Saurabh Chhajer S/O Shri Mahaveer Chand Chhajer vs. State Of Rajasthan

Held

The Court considered the contentions put forth by both sides. While the petitioner argued a lack of direct evidence and a slow trial, the Union of India presented strong counter-arguments regarding the creation of fake firms, fraudulent input tax credit transfers, the significant financial loss to the exchequer, and the petitioner's conduct in avoiding summons. The Court found the arguments presented by the Union of India persuasive. Consequently, the Court was not inclined to allow the second bail application. The reasoning implicitly weighs the severity of the alleged economic offence and the evidence presented by the revenue against the grounds for bail. The ratio decidendi is that in cases involving substantial financial fraud under the GST Act, where significant evidence of fraudulent transactions and recovery efforts exists, bail may be denied. The operative direction was the dismissal of the bail application.

Facts

The petitioner, Saurabh Chhajer, filed a second bail application under Section 439 of the Cr.P.C. The case involves Complaint No. 34/2019 pending before the Chief Metropolitan Magistrate (Economic Offences), Jaipur Metropolitan, for alleged offences under Sections 132(1)(b), (c), (f), (g), (k), (i) of the Central Goods and Service Tax Act, 2017, read with Section 69 of the CGST Act. The petitioner is accused of creating fake firms and fraudulently transferring input tax credit to 470 beneficiary parties, causing a loss of approximately Rs. 33 crore to the exchequer, of which Rs. 13 crore has been recovered. The petitioner was arrested from Ajmer after allegedly avoiding service of summons.

Key Issues

1. Whether the petitioner is entitled to bail considering the allegations of creating fake firms and fraudulent transfer of input tax credit, and the quantum of loss to the exchequer, as per Section 132 of the Central Goods and Service Tax Act, 2017? Petitioner's Arguments: The petitioner's counsel argued that there is no direct evidence of the petitioner creating fake firms. The department has not interrogated the recipients of the alleged input tax credit. Furthermore, the offence is triable by a First Class Magistrate, and out of fourteen witnesses, only two have had their statements recorded, indicating a slow pace of trial. Revenue's Arguments: The Union of India's counsel vehemently opposed the bail application. It was contended that the petitioner created fake firms and fraudulently transferred input tax credit to 470 parties, with 55 parties having reversed their fraudulent claims. The total loss to the exchequer is Rs. 33 crore, with Rs. 13 crore recovered. The petitioner also allegedly avoided service of summons.