Hema Garg And Anr vs. State Of Haryana And Another

Held

The Court dismissed the petitions for anticipatory bail. The Court found no merit in the petitioners' arguments for seeking anticipatory bail. The State had presented evidence, including statements from vehicle owners denying transportation of goods and the absence of stock at the petitioners' premises during inspection, suggesting the preparation of fake documents for availing ITC from non-existent firms. The petitioners' failure to appear before the authorities despite repeated summons further weakened their case. The Court noted the substantial amount of tax liability ascertained against the petitioners' firms, exceeding ₹36 crores, which was allegedly evaded through fraudulent means. The Court implicitly rejected the argument for staying arrest based on the challenge to Section 69 of the CGST Act, as the primary issue was the entitlement to anticipatory bail based on the facts presented. The ratio decidendi is that anticipatory bail is not a license to evade investigation, especially when prima facie evidence of significant tax evasion and fraudulent practices exists, and the accused fails to cooperate with the investigating authorities.

Facts

The petitioners, Arpit Garg, Hema Garg, and Vijay Garg, sought anticipatory bail in proceedings initiated by the State of Haryana under the HGST/CGST Act, 2017. The proceedings followed an inspection on June 24, 2021, and subsequent summons. The petitioners' firms, Shree Shyam Traders (operated by Hema Garg and Vijay Garg) and Stasya Enterprises (operated by Arpit Garg), dealt in iron and steel products. The State alleged that these firms availed Input Tax Credit (ITC) based on invoices from suspicious firms in Delhi. Verification of these Delhi firms indicated they were non-existent. Statements from vehicle owners, purportedly used for transportation, denied any such movement of goods. The petitioners' bank accounts were frozen via provisional attachment. The petitioners failed to appear before the authorities despite repeated summons, citing health grounds and being out of station. The State issued intimations of demand (GST DRC-01A) totaling over ₹36 crores against the petitioners' firms.

Key Issues

1. Whether the petitioners are entitled to anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973, in proceedings initiated under the HGST/CGST Act, 2017, for alleged evasion of tax and fraudulent availment of Input Tax Credit (ITC)? Petitioner's Arguments: The petitioners argued that custodial interrogation was not required and that the vires of Section 69 of the CGST Act, 2017 (power to arrest) were under challenge in another case. They sought to stay their arrest. Revenue's Arguments: The State of Haryana argued that the petitioners had prepared fake documents for inward supplies to evade tax exceeding ₹36 crores. They contended that vehicle owners denied transporting goods from the alleged Delhi suppliers, and no stock was found at the premises during inspection. The petitioners failed to appear before the authorities, thereby delaying proceedings. The State relied on the judgment in Rakesh Arora Vs. State of Punjab, highlighting the interconnected nature of GST transactions and the fraud committed by bogus chains.