Pankaj Aggarwal S/O Shri Hari Prakash Agarwal vs. Union Of INDIA

Held

The Court allowed the bail application. The Court noted that the investigation had been ongoing for over a year, yet the department had not ascertained the beneficiaries of the ITC or the amounts claimed by them. The allegation of GST evasion amounting to Rs. 215.67 crores could not be accepted without this crucial information. The Court also observed that the co-accused, Ashutosh Garg, who was allegedly involved in passing on ITC through fake invoices, had been granted bail by the Hon'ble Apex Court. The maximum punishment for the alleged offences is five years, and the petitioner had already undergone custody for five months. The Court acknowledged that the alleged offences are compoundable. Regarding the apprehension of influencing witnesses, the Court found it unfortunate that the department itself feared influence over its own officers, noting the lack of evidence to substantiate this apprehension and questioning the department's stance on its officers' integrity. The Court also highlighted that some witnesses who had made statements under Section 70 of the Act had retracted them and filed complaints against the DGGI officials. Given these circumstances, the Court deemed it just and proper to release the accused-petitioner on bail, without expressing any opinion on the merits of the case.

Facts

The Directorate General of Goods and Service Tax Intelligence (DGGI), Jaipur Zonal Unit, registered a case against the petitioner, Pankaj Aggarwal, for offences under Section 132(1)(b), (c), (f), and (l) of the Central Goods and Service Tax Act, 2017. The case was initiated based on the statement of Ashutosh Gupta, who alleged that the petitioner created fake firms and issued invoices to pass on Input Tax Credit (ITC). During the investigation, the petitioner was issued notices under Section 70 of the Act. A complaint was filed under Section 190 of the CrPC for non-appearance and non-submission of documents. Subsequently, a complaint was filed before the Special Court for offences under Section 132(1) of the Act. The petitioner was arrested on April 23, 2024, and has been in custody since then. The allegations involve the creation of 49 fake firms and evasion of GST amounting to Rs. 215.67 crores.

Key Issues

1. Whether the complaint filed against the accused petitioner for offences punishable under Section 132(1)(b), (c), (f), and (l) of the Central Goods and Service Tax Act, 2017, is legally sustainable, considering the stage of investigation and the evidence on record? (Mixed question of law and fact, turning on Sections 132, 190 CrPC, and principles of criminal jurisprudence). 2. Whether the petitioner's continued detention is justified given the maximum sentence for the alleged offences, the compoundable nature of the offences, and the fact that a co-accused has been granted bail by the Supreme Court? (Mixed question of law and fact, turning on Section 132(1) and Section 138 of the Act). Petitioner's Arguments: - The complaint was filed on 20.06.2024, and investigation commenced on 16.11.2023. The petitioner has been in custody since 23.04.2024. - The offences are compoundable under Section 138 of the Act, with a maximum sentence of five years. - Ashutosh Garg, on whose statement the case was registered, has been granted bail by the Supreme Court. - There is no provision for a supplementary complaint, and therefore, no scope for further investigation. - No evidence of loss to the government exchequer has been brought on record, as the amount of ITC actually availed or refunded by beneficiaries is not calculated. - No evidence prima facie fulfilling the ingredients of Section 132(1) is part of the complaint. - No recovery has been made from the petitioner. - The concept of 'fake registration' is flawed as GST registration is provided after verification. - ITC utilization and refund procedures are governed by specific sections and rules. - The Metropolitan Magistrate (Economic Offences) lacks jurisdiction. - The petitioner was involved only in financial transactions, not supply of goods/services. - Detention was illegal, and no transit remand was taken. - Witnesses are government officers and cannot be influenced. - All data is electronic, posing no risk of tampering. Respondent's Arguments: - The respondent (Union of India) did not explicitly present arguments in the provided excerpt regarding the sustainability of the complaint or the petitioner's bail plea, beyond stating that the investigation is continuing and that in similar cases with lower ITC amounts, bail was rejected. They also expressed apprehension of the petitioner influencing witnesses.