Niraj Jaidev Arya vs. State Of Gujarat

Facts

The applicant, Niraj Jaidev Arya, a designated partner of Utkarsh Ispat LLP, sought regular bail under Section 439 of the CrPC. The arrest memo dated 30.11.2021 was issued in connection with alleged offences under Section 132(1)(c) of the GGST Act and CGST Act, punishable under Section 132(1)(i). The Directorate of GST intelligence alleged that the applicant's firm showed fake purchases from 24 fictitious entities totaling Rs.172.36 Crores, leading to an illegal Input Tax Credit (ITC) claim of Rs.31.02 Crores. The applicant's firm deals in converting mild steel scrap into mild steel billets. Searches were conducted at the firm's and applicant's premises. The applicant was questioned on 19.11.2021 and 20.11.2021, and subsequently arrested on 30.11.2021. He was admitted to hospital due to chest pain and later diagnosed with prostate cancer. The applicant contended that all transactions were genuine, supported by documentation, and that the department had attached properties worth Rs.57 Crores, exceeding the alleged demand.

Held

The Court granted regular bail to the applicant. The Court considered the statutory limit for filing a complaint under the GGST Act & CGST Act, the facts and circumstances of the case, and the applicant's medical condition (prostate cancer). It noted that the respondent-Department had already attached immovable property belonging to the applicant in excess of the alleged evasion amount, thereby protecting the department's interest. The Court also referred to Section 138 of the GGST Act & CGST Act, which provides for compounding of offences, and was informed that no other complaint had been registered against the applicant. While acknowledging the gravity of economic offences, the Court reiterated that bail is the rule and refusal is the exception, and that considerations of gravity do not mandate denial of bail in every case. The decision was made on a case-to-case basis, considering the facts involved and securing the accused's presence for trial. The applicant was enlarged on bail upon furnishing a personal bond of Rs.2,00,000/- with one surety of the like amount, subject to certain conditions.

Key Issues

1. Whether the applicant is entitled to regular bail in connection with the alleged offences under Section 132(1)(c) of the GGST Act and CGST Act, punishable under Section 132(1)(i) of the GGST Act and CGST Act, considering the gravity of the alleged economic offence and the applicant's medical condition? Petitioner's Arguments: - The applicant is the Managing Director and handles day-to-day affairs, and all transactions are genuine, supported by necessary documents including E-way bills and vehicle details. - The firm has paid Rs.40 Crores as GST through banking channels and received goods worth Rs.225 Crores with genuine documents reflected on the government portal. - The applicant cannot be held liable for fraudulent acts of dealers (sellers) and the Act does not envisage punishing bona fide purchasing dealers without malafide intention or connivance. - The department attached properties worth Rs.57 Crores, exceeding the alleged demand of Rs.41 Crores, thus protecting the revenue interest. - The applicant is suffering from prostate cancer and undergoing treatment. Revenue's Arguments: - Not recorded in the provided text.