Divya Arvindbhai Monpara vs. The State Of Gujarat

Held

The Court dismissed the applications for anticipatory bail. On the issue of entitlement to anticipatory bail, the Court considered the gravity of the economic offense involving a substantial amount of alleged tax evasion (Rs. 137.00 crores). The Court noted the Supreme Court's decision in a similar case where bail was not granted despite the accused being in custody for a significant period, and found no reason to exercise discretion in favor of the applicants. The Court also distinguished the Supreme Court's guidelines in Satender Kumar Antil, categorizing the present offense as an 'economic offense' where the applicants had not cooperated with the investigation. Regarding the procedural arguments, the Court referred to a Division Bench decision of the Gujarat High Court (Vimal Yashwantgiri Goswami) which held that officers effecting arrest under Section 69 of the GGST Act are not obliged to comply with Sections 154-157 of the CrPC. The Court also took into account the apprehension expressed by the Public Prosecutor regarding tampering with evidence and witnesses. Therefore, the Court was not inclined to exercise its discretion in favor of the applicants.

Facts

The applicants, Chairman and Directors of M/s. Madhav Copper Limited, a public limited company, sought anticipatory bail under Section 438 of the Code of Criminal Procedure. The State Tax Department alleged that the company claimed Input Tax Credit (ITC) of Rs. 137.00 crores by obtaining fake bills for purchases worth Rs. 762.00 crores from 36 different firms. The department further alleged that while payments were made through banking channels, the amounts were received back in cash. The applicants contended that their purchases and sales data matched, and the company produced finished copper goods. They argued that the department had seized records, and proper procedures under the Gujarat Goods and Services Tax (GGST) Act, such as calling for explanations before initiating tax determination proceedings, were not followed. They also argued that no FIR was filed, and GST officers lack investigative powers akin to police officers.

Key Issues

1. Whether the applicants are entitled to anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973, in connection with allegations of wrongful Input Tax Credit claims under the Gujarat Goods and Services Tax Act, 2017? Petitioner's arguments: The applicants argued that no FIR had been filed, and GST officers are not police officers with investigative powers under the GGST Act. They contended that proper procedures under Section 61, 73, and 74 of the GGST Act were not followed, as no explanation was sought before initiating proceedings, except for a prior communication. They also highlighted that the company had deposited a sum under protest and that no proceedings for tax determination had been initiated for subsequent periods. Reliance was placed on various High Court decisions granting anticipatory bail in similar GST matters and the Supreme Court's guidelines in Satender Kumar Antil. Respondent's arguments: The State contended that the gravity of the offense, involving a huge sum of public money (Rs. 137.00 crores), warranted denial of anticipatory bail. They expressed apprehension that if enlarged on bail, the applicants might tamper with evidence and witnesses, and would not be available for trial. The State also relied on the Supreme Court's order in a similar case where bail was not granted despite prolonged custody, and a Division Bench of the Gujarat High Court's decision in Vimal Yashwantgiri Goswami, which held that arrest provisions under Section 69 of the GGST Act do not necessitate compliance with Sections 154-157 of the CrPC.