Bail Granted in Alleged 73 Fake Firms & ITC Scam by Rajasthan HC

Mohit S/o Shri Ishwar Sharma Vs Union of India (Rajasthan High Court)

Introduction: The Rajasthan High Court has granted bail to Mohit Sharma in a case involving 73 alleged fake firms and a substantial Input Tax Credit (ITC) transaction of Rs. 73.54 Crore. This article delves into the details of the case, the arguments presented, and the court’s decision.

Detailed Analysis:

i. Background of the Case: Mohit Sharma filed a bail application under Section 439 P.C. in connection with Case No. DGGI/Inv/INTL/40/2023. The case, registered at the DGGI Zonal Office, Jaipur, pertains to offenses under Sections 132(1)(b)(c)(f)(k) of the CGST Act, 2017, and Section 132(5).

ii. Petitioner’s Arguments: Mohit’s counsel, Siddhartha Ranka, argued that Mohit was employed in the firm of Rajat and Ishu, two other implicated individuals. Rajat and Ishu had been released on bail due to a delayed charge-sheet filing. Mohit had been in custody since July 12, 2023, with a brief interim bail period.

iii. Legal Precedent: Reference was made to the judgment in the case of Ratnambar Kaushik vs. Union of India [2022 SCC OnLine SC 1678], emphasizing the duration of incarceration, completion of investigation, and nature of evidence in economic offense cases.

iv. Opposition by Union of India: Mr. Sandeep Pathak, representing the Union of India, opposed bail, highlighting the creation of 73 fake firms without any goods transactions and an ITC of Rs. 73.54 Crore. He argued that given the gravity of offenses, bail should not be granted.

v. Court’s Decision: After considering both sides, the court noted Mohit’s custody since July 2023 and the release of Rajat and Ishu on bail. With no criminal antecedents against Mohit for similar offenses and a maximum punishment of 5 years, the court granted bail, emphasizing the nature of evidence in economic offenses.

Conclusion: In conclusion, the Rajasthan High Court, considering various factors, has granted bail to Mohit Sharma in the case involving 73 fake firms and a significant ITC transaction. The decision takes into account legal precedent, the duration of incarceration, and the absence of criminal antecedents, providing insights into the court’s rationale.

FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT

1. Instant bail application has been filed by petitioner under Section 439 P.C. in connection with Case No. DGGI/Inv/INTL/40/2023-Gr-N-O/o DD-DGGI-RU-UDAIPUR registered at Office of the Additional Directorate General, DGGI Zonal Office, Jaipur for the offence(s) under Sections 132(1)(b)(c) (f)(k) of Central Goods and Service Tax Act, 2017 and read with Section 132(5).

2. It has been argued by the learned counsel for petitioner Siddhartha Ranka that apart from the petitioner, other two persons named Rajat and Ishu were also implicated in the present case, however, as far as petitioner-Mohit is concerned, he was employed in the firm of Rajat and Ishu. Since the charge-sheet against Rajat and Ishu was not filed in time, they have been released on bail granting benefit of Section 167(2) Cr. P. C by the trial Court itself. Petitioner is in custody since 12.07.2023 (except for five days during which he was granted interim bail on account of death of his grand-mother); the maximum punishment for the alleged offence does not travel beyond 5 years of imprisonment and fine; there are no criminal antecedents against the petitioner, therefore in such totality of facts and circumstances, petitioner be enlarged on bail. Reliance have been placed upon the judgment passed in case of Ratnambar Kaushik Vs. Union of India [2022 SCC OnLine SC 1678], wherein the Hon’ble Supreme Court has held as under:-

“In considering the application for bail, it is noted that the petitioner was arrested on 21.07.2022 and while in custody, the investigation has been completed and the charge sheet has been filed. Even if it is taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132(1)(l)(i), the punishment provided is, imprisonment which may extend to 5 years and fine. The petitioner has already undergone incarceration for more than four months and completion of trial, in any event, would take some time. Needless to mention that the petitioner if released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Further, in a case of the present nature, the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses, due to which there can be no apprehension of tampering, intimidating or influencing. Therefore, keeping all these aspects in perspective, in the facts and circumstances of the present case, we find it proper to grant the prayer made by the petitioner.”

3. Learned counsel for Union of India Mr. Sandeep Pathak has vehemently opposed the bail and submitted that in the matter related to economic offences, the bail ordinarily should not be He submits that it is a case, wherein as many as 73 fake firms were created without transaction of any goods and through which an Input Tax Credit (ITC) to the tune of rupees 73.54 Crore was effected. Therefore, considering the gravity of offences, petitioner may not be released on bail.

4. Having considered the rival contentions of learned counsel for both parties, it is not in dispute that petitioner is in custody since 07.2023 and other two persons involved in the present case namely Rajat and Ishu have already been enlarged on bail, though by virtue of Section 167(2) Cr. P. C.; there are no antecedents against the petitioner for similar nature of offences and the punishment for the alleged offence related to evasion of tax is not more than 5 years and fine, as per relevant provisions of Section 132(1)(i) of CGST Act, 2017 and in view of judgment of Hon’ble Supreme Court passed in case of Ratnambar Kaushik (supra), but without commenting on merits of the case, this Court deems it just and proper to release the petitioner on bail.

5. Accordingly, the bail application is allowed and it is ordered that the accused-petitioner Mohit S/o Shri Ishwar Sharma shall be released on bail provided he furnishes a personal bond in the sum of Rs.1,00,000/- with two sureties of Rs.50,000/- each to the satisfaction of the learned trial Judge for his appearance before the court concerned on all the dates of hearing as and when called upon to do So.