Giri Ram.J vs. The Superintendent Of GST And Central Excise

Held

The Court granted bail to the petitioner, acknowledging that his continued judicial custody would not serve any purpose. The decision was influenced by the petitioner's readiness to deposit Rs. 1.5 Crores towards the disputed tax liability and the fact that two other directors were enjoying the benefit of a 'no arrest' order. The Court noted that while the propriety of clubbing the transactions could only be decided at trial, the petitioner's offer to pay a substantial amount was a significant factor. The Court also took into account the interim relief granted to other directors, finding it unfair to keep the petitioner in custody under similar circumstances, especially when adjudication proceedings were underway. The Court did not decide on the alleged malafides of the respondent in clubbing the transactions or the petitioner's withdrawal of a previous writ petition.

Facts

The petitioner, Giri Ram, is seeking bail. He is in custody since April 15, 2021, for alleged offences under Sections 69 read with 132(1)(c) and 132(1)(d) of the CGST Act, 2017. The prosecution alleges that as a Director and person in charge of two companies, PSTS Logistics Private Limited and PSTS Heavy Lift and Shift Limited, the petitioner collected GST amounting to approximately Rs. 4.61 Crores and Rs. 4.95 Crores respectively, which were not paid to the government. Additionally, the companies allegedly availed ineligible Input Tax Credit (ITC) worth Rs. 2.54 Crores and Rs. 1.78 Crores without proper documentation. The petitioner claims the two cases were improperly combined to make the offences non-bailable, as separating them would bring the liability below the Rs. 5 Crores threshold. He also cited his medical condition (Obsessive Compulsive Disorder) and the fact that other directors received interim relief from arrest.

Key Issues

1. Whether the respondent authority committed an error in clubbing the transactions of two separate entities for the purpose of determining the bail eligibility under the CGST Act, 2017? 2. Whether the continued judicial custody of the petitioner serves any purpose, considering his offer to deposit a significant sum towards the disputed tax liability and the interim relief granted to other directors? Petitioner's Arguments: The petitioner argued that the clubbing of transactions from two distinct companies was improper and done solely to make the offences non-bailable. He contended that if the liabilities were considered separately, they would fall within the bailable limit. He also highlighted his cooperation with the investigation, his medical condition, and the fact that other directors had obtained orders restraining their arrest. The petitioner offered to deposit Rs. 1.5 Crores towards the disputed tax liability, in addition to Rs. 30 Lakhs already paid. Respondent's Arguments: The respondent objected to the petitioner's offer of Rs. 1.5 Crores, stating that the total outstanding tax liability was Rs. 13.88 Crores. They submitted that adjudication proceedings had been initiated. The respondent also attempted to demonstrate that the petitioner had a history of similar non-payment activities in the past.