Commissioner Of CGST vs. Kartik Agarwal

Held

The Court dismissed the application for cancellation of bail. The Court noted that the application for cancellation of bail did not even specify the exact amount of duty tax evasion alleged against the respondents, which was considered surprising. While acknowledging the petitioner's submissions regarding the alleged evasion and the deposited amount, the Court found no illegality in the trial court's order. The Court considered that the respondents had already been granted bail by the trial court based on their undertaking to deposit Rs. 50 Lakhs, a portion of which had been deposited. Furthermore, the Court noted that the respondents had not misused the liberty extended to them and that departmental proceedings were also pending. In light of these circumstances, the Court concluded that the learned Judge of the trial court had not committed any illegality in allowing the bail application. The ratio decidendi is that when bail has been granted by the trial court on an undertaking to deposit a sum, and the accused have not misused liberty, and departmental proceedings are pending, cancellation of bail is not warranted, especially when the application for cancellation lacks specific details of the alleged evasion.

Facts

The Commissioner of CGST filed a criminal miscellaneous case seeking cancellation of bail granted to Kartik Agarwal and Sheel Panchal, directors of M/s Pyrol Fuel Industries Private Pvt. Ltd. The respondents are alleged to have availed Input Tax Credits on fake invoices without actual receipt of goods, violating Section 16 of the GST Act, 2017. The total alleged tax evasion is Rs. 15 Crores. The trial court granted bail upon an undertaking to deposit Rs. 50 Lakhs, of which Rs. 20 Lakhs has been deposited. The petitioner argued that the deposited amount is meager compared to the alleged evasion, warranting cancellation of bail. The respondents countered that the offence is punishable with a maximum of five years imprisonment, triable by a Magistrate, and compoundable, and they have not misused their liberty.

Key Issues

1. Whether the learned Additional Sessions Judge erred in granting bail to the respondents under Section 132 of the CGST Act, 2017, and Section 120-B of the IPC, considering the alleged tax evasion of Rs. 15 Crores, when only an undertaking to deposit Rs. 50 Lakhs was given and Rs. 20 Lakhs deposited. Petitioner's arguments: The petitioner contended that the bail order was erroneous because the amount deposited by the respondents (Rs. 20 Lakhs out of an undertaking for Rs. 50 Lakhs) is disproportionately small compared to the alleged tax evasion of Rs. 15 Crores. They argued that this meager deposit does not adequately address the gravity of the offence and therefore, the bail granted should be cancelled. Respondents' arguments: The respondents argued that no interference is warranted as the trial court rightly granted bail. They highlighted that the offence under Section 132 of the CGST Act carries a maximum sentence of five years, the case is triable by a Magistrate, and the offence is compoundable. They also submitted that they have not misused the liberty granted and would suffer incarceration unnecessarily if the case terminates in their favour. They relied on the fact that departmental proceedings are also pending.