Dhaval Jagdishbhai Patel Vs Superintendent of CGST And C.EX. HQ Prev. Gandhinagar & Anr. (Gujarat High Court)
Conclusion: The authorities will release the applicant/s only if he was not required in connection with any other offence for the time. If breach of any of the prescribed conditions was committed, the Sessions Judge concerned would be free to issue warrant or take appropriate action in the matter.
Held: Assessee was a Director of M/s. Nandeshwari Steel Limited, was involved in the manufacturing and clearing of SS ingots and SS round bars, falling under Chapter 72 of the Harmonized System of Nomenclature. The Company was registered with the Goods & Service Tax (GST) Department under GST Certificate No. 24AABCN3464B1ZY and regularly paid GST on the goods supplied from its factory. The Company availed ITC after confirming from the GST portal that the suppliers have valid GST registrations and have filed necessary returns (GSTR-1 and GSTR- 3B), and the tax has been paid. The Company ensured that the invoices from the suppliers were genuine and that all payments for the goods and GST had been made correctly. However, despite following the law, the applicant was wrongfully arrested as a Director of the Company when some suppliers’ GST registrations were subsequently cancelled. It was important to note that the credits were availed when the suppliers’ GST registrations were valid and the suppliers had filed the statutory returns. The applicant was arrested on 20/07/2024, and although bail applications were filed in various courts, the bail was denied. A criminal complaint was filed against the Company and its Directors, including the applicant, for an alleged offence under sections 132(1)(c), 137(1), and 137(2) of the CGST/SGST Act, 2017, punishable under section 132(1)(i) of the said Act. As the charge-sheet was filed while the bail application was pending in the High Court of Gujarat, the applicant withdrew the bail application. This Court allowed the withdrawal and directed the applicant to file a fresh bail application before the Additional Chief Judicial Magistrate, Ahmedabad. The authorities contended fraudulent ITC to the tune of Rs. 51.53 crores had been unearthed out of a total ITC of Rs. 327.53 crores availed by the company to date. The department had verified that the accused persons had taken undue advantage and siphoned off the Input Tax Credit. No goods had been sold, and forged bills were prepared. Furthermore, no vehicles had passed through toll plazas, and no registration numbers were available. On appeal. It was held that the Court considered several factors in granting bail, including the non-violent nature of the offense, the completion of the investigation, and the prolonged trial process. It imposed strict conditions on Patel, including surrendering his passport, marking monthly attendance at the police station, and refraining from interfering with the case. Additionally, the company must pay Rs. 2 crores in installments, failing which a non-bailable warrant could be issued. The ruling emphasized the principle that “bail is the rule, jail is the exception” while ensuring compliance with legal proceedings. The Court also clarified that its decision should not influence the trial’s outcome, and the prosecution retains the right to seek bail cancellation if any conditions were breached.
