Directorate General Of GST Intelligence vs. Kamal Kishore Aggarwal

Held

The Court found merit in the petitioner's argument that the learned CMM had failed to adequately consider the magnitude of the alleged crime, which was approximately ₹72 crores, and had given undue consideration to the deposit of ₹1.35 crores, which was paltry in comparison. The Court noted that financial offences are serious and require a different approach at the bail stage, citing Supreme Court judgments in State of Gujarat v. Mohanlal Jitamalji Porwal and Y.S. Jagan Mohan Reddy v. CBI. The Court acknowledged that the CMM erred in granting bail at such an early stage when the investigation was incomplete and the risk of tampering with evidence could not be ruled out. However, the Court also observed that despite the investigation commencing in 2020, no complaint had been filed even after more than five years, and the department was still in the process of filing it. The Court noted that the respondent would have been entitled to default bail due to the delay in filing the complaint. Since the respondent had not misused the liberty granted by the bail order and the department had shown a lackadaisical approach, the Court found no reason to cancel the bail. The Court held that the respondent could not be subjected to unending incarceration due to the department's inaction.

Facts

The Directorate General of GST Intelligence (DGGI), the petitioner, filed a petition under Section 482 of the CrPC challenging an order dated August 17, 2020, passed by the Chief Metropolitan Magistrate (CMM). The CMM had granted bail to the respondent, Kamal Kishore Aggarwal, in proceedings under Section 132 of the CGST Act. The prosecution alleged that the respondent was involved in GST evasion amounting to approximately ₹72 crores through clandestine cigarette supply. The respondent was arrested on July 20, 2020. The CMM granted bail considering the respondent's claim of depositing ₹1.35 crores towards GST, which was not disputed by the department, and noting that final adjudication was pending and the complaint filing would take time. The CMM also considered that the respondent suffered from a kidney ailment and there was no justification for continued custody.

Key Issues

1. Whether the learned CMM erred in granting bail to the respondent at the initial stage of investigation in a financial crime involving alleged GST evasion of ₹72 crores, considering the deposit of only ₹1.35 crores? (Question of law, turning on principles of bail for economic offences under Section 132 of the CGST Act and relevant Supreme Court precedents). Petitioner's arguments: The learned CMM failed to appreciate the magnitude of the alleged evasion of ₹72 crores and erred in granting bail upon a deposit of a paltry sum of ₹1.35 crores. The CMM should have considered the seriousness of financial crimes and the potential for tampering with evidence at the nascent stage of investigation. Respondent's arguments: The learned counsel for the respondent opposed the petition, praying for its dismissal. The respondent argued that the complaint had not yet been filed, and no purpose would be served by keeping the applicant incarcerated. The respondent also highlighted that the department had not disputed the deposit of ₹1.35 crores and that the respondent suffered from a kidney ailment.