Case Law Details
Hitendra Chandrakant Shah Vs State of Gujarat (Gujarat High Court)
Introduction: In a recent development, the Gujarat High Court has dismissed the anticipatory bail application of Hitendra Chandrakant Shah in connection with FIR 11191011220168 of 2022. The case revolves around the alleged illegal opening of a GST account based on false documents to obtain financial benefits through input tax credit.
Detailed Analysis:
1. Background of the Case:
- Hitendra Shah filed an application seeking anticipatory bail under Section 438 of the Code of Criminal Procedure. The FIR accuses him of offenses under Sections 409, 420, 465, 467, 468, 471, 120-B, and 34 of the Indian Penal Code.
2. Nature of Allegations:
- The FIR outlines that Hitendra Shah, along with other accused, unlawfully opened a GST account using false documents to gain financial benefits in the form of input tax credit.
- Dummy accounts were allegedly created, using forged documents and bills, to obtain financial benefits from the government exchequer illegally.
3. Bail Application and Arguments:
- Shah’s counsel argued his innocence, claiming no active or passive role in obtaining false input tax credit.
- It was highlighted that during the alleged period of the offense, Shah was in custody for another case, indicating his non-involvement in the scam.
- The defense argued that the severity of the charges was escalated purposefully by including various IPC sections to harass the petitioner.
4. Opposition and Prosecution’s Stand:
- The prosecution vehemently opposed the bail, asserting that Shah was a wanted accused involved in a massive scam amounting to Rs. 1500 Crore.
- They claimed Shah, along with other accused, cheated the government by preparing bogus bills and siphoned off a considerable amount through false input tax credit.
5. Court’s Prima Facie Observation:
- The court, after reviewing the FIR and the facts presented by the Investigating Officer, observed a prima facie case of a scam involving false input tax credit and financial loss to the government exchequer.
- Shah was seen as playing a significant role in committing an offense of an economic nature.
6. Judicial Discretion and Economic Offenses:
- The court emphasized the serious nature of economic offenses and the need for a different approach in bail considerations.
- Quoting legal precedents, the court noted that economic offenses impacting society and causing substantial financial loss should be viewed with gravity.
7. Court’s Decision:
- Considering the magnitude and seriousness of the economic offense, the court concluded that Shah failed to make a case for pre-arrest bail.
- The application was dismissed, and the rule was discharged.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Rule. Learned APP waives service of rule for the respondent State.
2. By this application, under Section 438 of the Code of Criminal Procedure, the applicant – accused seeks anticipatory bail in connection with the offence being FIR 11191011220168 of 2022 registered with DCB Police Station, Ahmedabad for the offence punishable under Sections 409, 420, 465, 467, 468, 471, 120-B and 34 of the Indian Penal Code.
3. The facts of the FIR in nutshell are that present applicant – accused with the connivance of other accused as named in the FIR with a view to obtain the financial benefits in the form of input tax credit illegally opened the GST Account on the basis of the false and fabricated documents. It is also alleged in the FIR that the said dummy accounts were used by using false documents / bills for obtaining financial benefits from the government exchequer illegally. It is also alleged in the FIR that on the basis of the forged and fabricated documents the applicant-accused had made some rent agreement and opened up the bank account and thereby got registration of the GST Number and created a dummy firm to obtain the input tax credit. Thus, the applicant-accused with the aid of other accused persons created bogus GST Account on the basis of dummy documents and by creating forged and bogus bills obtained financial benefits through his known persons without there being actual business and thereby created bogus bills and obtained input tax credit and caused financial loss to the government exchequer.
4. On filing of the FIR, the applicant – accused preferred application before the learned court below seeking anticipatory bail which came to be rejected. Thus, the present application is preferred seeking pre-arrest bail in connection with the aforesaid offence.
