Sourabh Agrawal vs. Union Of INDIA

Held

The Court allowed the bail application. The Court considered that the investigation concerning the applicant was complete, a complaint had been filed, and the applicant had been in custody for approximately five months. The case was noted to be based on documentary and electronic evidence. Referencing the Supreme Court's decision in Ratnambar Kaushik Vs. Union of India, which dealt with GST evasion and where the accused was in jail for over four months, the Court observed that in such cases, evidence is primarily documentary and electronic, and ocular evidence comes from official witnesses, minimizing the apprehension of tampering. Therefore, the Court was of the view that the applicant could be released on bail. The applicant was directed to furnish a personal bond of Rs. 1 lakh with two sureties, appear before the trial court on each date, provide details of his and his family's movable and immovable properties, and refrain from alienating immovable property without prior court permission.

Facts

The applicant, Sourabh Agrawal, is seeking bail in connection with a case registered under Section 132(1)(b)(c) of the Central Goods and Services Tax Act, 2017. The prosecution alleges that the applicant created a fake firm, M/s United Ispat, with a dummy partner, Divya Nag, and wrongly availed input tax credit (ITC) of Rs. 16,94,87,733/- based on fake invoices without supplying any goods. The applicant was arrested on February 21, 2023, and a complaint was filed on April 21, 2023. The applicant claims he has no connection with M/s United Ispat, stating that his father's business partner, Ayush Garg, introduced Divya Nag and that Ayush Garg is the actual owner. The applicant asserts that no substantial evidence shows he benefited from M/s United Ispat and that the investigation is complete.

Key Issues

1. Whether the applicant is entitled to bail considering the allegations of creating a fake firm and wrongly availing input tax credit under Section 132(1)(b)(c) of the CGST Act, 2017, and the quantum of alleged ITC wrongly availed (Rs. 16,94,87,733/-)? Petitioner's arguments: The applicant's counsel argued that the applicant has been implicated based solely on the oral statements of other accused persons. The applicant, in his confessional statement, denied involvement and stated that Ayush Garg, a business partner of his father, introduced Divya Nag and benefited from M/s United Ispat, with Ayush Garg being the owner. No substantial evidence was collected by the GST Department to show the applicant gained any benefit. The applicant has been in custody for approximately five months, the investigation is complete, and a complaint has been filed. The offense is punishable with a maximum of 5 years imprisonment and is triable by a JMFC, suggesting no flight risk. Reliance was placed on Ratnambar Kaushik Vs. Union of India. Non-applicant's arguments: The GST Department and the Objector opposed the bail. The Objector claimed the applicant and his father presented themselves as owners of M/s United Ispat, leading to transactions. The Objector's statement to the GST Department identified the applicant as the mastermind behind the fraud, leading to a penalty of Rs. 12.50 crores for ITC evasion, of which the Objector paid Rs. 6 crores and had Rs. 2 crores frozen in his bank account. The GST Department argued that economic offenses constitute a class apart and require a different approach for bail, citing Nimmagadda Prasad Vs. Central Bureau of Investigation.