Mukat Behari Sharma S/O Late Shri P.R. Sharma vs. Union Of INDIA

Held

The Court dismissed the bail application. The primary reason for dismissal was the seriousness of the allegations levelled against the petitioner. The respondent argued that the accused had issued bogus invoices without actual movement of goods, resulting in fraudulent input tax involvement amounting to Rs. 40.58 crores. While the petitioner's counsel highlighted the deposits made by the company (Rs. 6.95 crores and Rs. 4 crores) and the procedural irregularities concerning the show cause notice and determination of the amount due, the Court found these submissions insufficient to grant bail. The Court's reasoning focused on the gravity of the offence, particularly the alleged fraudulent input tax credit, and the fact that the investigation was still ongoing. The ratio decidendi appears to be that in cases involving significant alleged fraud and ongoing investigation, bail may not be granted even if substantial amounts have been deposited or procedural lapses are alleged, especially when the alleged offence is of a serious nature under the CGST Act.

Facts

The petitioner, Mukat Behari Sharma, Director of M/s Leel Electrical Ltd., sought regular bail under Section 439 of the Code of Criminal Procedure, 1973. He is in judicial custody since January 19, 2019, in connection with Case No. IV(6)78/AE/ALWAR/2019 for alleged offences under Section 132(1)(B), (C), & (D) of the CGST Act, 2017. The petitioner's counsel argued that the company had already deposited Rs. 6.95 crores and an additional Rs. 4 crores. He contended that the petitioner was summoned under Section 70, interrogated, and then arrested, but no show cause notice was issued to the company, and the amount due had not been determined. The counsel also highlighted that the offence is compoundable and the petitioner is merely an employee. The respondent, Union of India, opposed the bail, stating the offence was serious, involving bogus invoices and fraudulent input tax credit of Rs. 40.58 crores. The investigation is ongoing.

Key Issues

1. Whether the petitioner is entitled to regular bail in Case No. IV(6)78/AE/ALWAR/2019 for offences under Section 132(1)(B), (C), & (D) of the CGST Act, 2017, considering the stage of investigation and amounts deposited. Petitioner's Contentions: - The petitioner has been in custody since January 19, 2019, and is not required for further investigation. - The company has deposited Rs. 6.95 crores and an additional Rs. 4 crores with the concerned authority. - No show cause notice was issued to the company, and the amount due has not been determined. - The company has a remedy to file an appeal against any determined amount. - The offence under the Act is compoundable. - The petitioner is merely an employee of the company. Respondent's Contentions: - The offence committed is serious in nature. - The accused issued bogus invoices without actual movement of goods, leading to fraudulent input tax involvement amounting to Rs. 40.58 crores. - The company has deposited Rs. 6.95 crores towards non-payment of GST. - The case is still under investigation.