Central Goods And Service Tax Delhi East vs. Sh. Naval Kumar & Ors.

Held

The Court held that the petition for cancellation of bail was dismissed. It reiterated the principle that cancellation of bail requires cogent and overwhelming circumstances, and bail once granted should not be cancelled mechanically without considering supervening circumstances that render it no longer conducive to a fair trial. The Court found that the respondents had joined the investigation, their statements were recorded, and there were no allegations of non-cooperation, tampering with evidence, influencing witnesses, or being a flight risk. The petitioner failed to demonstrate any supervening circumstances or that the respondents' presence on bail would thwart the investigation or threaten a fair trial. Relying on Supreme Court judgments in State (Delhi Administration) vs. Sanjay Gandhi and Dolat Ram v. State of Haryana, the Court concluded that pre-trial incarceration was not required in this case.

Facts

The petitioner, Central Goods and Service Tax Delhi East, filed a petition seeking to set aside an order dated 24.11.2020 passed by the Additional Sessions Judge (ASJ), New Delhi, which granted anticipatory bail to the respondents. The investigation concerns fictitious firms allegedly involved in generating and passing fake Input Tax Credit (ITC), with M/s Milkfood Limited at the center, having availed inadmissible fake ITC amounting to Rs. 85.4 crores. The masterminds, Ashish Aggarwal and Sanjay Kumar Garg, were arrested. The respondents are senior officials of M/s Milkfood Limited. The ASJ granted anticipatory bail on the condition of depositing 10% of the alleged duty evasion amount, citing that the alleged amount was yet to be adjudicated, M/s Milkfood Ltd. had a long history with clean antecedents, the respondents were not habitual offenders, and relying on Supreme Court precedents regarding pre-adjudication bail conditions.

Key Issues

1. Whether the Additional Sessions Judge erred in granting anticipatory bail to the respondents by not considering the gravity of the alleged GST evasion and the role of the respondents in the alleged scam, thereby contravening the principles for cancellation of bail? (Mixed question of law and fact, concerning Section 69(1) of the CGST Act and principles of bail). The petitioner argued that the respondents' statements indicated their active participation in availing fake ITC, and the ASJ overlooked vital aspects. They contended that the ASJ's reliance on the bail granted to Ashish Aggarwal was misplaced as the circumstances were different. The respondents argued that they had joined the investigation, Ashish Aggarwal, the alleged mastermind, was granted bail, and the ASJ correctly applied the triple test for bail, considering the company's long standing and the respondents' lack of prior offenses. They also highlighted that the alleged amount was yet to be adjudicated.