Bharat Gordhandas Patel vs. State Of Gujarat

Held

The Court held that the applicant is working for and on behalf of the principal accused, Mr. A.A. Shah, and was charging a commission. Considering that the principal accused was granted bail subject to depositing Rs. 2 crore, the present bail application also deserves consideration. The department failed to demonstrate the necessity of the applicant's further custody, as the entire case relies on documentary evidence already in the department's possession. With the complaint filed, the trial is unlikely to conclude quickly. The Court, exercising discretion in favour of the applicant, considering the bonafide shown and referencing the Apex Court's observation in P. Chidambaram Vs. Directorate of Enforcement that even grave economic offences do not automatically warrant denial of bail and that decisions are case-to-case, inclined to release the applicant on bail. The applicant is ordered to deposit Rs. 10 lacs within six months in equal installments, failing which bail will stand cancelled. The applicant is also required to furnish an undertaking to this effect. Standard bail conditions, including not misusing liberty, not acting against prosecution interests, surrendering passport, not leaving India without permission, and providing his latest address, were imposed.

Facts

The applicant, Bharat Gordhandas Patel, is in custody and has filed a regular bail application under Section 439 of the Cr.P.C. The case involves alleged offences under Sections 132(1)(A), 132(1)(B), and 132(1)(C) of the Gujarat Goods and Services Tax Act, 2017, and the Central Goods and Services Tax Act, 2017, along with Sections 21 and 120B of the IPC. The applicant was arrested on March 23, 2022, and has been in judicial custody since then. His prior bail application was rejected by the City Sessions Court. The allegations stem from search proceedings at M/s JK Traders, where it was revealed that fake inward transactions were used to claim illicit Input Tax Credit (ITC) of Rs. 36.05 crore, passing on Rs. 36.35 crore to other firms and engaging in cash transactions without invoices, causing a loss of Rs. 37.95 crore to the government. The applicant's residence was used for billing activities, and incriminating documents were seized. The investigation suggests the applicant, acting as an accountant, charged a commission for facilitating these fraudulent transactions.

Key Issues

1. Whether the applicant, charged with grave economic offences under the GST Act and IPC, is entitled to regular bail, considering his role as an alleged facilitator charging commission and the fact that the principal accused has been granted bail subject to deposit of Rs. 2 crore? Petitioner's Arguments: The applicant's counsel argued that the allegations are false and frivolous, and the applicant did not avail or utilize ITC fraudulently. They contended that prosecution should normally be launched after adjudication. The applicant is not the proprietor of M/s JK Traders nor connected with the principal accused, Mr. A.A. Shah. The applicant's role was limited to charging a commission of 4-5% for alleged transactions. Given that Mr. A.A. Shah was granted bail upon depositing Rs. 2 crore, the applicant, with a lesser role, is willing to deposit Rs. 10 lacs within six months of release. Further custody is unnecessary as a complaint has been filed. Revenue's Arguments: The State contended that the applicant, in connivance with the principal accused, defrauded the exchequer of Rs. 37.95 crores. There is a potential risk of the applicant manipulating or destroying evidence. The offence is a grave economic offence, detrimental to the nation's economy, requiring a different approach to bail. Therefore, the applicant should not be enlarged on bail to ensure proper investigation.