Upendra Badarji Rana vs. State Of Gujarat

Held

The Court allowed the application for regular bail. It acknowledged the gravity of economic offences but referred to the Supreme Court's decision in P. Chidambaram Vs. Directorate of Enforcement, stating that bail should not be denied in every such case and is decided on a case-to-case basis. The Court found that incriminating material relevant to the investigation had been seized, and the applicant had been in custody since February 24, 2022. It noted the lack of progress in the trial after the complaint was filed and opined that the entire case was based on documentary evidence. The department failed to demonstrate the necessity of the applicant's further custody. Considering that Rs. 64 lakhs had already been recovered and the applicant showed willingness to deposit 10% of the alleged amount, the Court concluded that keeping him in custody would serve no further purpose as the investigation concerning him was virtually over. The applicant was ordered to be released on bail subject to depositing Rs. 38 lakhs in four equal installments within four months and executing a personal bond of Rs. 10,000/- with one surety. The Court also imposed standard bail conditions, including surrendering his passport and not leaving India without permission. The trial court was directed not to be influenced by the preliminary observations made by the High Court.

Facts

The applicant, Upendra Badarji Rana, sought regular bail under Section 439 of the Code of Criminal Procedure. He was arrested on February 24, 2022, in connection with a case registered by the Directorate General of GST Intelligence (DGGI) for alleged offences under the CGST Act and GST Act, specifically Sections 132(1)(b), 132(1)(c), 132(1)(i), and 132(5). The DGGI received intelligence regarding fraudulent Input Tax Credit (ITC) transfers without actual supply of goods, leading to tax evasion. A search of the applicant's premises yielded Rs. 64 lakhs in cash and incriminating documents related to several firms. The authorities concluded that the applicant operated 11 non-existing firms, supplied invoices to beneficiaries, and facilitated fraudulent ITC claims totaling Rs. 10.20 crores. His bail application was rejected by the Sessions Court on June 22, 2022, after which he approached the High Court.

Key Issues

1. Whether the arrest of the applicant was in contravention of mandatory provisions and rules, specifically regarding the use of power under Section 69 of the CGST Act and the requirement for recorded reasons for arrest? The petitioner argued that no sufficient reasons were assigned for his arrest and the reasons provided were imaginary. 2. Whether the investigation concerning the applicant is virtually over, and if further custody is necessary, considering the seizure of documents and the filing of a complaint? The petitioner contended that necessary documents were seized and the prosecution failed to demonstrate the need for further custody. 3. Whether the applicant, being a permanent resident with societal roots and facing a case with a maximum punishment of five years, triable by a Magistrate and potentially compoundable, should be granted bail, especially given the likely delay in trial? The petitioner highlighted that the offence is compoundable and the trial might not conclude within a reasonable time, thus violating Article 21 of the Constitution. The revenue, through its standing counsel and APP, argued that the applicant managed non-existing firms, generated fake invoices, and facilitated fraudulent ITC, causing a loss of Rs. 10.20 crores. They contended that the applicant's family members are absconding, the investigation is ongoing, and granting bail poses a risk of evidence destruction, emphasizing the economic nature of the offence.