Anantbhai Ashokbhai Shah vs. State Of Gujarat

Held

The Court held that the respondent Department failed to establish the necessity of the applicant's further custody. The entire case relies on documentary evidence, which is already in the department's possession. The Court noted that no show cause notice for determining liability had been issued post-complaint filing. The applicant demonstrated bona fides by offering to deposit Rs. 2 crores. Citing the Supreme Court's decision in P. Chidambaram Vs. Directorate of Enforcement, the Court acknowledged that even in grave economic offences, bail is not automatically denied and is decided on a case-to-case basis. The Court exercised its discretion in favour of the applicant, inclined to release him on bail with the condition of depositing Rs. 2 crores before the Assistant Commissioner of State Tax within six months in equal installments. Failure to comply would result in automatic cancellation of bail. The applicant was also directed to file an undertaking to this effect. The Court clarified that its observations were not an expression of opinion on the merits of the case. Rule was made absolute to the extent of granting bail.

Facts

The applicant, Anantbhai Ashokbhai Shah, 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 Section 120B of the IPC. The applicant, administrator of M/s. JK Traders, is accused of fraudulent Input Tax Credit (ITC) claims and GST evasion, involving illicit ITC of Rs.36.05 crores claimed and passed on, and cash transactions without invoices totaling Rs.1.09 lakhs, resulting in a loss of Rs.37.95 crores to the government. The applicant was arrested on March 13, 2022, and has been in judicial custody since March 23, 2022. His bail applications before the lower courts were rejected. Incriminating material was seized during a search of the business premises.

Key Issues

1. Whether the applicant should be released on regular bail given the allegations of a grave economic offence and potential risk of evidence tampering, as argued by the State. 2. Whether the applicant's arrest and continued detention are justified considering the guidelines for prosecution and the fact that adjudication has not been completed, as argued by the applicant. 3. Whether the applicant's offer to deposit Rs. 2 crores towards the disputed liability, subject to release on bail, should be considered, given the applicant's contention that bail is a rule and jail is an exception, and the investigation is complete. Contentions of the Petitioner: The applicant argued that the allegations are false and frivolous, and he has not fraudulently availed or utilized ITC. He contended that prosecution should normally follow adjudication. He highlighted that no show cause notice fixing liability has been issued post-complaint filing, and the offences are punishable with a maximum of 5 years, triable by a Magistrate, and compoundable. He emphasized that further custody is not necessary and indefinite detention serves no purpose. He offered to deposit Rs. 2 crores within 6 months of release. The applicant invoked the constitutional right to liberty and the principle that 'Bail is a rule and jail is an exceptional'. Contentions of the Revenue/State: The State reiterated the affidavit, contending that the applicant defrauded the exchequer of Rs.37.95 crores and poses a risk of manipulating or destroying evidence. The State argued that the offence is a grave economic offence, constituting a class apart, requiring a different approach to bail to ensure proper investigation.