5. Learned Advocate for the petitioner would submit that petitioner is innocent and has not played any active or passive role in obtaining the false input tax credit. He would further submit that for the alleged period of committing offence, he was behind the bar in some other offence being F.No.DGGI/AZU/GRC/ 12(4)/291/2020-21 lodged before the learned Additional Chief Metropolitan Magistrate, Ahmedabad and this Court has released the applicant on regular bail as per order dated 29/07/2022 passed in CR.MA No.3931 of 2022 in connection to the said offence which indicates that present applicant was not involved in the huge scam of getting input tax credit illegally. He would further submit that no allegations are levelled against the petitioner in the FIR and / or during the offence anything has been revealed against the petitioner. Merely, on the basis of statement of co-accused, the applicant came to be involved in the offence. He would further submit that on bare reading of the FIR, at the most, offence under Sections 132(1)(B) of the GST Act is made out, however, just to add the severity of punishment and gravity of offence, the prosecution has purposefully added various offences punishable u/s 409, 420, 465, 467, 468, 471, 120-B and 34 of the Indian Penal Code. Thus, to harass the petitioner, after receiving information from the GST Officer, the Police has filed the FIR in question which is something unusual on the part of the prosecution. It is submitted that petitioner is ready and willing to co-operate with the investigation and thus no custodial interrogation is required. By making above submissions, it is prayed to grant pre-arrest bail to the applicant.
6. On the other hand, learned APP has vehemently opposed the bail application by submitting that the petitioner is wanted accused. He acted hand in gloves with the main accused and in connivance with the other accused as named in the FIR and taken advantage of the documents of some other persons and made GST registration of firms and then without the actual selling or purchasing indulged into in preparing bogus bills and obtained false input tax credit and as such committed the offence as alleged in the FIR to the tune of Rs. 1500 Crore. She would further submit that this is the offence against the public exchequer and huge amount has been involved in the offence. The petitioner in the aid of other accused cheated and siphoned of the huge amount by availing bogus input tax credit. She would submit that even prior to the present FIR, the applicant is found involved in identical offence, whereby it was alleged that siphoning of Rs. 185 Crore is involved in availing the bogus input tax credit by preparing bogus bills. Thus, the present petitioner is habitual offender and by identical modus operandi and cheating the government by using the false documents. Thus, she would submit to dismiss the present application.
7. Having heard the learned Advocates appearing for the respective parties and having perused the FIR, as also the facts coming from the affidavit filed by the IO, it prima facie surfaces allegation of scam of availing bogus input tax credit on the basis of forged documents. The public exchequer has been cheated. It also appears that upon documents of some other persons registration of the GST has been made to avail false input tax credit. Bogus bills are also prepared for the same and thus the present applicant has played an important role in commission of the offence of economic nature. It also surfaces that money is transferred from one account to another account and such huge loss has been caused to the government exchequer by the petitioner. Hence, serious economic offence is made out against the petitioner, which has wide effect on the society. Thus, the petitioner has failed to make out a case to allow this application and grant of pre-arrest bail. No case is made out to exercise the judicial discretion in favour of the applicant-accused. There is no whisper to indicate that petitioner has been falsely implicated in the offence.
8. To be noted that, this is an economic offence having huge magnitude needs to be viewed with different approach and to be considered seriously, as it is eroding economic death of the country. In Nimmagadda Prasad Versus Central Bureau Of Investigation [2013 (7) SCC 466], the Hon’ble Apex Court in paragraph 23 to 25 has observed as under:
“23. Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fiber of the country’s economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat V/s. Mohanlal Jitamalji Porwal and Anr. (1987) 2 SCC 364 this Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under:-
“5 The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest..”
24. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. It has also to be kept in mind that for the purpose of granting bail, the Legislature has used the words “reasonable grounds for believing” instead of “the evidence” which means the Court dealing with the grant of bail can only satisfy it as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt.
25. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”
9. Referring to law laid down in P. Chidambaram Vs. Vs. Directorate Of Enforcement reported in (2019) 9 SCC 24, in case of Directorate Of Enforcement Versus M. Gopal Reddy [2023 (0) AIJEL-SC 70433], the Hon’ble Apex Court in paragraph 6.3, has observed as under:
“6.3 From the aforesaid, it can be seen that the High Court has not at all considered the nature of allegations and the seriousness of the offences alleged against respondent No. 1. As per the catena of decision of this Court, more particularly, observed in the case of P. Chidambaram (supra) in case of economic offences, which are having an impact on the society, the Court must be very slow in exercising the discretion under Section 438 of Cr. PC.”
10. Taking note of all above aspects without expressing any opinion on the merit of the case, this Court is of the view that petitioner cannot be released on pre-arrest bail.
11. Resultantly, present petition fails and stands dismissed. Rule discharged.
