Hitesh Shivchand Gupta vs. State Of Gujarat

Facts

The applicants, Ravi Shivchand Gupta and others, sought regular bail under Section 439 of the Cr.P.C. in connection with an alleged offence under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Service Tax (CGST) Act, 2017. The prosecution alleged that the applicants were involved in fraudulently availing and passing on ineligible/fake Input Tax Credit (ITC) amounting to Rs. 20.63 crores by creating and operating fictitious firms. The applicants were arrested on March 30, 2022. Their bail applications were rejected by the lower court. The applicants argued that the allegations were vague, the assessment was not finalized, and they were willing to deposit Rs. 2 crores. The revenue contended that the applicants were masterminds of a serious economic offence and granting bail could hamper the investigation.

Held

The Court held that the bail applications were maintainable before the High Court. It reasoned that there was no substantial change in the facts between the arrest report and the complaint, and the changes in the complaint were cosmetic. Therefore, relegating the applicants to the trial court, especially when the High Court had already heard the matter, was not warranted. Regarding the grant of bail, the Court found that the investigation was virtually over, and the revenue failed to substantiate how the applicants would hamper the investigation if released. Citing P. Chidambaram Vs. Director of Enforcement, the Court reiterated that even in grave economic offences, bail is not automatically denied and must be considered on a case-to-case basis. Considering the applicants had been in custody since March 31, 2022, were willing to deposit Rs. 2 crores, and the investigation was substantially complete, the Court found no purpose in keeping them incarcerated. The Court allowed the applications, subject to the deposit of Rs. 2 crores and other standard bail conditions. The Court expressly noted that nothing stated in the order amounted to an opinion on the merits of the case.

Key Issues

1. Whether the High Court can entertain bail applications filed under Section 439 of the Cr.P.C. when a complaint has been filed before the Chief Judicial Magistrate during the pendency of the applications before the High Court, and if so, whether the applicants should be relegated to the concerned court? (Question of procedure and maintainability) Petitioner's Arguments: The applicants argued that there was no statutory bar to entertaining the applications, especially since there were only cosmetic changes between the arrest report and the complaint, and the factual situation had not substantially changed. They contended that relegating them to the trial court would be unnecessary when the High Court had already heard the matter. Revenue's Arguments: The respondent (State of Gujarat and Commissioner of CGST) argued that since a complaint had been filed, the bail applications were not maintainable before the High Court, and the applicants should exhaust their remedy by filing fresh bail applications before the concerned court. 2. Whether bail should be granted to the applicants considering the nature of the alleged offence (grave economic offence) and the stage of investigation? (Question of mixed law and fact) Petitioner's Arguments: The applicants argued that the investigation was virtually over, they had deep roots in society, had no criminal record, and the offence was compoundable. They also cited C. Pradeep Vs. Commissioner of GST and P. Chidambaram Vs. Director of Enforcement to argue that bail should not be denied solely based on the gravity of the offence. Revenue's Arguments: The revenue contended that the applicants were masterminds of a serious economic offence causing loss to the public exchequer, and granting bail could lead to manipulation of evidence and influence witnesses. They relied on Paresh Nathalal Chauhan Vs. State of Gujarat.