Sumit Dutta S/O Shri Vinod Dutta Partner Msr Veto Merchandise Jaipur vs. Union Of INDIA

Held

The Court rejected the third bail application. It considered the contentions of both parties and perused the previous order and the letter from the Principal Commissioner. The Court found that the charge-sheet and evidence collected by the Department indicated the creation of fake entities, the non-transportation of goods, and the generation of fake bills. Based on these findings, the Court concluded that there was no change in circumstances to justify entertaining the third bail application. The ratio decidendi is that a bail application will not be entertained if there is no significant change in circumstances since the previous rejection, especially when evidence points to fraudulent activities like the creation of fake entities and bills to claim input tax credit. The operative direction was the rejection of the bail application.

Facts

The petitioner, Sumit Dutta, a partner in Msr Veto Merchandise, filed a third bail application before the Rajasthan High Court. The application arose from a complaint filed by the CGST and Central Excise Commissionerate, Jaipur, for alleged offences under Section 132(1)(b) & (c) of the CGST Act, 2017, read with Section 132(1)(i) and Sub-Section (5). The petitioner contended that state authorities investigated and concluded that input tax credit was rightly claimed, and a co-accused had been granted bail. The Union of India opposed the bail, noting the petitioner's first bail application was rejected and there was no change in circumstances. They argued that the firms involved were non-existent and that state authorities lacked jurisdiction once CGST initiated action. The Union of India also presented a letter detailing Rs. 150.6 crores of fraudulently claimed input tax credit.

Key Issues

1. Whether there has been a change in circumstances warranting the entertainment of a third bail application under Section 439 of Cr.P.C., considering the previous rejection of bail. Petitioner's Argument: The petitioner argued that state authorities' investigation concluded that input tax credit was rightly claimed and that a co-accused had been granted bail, suggesting a change in circumstances. Revenue's Argument: The Union of India contended that the petitioner's first bail application was rejected on 20.04.2021, and no change in circumstances had occurred. They further argued that the firms involved were non-existent, the transactions were paper-based, and the input tax credit claimed was fraudulent, amounting to Rs. 150.6 crores. They also asserted that state authorities had no authority to investigate once CGST initiated action and filed a charge-sheet.