the alleged offence is punishable with the maximum period of imprisonment of five years, the applicant is in jail since 1.5.2024, without commenting upon the merits of the case, I am of the opinion that the applicant has made out a case for bail.”
It would be relevant to refer to the case of Chetankumar Jasraj Palgota vs Assistant Commissioner Of State Tax And others decided on 8 March, 2023 (2023:BHC-AS:9047) wherein the Bombay High Court granting the bail of the accused following earlier case laws elaborated thus:
12. In Daulat Sameermal Mehta v/s. Union of India through the Secretary and ors. in Writ Petition No.471/2021 , the Petitioner who was arrested for offences under Sections 132(1)(b) and 132(1)(c) had interalia sought a declaration that the power under Section 69 of the CGST Act can be exercised only upon determination of the liability. An interim prayer was also made for enlarging the Petitioner on bail. While considering the prayer for interim relief, the Division Bench of this Court observed that the expression ‘reasons to believe’ as appearing in sub-section (1) of section 69 is a sine qua non for exercise of power to arrest by the Commissioner. It is held that the expression ‘reasons to believe’ postulates belief and the existence of reasons for that belief. The belief must be held in good faith, it cannot be merely a pretence. It must be founded upon information and can be formed on the basis of direct or circumstantial evidence and not on mere suspicion, gossip or rumor. It is held that a rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the officer and the formation of his belief.
13. The Division Bench of this Court, upon considering the principles laid down by the Apex Court in Arnab Manoranjan Goswami v/s. State of Maharashtra AIR 2021 SC 1 observed that Supreme Court has once again reminded us that the basic rule of our criminal justice system is ‘bail not jail’. In cases at undertrial stage, not involved in heinous offences like rape, murder, terrorism, etc. it is bail and not jail which is the norm.”
14. It would also be relevant to refer to the decision in Satender Kumar Antil v/s. Central Bureau of Investigation and Anr., BI 2022 Online SC 825 wherein the Hon’ble Supreme Court has reiterated the principles laid down in Arnesh Kumar (supra), that notwithstanding that existence of a reason to believe qua a police officer, the satisfaction for the need to arrest shall also be present. It is held that sub clause (1)(b)(i) of section 41 has to be read along with sub-clause (ii) and therefore both the elements of ‘reason to believe’ and ‘satisfaction qua an arrest’ are mandated and accordingly are to be recorded by the police officer.
15. In Nathu Singh v/s. State of U.P. ,(2021) 6 SCC 64, a three Judge Bench of the Hon’ble Supreme Court has observed that ‘it is no longer res integra that any interpretation of the provisions of section 438 Cr.P.C. has to take into consideration the fact that the grant or rejection of an application under section 438 Cr.P.C. has a direct bearing on the fundamental right to life and liberty of an individual. The genesis of this jurisdiction lies in Article 21 of the Constitution, as an effective medium to protect the life and liberty of an individual. The provision therefore needs to be read liberally, and considering its beneficial nature, the Courts must not read in limitations or restrictions that the legislature have not explicitly provided for. Any ambiguity in the language must be resolved in favour of the Applicant seeking relief.’
16. In Sushila Agarwal v/s. State (NCT of Delhi) (2020) 5 SCC 1, the Constitution Bench of the Hon’ble Supreme Court has observed thus :-
” 92. This court, in the light of the above discussion in the two judgments, and in the light of the answers to the reference, hereby clarifies that the following need to be kept in mind by courts, dealing with applications under Section 438, Cr. PC:
92.1 Consistent with the judgment in Shri Gurbaksh Singh Sibbia and others v. State of Punjab 54, when a person complains of apprehension of arrest and approaches for order, the application should be based on concrete facts (and not vague or general allegations) relatable to one or other specific offence. The application seeking anticipatory bail should contain bare essential facts relating to the offence, and why the applicant reasonably apprehends arrest, as well as his side of the story.
These are essential for the court which should consider his application, to evaluate the threat or apprehension, its gravity or seriousness and the appropriateness of any condition that may have to be imposed. It is not essential that an application should be moved only after an FIR is filed; it can be moved earlier, so long as the facts are clear and there is reasonable basis for apprehending arrest. 92.2 It may be advisable for the court, which is approached with an application under Section 438, depending on the seriousness of the threat (of arrest) to issue notice to the public prosecutor and obtain facts, even while granting limited interim anticipatory bail.
92.3 Nothing in Section 438 CrPC, compels or obliges courts to impose conditions limiting relief in terms of time, or upon filing of FIR, or recording of statement of any witness, by the police, during investigation or inquiry, etc. While considering an application (for grant of anticipatory bail) the court has to consider the nature of the offence, the role of the person, the likelihood of his influencing the course of investigation, or tampering with evidence (including intimidating witnesses), likelihood of fleeing justice (such as leaving the country), etc. The courts would be justified – and ought to impose conditions spelt out in Section 437 (3), Cr. PC [by virtue of Section 438 (2)]. The need to impose other restrictive conditions, would have to be judged on a case by case basis, and depending upon the materials produced by the state or the investigating agency. Such special or other restrictive conditions may be imposed if the case or cases warrant, but should not be imposed in a routine manner, in all cases.
