Shubham Singhal vs. Union Of INDIA

Held

The Court allowed the application for regular bail. The Court noted that the offense registered against the petitioner is compoundable under Section 138 of the Central Goods and Services Tax Act, 2017, and that the petitioner had made his intention clear that he is willing to compound the offenses against him. The Court found these reasons sufficient to grant bail. The Court referred to the prosecution's case that M/s Adhiraj Cements, of which the petitioner is a partner, had availed Input Tax Credit (ITC) of Rs. 12.53 crores fraudulently by using invoices and bills of M/s United Ispat, which was found to be a fake organization. Despite the seriousness of the allegations and the amount involved, the Court was inclined to allow the application based on the compoundable nature of the offense and the petitioner's expressed willingness to compound. The interim bail granted to the applicant was confirmed as regular bail.

Facts

The petitioner, Shubham Singhal, a partner in M/s Adhiraj Cements, was arrested on September 12, 2020, in connection with a GST crime. The arrest followed a raid by the Director General of GST Intelligence (DGGI) on August 10, 2020, where documents were seized. A subsequent raid by the preventive authority on September 11, 2020, did not yield documents for seizure, but the petitioner was arrested. The petitioner's application for bail before the Special Court was dismissed, and he was subsequently granted temporary bail by the High Court. The petitioner argued that the assessment was ongoing and he was cooperating, and that the offense was compoundable. The respondent contended that the petitioner's concern dealt with a fake organization, M/s United Ispat, leading to fraudulent Input Tax Credit (ITC) claims and tax evasion amounting to approximately Rs. 12 crores.

Key Issues

1. Whether the petitioner is entitled to regular bail under Section 439 of the Cr.P.C. given the ongoing assessment and his willingness to compound the offense under Section 138 of the CGST Act, 2017? Petitioner's arguments: The petitioner argued that all relevant documents are with the DGGI, the assessment is ongoing, and he is fully cooperating with the investigation. He emphasized that the offense is compoundable under Section 138 of the CGST Act, 2017, and he intends to opt for compounding. He relied on the case of Prakash Bihari Lal Dadhichi Vs. Union of India, which he contended held that prosecution can only commence after assessment is complete. Respondent's arguments: The respondent argued that the petitioner's concern dealt with a fake organization, M/s United Ispat, and that transactions with this entity were false, leading to tax evasion. They asserted that the investigation by the preventive authority is separate from the DGGI's investigation. They also pointed out that while the offense is compoundable, no offer for compounding has been made. The respondent cited P.V. Ramana Reddy Vs. Union of India & Ors. to argue that the petitioner is not entitled to bail due to the seriousness of the offense involving evasion of approximately Rs. 12 crores, which constitutes a loss of public money affecting the State's economy.