Mumbai: The Nagpur bench Bombay high Court has granted bail to a man accused of committing a ₹144 crore tax fraud observing that the offence of tax fraud is not a “heinous crime like murder or terrorism”.
The court also noted that accused Rahul Jain has already paid ₹81 lakhs of the ₹144 crore. Also, the investigation against Jain had been completed in the case.
“The offence under the CGST Act, 2017 except with limited exceptions, are compoundable. In light of the above facts, detention of the applicant in jail is not required. The applicant is not involved in a heinous crime like murder or terrorism. The allegations of serious financial impropriety are levelled against the applicant,” observed Justice Urmila Joshi-Phalke on January 25.
The HC was hearing a plea filed by Jain seeking bail.
The tax fraud case
Jain was accused of committing tax fraud of ₹144 crores by availing input tax credit (ITC) without supplying any goods or services. He was also alleged to have obtained a GST registration on fictitious documents and is said to have illegally claimed tax refunds.
His advocate Sahil Dewan submitted that the officials did not follow the provisions of Section 41A of the Code of Criminal Procedure (CrPC). Under Section 41A, the police need to first issue a notice to the accused person directing him or her to appear to give a statement, after which, if the police deem it fit, then the arrest should be made.
Also, his arrest was not required as per the observations in the Supreme Court judgment in Arnesh Kumar case, which said that arrest was not required in cases where punishment, if found guilty, was maximum seven years. The offences alleged against him were punishable with less than seven years of imprisonment, Dewan submitted.
Advocate SN Bhattad for the GST department argued that observations of Arnesh Kumar would not apply to the officers of the GST department.
Consequences are the same regardless of statute at the time of arrest: HC
However, the bench observed that regardless of the statute under which an arrest is carried out, the consequences would be the same.
“The guidelines issued by the Honourable Apex Court thus are to be followed in the backdrop of severe congestion in the jail and denial of the bail is an exception, where the custody for investigation is not warranted. There is no reason why the aforesaid guidelines shall not be made applicable to the statute like in the present matter, where the power is conferred upon an officer to effect an arrest in case of offences where the penalty prescribed is less than 7 years imprisonment,” the court added.
The court directed his release on bail on furnishing a personal bond of ₹2 lakh.
