Rajesh Kumar Alias Ajay Gupta vs. Inspector (Prev.) CGST Commissionerate Ludhiana

Held

The Court allowed the petition for regular bail. The primary reasoning was based on the petitioner having already undergone a significant period of custody (two years, five months, and twenty-one days) which is substantial in relation to the maximum sentence of five years prescribed under Section 132 of the CGST Act. Additionally, the Court noted that the trial in the case was likely to take time to conclude, especially since a co-accused had challenged the constitutional validity of Sections 69 and 132 of the CGST Act, leading to a stay on the trial in that co-accused's case. The Court found no useful purpose would be served by keeping the petitioner incarcerated indefinitely. Regarding the respondent's apprehension of witness influence, the Court stated that the prosecution could approach the trial court for cancellation of bail if any such conduct occurred. The operative directions included releasing the petitioner on regular bail subject to furnishing bail/surety bonds, informing the SHO of his address, providing his phone number, undertaking not to indulge in illegal activities, appearing before the police station on the first Monday of every month, and submitting an affidavit of no involvement in other cases. A Fixed Deposit Receipt (FDR) of Rs. 5,00,000/- was also to be submitted with the trial court, liable for forfeiture if the petitioner absented himself without cause. The Court explicitly stated that its observations were only for the purpose of considering the bail application and not on the merits of the case.

Facts

The petitioner, Rajesh Kumar @ Ajay Gupta, sought regular bail in a complaint case filed under Section 132 of the CGST Act and related statutes. The petitioner was arrested on December 27, 2020, in connection with alleged involvement in creating partnership firms (M/s La Mode Fashions and M/s Murari Enterprises) using forged identity proofs to avail fraudulent Input Tax Credit (ITC) and obtain refunds. Initially granted default bail by the CJM Court, Ludhiana, the bail was subject to stringent conditions, including furnishing bail bonds of Rs. 1 Crore and a bank guarantee of Rs. 50 Lacs. These conditions were later modified by the Additional Sessions Judge, Ludhiana, to Rs. 30 Lacs in bail bonds and Rs. 20 Lacs in bank guarantee. The petitioner was unable to meet these modified conditions. Subsequently, a complaint was filed, and his regular bail applications were dismissed by the CJM and ASJ Courts. The petitioner has undergone over two years and five months of custody.

Key Issues

1. Whether the petitioner is entitled to regular bail under Section 439 of the Code of Criminal Procedure, considering the period of custody undergone and the maximum punishment prescribed under Section 132 of the CGST Act? Petitioner's arguments: The petitioner contends he has no role in the alleged offenses, is not a beneficiary of the firms, and has been falsely implicated. He highlights that he has undergone a significant period of custody (over two years, five months) which is substantial relative to the maximum five-year sentence under Section 132 of the CGST Act. He also points out that co-accused have been granted bail and that a co-accused's challenge to Sections 69 and 132 of the CGST Act has led to a stay on the trial in a related case. The petitioner is ready to abide by any conditions imposed. Respondent's arguments: The respondent-Department opposes the bail plea due to the seriousness and gravity of the offense, alleging the petitioner's instrumental role in creating bogus firms, forging identity, availing fake ITC amounting to Rs. 17.11 Crores, fraudulent monetization of ITC through refunds totaling Rs. 2.90 Crores, and issuing bogus bills of Rs. 153.15 Crores. The respondent fears the petitioner might influence witnesses and abscond, thereby delaying the trial.