Sri. Neeraj Karande vs. The Directorate General Of GST Intelligence

Held

The Court acknowledged that the petitioner has been in jail since 02.11.2020 and that the respondent's authorities have to collect evidence and record statements. It noted that the respondent's counter in both bail applications indicated that the investigation would take considerable time to complete. The Court also observed that there appeared to be no significant progress in the investigation since the first bail application was dismissed, other than the issuance of notices. Considering the principle that an accused is presumed innocent until guilt is proved, and the prolonged period of custody, the Court was inclined to grant regular bail. The Court found that while the allegations were serious and factual aspects required investigation, the lack of progress in the investigation despite the petitioner's custody warranted consideration for bail. The Court granted bail on specific conditions, including executing a personal bond, reporting to the Investigating Officer weekly, cooperating with the investigation, and not interfering with it.

Facts

The petitioner, Sri Neeraj Karande, is the Managing Director of M/s. GE Godavari Engineering Industries Limited. He is the sole accused in a case registered by the Directorate General of GST Intelligence (DGGI), Hyderabad Zonal Unit, for alleged offences under Section 132(1)(i) read with Section 132(1)(b) and (c) of the Central Goods and Services Tax Act, 2017 (CGST Act). The allegations are that he collected and issued invoices or e-way bills without the actual supply of goods, leading to wrongful availment or utilization of input tax credit. The modus operandi involved issuing GST invoices and passing on input tax credit without actual supply of goods, and procuring invoices without receiving goods to enhance banking loan facilities. The amount involved is stated to be Rs. 10.89 Crores for the period from 01.07.2017 to 31.08.2020. This is the petitioner's second bail application, the first having been dismissed on 30.11.2020.

Key Issues

1. Whether the respondent authorities followed the procedure laid down under Section 41-A of the Code of Criminal Procedure, 1973, considering the punishment for the alleged offence is five years and it is a cognizable offence? 2. Whether there is an abnormal delay in lodging the complaint, given the alleged period of availment of ITC credit from 01.07.2017 to 31.08.2020 and the complaint being lodged on 02.11.2020? 3. Whether the petitioner should be enlarged on bail, considering he has been in jail since 02.11.2020 and the investigation is allegedly incomplete? Petitioner's arguments: The respondent authorities failed to follow Section 41-A Cr.P.C. There is no loss to the government exchequer. There is an abnormal delay in lodging the complaint. The investigation is almost complete, and the petitioner has been in custody since 02.11.2020. He sought bail on certain conditions. Respondent's arguments: The petitioner, as Managing Director, committed a serious offence by availing input tax credit of Rs. 10.89 Crores. The plant and machinery of the company were sold in 2016, and there were no established premises. The petitioner admitted in his statement under Section 70 of the CGST Act that business was run from a vehicle and that he would submit related documents. The investigation is not yet completed, and the forward chain recipient of tax credit is yet to be investigated. Notices have been issued to various Commissionerates for investigation.