1. The applicant, presently in custody, has filed regular bail application under Section 439of the Cr.P.C., in connection with File No. ACST/U-5/J K Traders/2021-22, registered with office of Assistant Commissioner of State Tax, Ahmedabad, for the offences punishable under Sections 132(1)(A), 132(1)(B) and 132(1)(C) of the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as ‘the GST Act’.) and Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘CGST Act’), ready with Section 21 and 120B of the IPC.

2. The applicant arrested on 13.03.2022 and was produced before the learned Metropolitan Magistrate on 14.03.2022 and till 23.03.2022, he remanded to the custody of the department and since then, he is in judicial custody. His bail application filed before the Metropolitan Magistrate came to be rejected vide order dated 21.04.2022. Respondent authority, filed complaint before the court concerned as contemplated under the Act. The applicant, thereafter, moved an application seeking his regular bail before the courts below and same was rejected vide order dated 06.06.2022 and 28.06.2022. Feeling aggrieved by the same, the applicant preferred present application seeking regular bail.

3. This Court has heard Mr. N.D. Nanavaty, learned Senior Advocate assisted by Mr Rahul Dholakia, learned counsel for and on behalf of the applicant and Mr. Manan Mehta, learned APP for the respondents – State and department.

4. Brief facts leading to file present application are that, the applicant is administrator of M/s. JK Traders, engaged in the business of trading of ferrous waste and scrape. The department collected specific intelligence to the effect that the applicant and his associates are engaged in fraudulent transfer of Input Tax Credit (ITC, for short) and evasion of huge amount of Goods and Service Tax particularly, in cases where illicit ITC is claimed and availed by procuring invoices without actual receipt of goods and also procured goods without invoices and thereby, to avoid tax liability, by using such ITC on outward supply of goods procured without invoice, whereby, ITC is claimed and availed without any inward supply and pass on the benefits of ITC without any intention. During the search conducted at the business premises, incriminating material in the form of books of account and digital date, storage devices like cell phones, laptops, hard disks, pen drives, were seized and recovered. It is further case of the respondent department that the applicant Mr. Shah is the person who is the responsible to execute the alleged huge scam of showing fake inward transactions and have created fictitious firms/companies in the name of relatives, employees and others namely, M/s Reevan Creation, Gayatri Corporation and J.K. Traders, whereby, illicit ITC of Rs.36.05 crores claimed and passed on three firms to the tune of Rs.34.35 crores and made cash transactions without invoices of Rs.1.09 lakhs, which resulted into monetary loss to the Government Exchequer to the tune of Rs.37.95 crores, thereby, committed an offences as referred above.

5. Mr. N.D. Nanavati, learned Senior Counsel urged that:

(i) That the allegations leveled against the applicant are false and frivolous and he has not at all availed and utilized the ITC as being alleged fraudulently. It is in this context, he submitted that the arrest of the applicant is being made against the guidelines issued by the finance department and considering the scheme and object of the Act, prosecution should normally be launched only after adjudication is completed. On factual aspect, it is urged that after the filing of the complaint, no show cause notice is issued fixing the liability and therefore, the maximum punishment is upto 5 years, and case is triable by Magistrate and also compoundable and when the further custody of the applicant is not necessary, keeping behind bar him for an indefinite period, would not serve any purpose.

(ii) Without prejudice to the rights and contentions, it was submitted that statutory right of Appeal against the Assessment Order is available to the applicant subject to deposit of 10% disputed liability, which may not exceed Rs. 2 crores. It is in this context, on instructions, it was submitted that the applicant is ready and willing to deposit Rs. 2 crore within 6 months from his release before the department and he will also file an undertaking to this effect.

(iii) In the aforesaid contentions, it was submitted that the constitutional right of liberty must be protected, unless further detention is necessary, as the jurisprudence of the bail, is that ‘Bail is a rule and jail is an exceptional’ and therefore, when investigation is over and after filing of the complaint, the department failed to point out that further custody of the applicant is not necessary, the applicant may be enlarged on bail.

6. Mr. Manan Mehta, learned APP reiterating the contents of the sworn affidavit, contended that the applicant defrauded the State Exchequer to the tune of Rs.37.95 crores and there exists potential risk that the applicant may manipulate or attempt to destroy the evidences. He further submitted that the offence committed is grave economic offence, and detrimental to the nation economy as economic offense constitute a class apart and need to be viewed with different approach in the matter of bail and therefore, he prays that the applicant should not be enlarged so as to ensure proper investigation.

7. Having considered the rival contention of respective parties and having regard to the material on record, it appears that the respondent Department failed to point out the facts that the further custody of the applicant is necessary. The entire case is based on documentary evidence and same are in the custody of the department. Record indicates that after filing the complaint, still no show cause notice for determining the liability is issued by the Department. However, the applicant herein has shown his bonafide and is willing to deposit Rs.2 crore before the department. In such circumstances, considering the observations made by the Apex Court in case of P. Chidambaram Vs. Directorate of Enforcement, (2020) 13 SCC 791, i.e. “even allegations of grave economic offence, it is not a rule that bail should be denied in every case and whether bail is granted or not, will have to be on the case to case basis of the facts involved therein and securing the presence of the accused to stand trial.”, I deem it fit to exercise the discretion in favour of the applicant and accordingly, I inclined to release the applicant on bail with a condition that the applicant shall deposit Rs.2 crores before the Office of the respondent no. 2 i.e Assistant Commissioner of State Tax, Unit-5, 11^th Floor, B-Block, Multi-storied Building, Lal Darwaja, Ahmedabad within a period of 6 months in equal six installments. The department is directed to accept the amount. It is clarified that, if the applicant fails to deposit the amount as aforesaid or missed any installment, the bail granted shall stands automatically cancelled. The applicant is directed to file undertaking to this effect before the court concerned and this court within 15 days from his release.

8. Hence, the applicant is ordered to be released on regular bail in connection with the File No. ACST/U-5/J K Traders/2021-22, registered with office of Assistant Commissioner of State Tax, Ahmedabad, on executing a personal bond of Rs.10,000/- (Rupees Ten thousands only), with one surety of the like amount to the satisfaction of the learned Trial Court and subject to the conditions that he shall:

9. The authorities shall release the applicant if he is not required in connection with the any other offence. If breach of any above condition is committed, the Sessions Judge concerned shall take appropriate action or issue warrant against the applicant. The bail bond to be executed before the learned trial Court having jurisdiction to try the case. It will be open for the sessions judge concerned to delete, modify and/or relax any of the above conditions, in accordance with law. Nothing stated hereinabove, shall tantamount to the expression of any opinion on the merits of this case. Rule is made absolute to the aforesaid extent. Direct service permitted.