Likewise, conditions which limit the grant of anticipatory bail may be granted, if they are required in the facts of any case or cases; however, such limiting conditions may not be invariably imposed. 92.4 Courts ought to be generally guided by considerations such as the nature and gravity of the offences, the role attributed to the applicant, and the facts of the case, while considering whether to grant anticipatory bail, or refuse it. Whether to grant or not is a matter of discretion; equally whether and if so, what kind of special conditions are to be imposed (or not imposed) are dependent on facts of the case, and subject to the discretion of the court.
Anticipatory bail granted can, depending on the conduct and behavior of the accused, continue after filing of the charge sheet till end of trial.
92.6 An order of anticipatory bail should not be “blanket”
in the sense that it should not enable the accused to commit further offences and claim relief of indefinite protection from arrest. It should be confined to the offence or incident, for which apprehension of arrest is sought, in relation to a specific incident. It cannot operate in respect of a future incident that involves commission of an offence.
92.7 An order of anticipatory bail does not in any manner limit or restrict the rights or duties of the police or investigating agency, to investigate into the charges against the person who seeks and is granted pre-arrest bail.”
17. In Siddharth v/s. The State of Uttar Pradesh and anr. In Criminal Appeal No.838 of 2021, the Hon’ble Supreme Court while interpreting the word ‘custody’ appearing in section 170 of the Cr.P.C., has observed that ‘… personal liberty is an important aspect of our Constitutional mandate. The occasion to arrest an accused during investigation arises when custodial interrogation becomes necessary or it is a heinous crime where there is possibility of influencing the witnesses or accused may abscond. Merely because an arrest can be made because it is lawful does not mandate that arrest must be made. A distinction must be made between the existence of the power to arrest and the justification for exercise of it. If arrest is made routine, it can cause incalculable harm to the reputation and self-esteem of a person. If the Investigating Officer has no reason to believe that the accused will abscond or disobey summons and has, in fact, throughout cooperated with the investigation we fail to appreciate why there should be a compulsion on the officer to arrest the accused. ”
18. It is true that economic offences such as tax evasion affect the economy of the country and are considered to be grave in nature. However, the gravity of such offence cannot per se be a reason to decline pre-arrest bail and deprive a person of his personal liberty. In P. Chidambaram v/s. Directorate of Enforcement (2020) 13 SCC 791, the Hon’ble Supreme Court has observed thus :-
” 21. Thus from cumulative perusal of the judgments cited on either side including the one rendered by the Constitution Bench of this Court, it could be deduced that the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of “grave offence” and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provides so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration will have to be on case to case basis on the facts involved therein and securing the presence of the accused to stand trial. “
19. The Delhi High Court in Tarun Jain (supra), while dealing with an application for pre-arrest in an offence under section 132 of CGST Act has held thus :-
“36. There is no embargo under the CGST Act restraining the petitioner from seeking pre-arrest bail. Economic offences such as tax evasion, money laundering, etc. affect the economy of the country and thus are considered grave in nature. To deter persons from indulging in such economic offences, criminal sanctions are required to be imposed. One of the most prominent criminal sanctions imposed with regard to economic offences is that of arrest. It is widely acknowledged that arrests result in deprivation of liberty of a person. Thus, while it is imperative to maintain law and order in society, the power to arrest must also always be subject to necessary safeguards.
Against this backdrop, analysing the arrest provisions under the Goods and Services Tax Law, with a view to study the adequacy of the safeguards and authorisation built into the text of the statute, the interplay between these provisions and the standards of arrest has to be established through judicial precedents, as well as other sources such as the Constitution of India and general statutes such as the Code of Criminal Procedure. ”
20. The learned Single Judge while granting pre-arrest bail observed that though the Petitioner was charged with economic offence, the maximum punishment for the offences involved was not more than five years and held that the offences under the Act are not grave to an extent where the custody of the accused can be held to be sine qua non. It is further observed that section 138 of CGST Act makes every offence under the Act compoundable except for certain circumstances which are specified under different clauses to the proviso of section 138 and this dilutes the heinousness of offences under the Act.
……..
24. Be that as it may, the investigation is based mainly on documents. All the documents are in custody of the Department. The Applicant who is on interim bail has co-operated with the investigation. Considering the fact that the offence is punishable with imprisonment for five years and considering the principles laid down by the Apex Court in the case of Arnesh Kumar (supra) and Satender Kumar Antil (supra), in my considered view, this would be a fit case to exercise discretion under section 438 of Cr.P.C. in favour of the Applicant.”
Conclusion:
Various Courts in a catena of cases have categorically held that bail should be normally granted to offenders u/s 132 of the CGST Act but for brevity, the same are not being referred to. It is indisputable that the Courts must uphold the presumption of innocence and ensure that pre-trial detention is not used as a tool of punishment. The observations in Vineet Jain (supra) should serve as a judicial compass guiding subordinate courts towards a more balanced and constitutionally sound approach to bail under the GST regime.
Author Bio
