These two bail applications have been filed by the petitioners under Section 439 CrPC. Facts of the case are that a letter dated 27.11.2020 was received from the Assistant Commissioner, CGST Division-C, Bhiwadi to the effect that income tax credit (for short, ‘ITC’) on the invoices issued by M/s. Veto Merchandise had been wrongly availed. Alongwith the aforementioned letter, a letter written by the Deputy Commissioner, Circle-I, State Tax, Jaipur dated 3.3.2020 was also enclosed, wherein it was stated that upon verification of M/s. Veto Merchandise, Jaipur (GSTIN- 08AA0FV2648B1Z1), the said firm was found non-existent at its principal place of business and, therefore, the invoices issued by M/s. Veto Merchandise, Jaipur (GSTIN-08AA0FV2648B1Z1) to M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN- 08AAJCS6595A1Z3) were also fake / bogus. The Dy. Commissioner, State Tax had also informed that no business activities were done at the business premises of M/s. Veto Merchandise and that the registration of the said firm had been cancelled and complete ITC had been blocked.

Returns and other relevant details of M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN- 08AAJCS6595A1Z3) were checked on AIO and it was found that earlier M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN-08AAJCS6595A1Z3) was registered under Central Excise and later, it was registered under the GST regime. Since July, 2017 (after enactment of GST), M/s. Swissline had filed GSTR 3B returns upto February, 2020 and the total taxable supplies shown in GSTR 3B returns were ₹ 300.09 crores. M/s. Swissline Intertrade Pvt. Ltd. had paid tax amounting ₹ 48.87 crores through ITC and ₹ 2.20 lakhs only through cash. It had also paid cash ₹ 4.71 lakhs under RCM. The cash : ITC ratio of M/s. Swissline Intertrade Pvt. Ltd. is 0.04 : 99.96.

From registration details of M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN- 08AAJCS6595A1Z3), it was gathered that GST registration of the company was cancelled on 5.2.2020 and it had three Directors:

i. Sh. Bimal Kumar Jain S/o Shri Abhey Kumar Jain, Resident of JP-1, Maurya Enclave, Block-JP, Maurya Enclave, Pitampura, Delhi

ii. Sh. Ramesh Kumar Jain, S/o Shri Bhimsem Jain, Resident of ZP-21, Maurya Enclave, Block-ZP, Maurya Enclave, Pitampura Delhi

iii. Smt. Saroj Bala D/o Abhey Kumar Jain, Resident of DP-218, Maurya Enclave, Block-DP, Maurya Enclave, Pitampura, Delhi.

Similarly, Sanjeev Jain S/o Ramesh Jain was alleged to be Director of another firm called M/s. Mohit Metals Pvt. Ltd., G-1208 B & C, RIICO Industrial Area, Rampur Mundana, Bhiwadi, Alwar, Rajasthan (08AAECM0087C1ZR) and he also held 65% shares of the company.

Petitioner Ramesh Jain was alleged to have availed of wrongful input tax credit to the tune of ₹ 47,91,05,784/- and passed on fake / bogus ITC to the tune of ₹ 48,40,60,293/- without any purchase or sale of goods. Likewise, petitioner Sanjeev Jain was alleged to have availed of wrongful input tax credit to the tune of ₹ 13,35,44,893/- and passed on fake / bogus ITC amounting to ₹ 12,64,19,263/- without any purchase or sale of goods.

Acting upon the aforementioned letters, a complaint was filed against them before ACJM (Economic Offence), Jaipur and they were arrested on 19.12.2020. The petitioners filed bail applications before the trial court, which came to be dismissed vide order dated 8.2.2021/20.2.2021. Hence, these bail applications.

Mr. Sameer Jain, learned counsel for the petitioners submits that as per Section 134 of the Central Goods and Services Tax Act, 2017 (for short, ‘the Act of 2017’), the alleged offence is triable by a Judicial Magistrate, First Class. He further submits that as per arrest memo (Annexure-1), the petitioners have been arrested for the offence under clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 of the Act of 2017. As per the provisions of Section 132 of the Act of 2017, maximum sentence provided for the alleged offence is 5 years, which is reducible to 6 months. He has drawn the attention of the Court towards Section 137 of the Act of 2017 and submits that where an offence committed under this Act is a Company, every person who, at the time of commission of the offence, was in charge of and was responsible for the conduct of the business of the company, as well as the Company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly, but in the instant case, Department has neither given any prosecution sanction nor initiated any action for the alleged offence against the Company, which is a taxable person in view of Section 122 of the Act of 2017. He further submits that for the alleged offence a taxable person is liable to pay a penalty of an amount equivalent to the tax evaded in terms of Section 122 (1) of the Act of 2017 and in view of sub-section (3) of Section 122 of the Act of 2017, who aids or abets the offence shall be liable to a penalty which may extend to twenty five thousand rupees only. The petitioners who are the employees of the Company have been falsely implicated in this matter. He further submits that as per Section 138 of the Act of 2017, the alleged offence is compoundable by the Commissioner.

He further submits that although the petitioners were arrested for the offence under clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 of the Act of 2017, but the charge sheet was filed against them for the offence under Section 132(1) (b) (c) (l) of the Act of 2017 alongwith other offences. He further submits that clause (b) of sub-section (1) of Section 132 of the Act of 2017 deals with issuing any invoice or bill and clause (c) of sub- section (1) of Section 132 deals with availing input tax credit, whereas clause (l) of sub-section (1) of Section 132 of the Act of 2017 deals with attempt to commit or abet the commission of any of the offences mentioned in clauses (a) to (k) of this Section, for which the maximum sentence is six months. If viewed from this angle, the alleged offence is bailable. He further submits that clauses (a) (b), (c) and (d) of sub- section (1) of Section 132 of the Act of 2017 are exclusive clauses and under sub-section (5) of Section 132 of the Act of 2017, offences specified therein have been made cognizable and non-bailable, whereas all other offences are non cognizable and bailable under sub-section (4) of Section 132 of the Act of 2017. He has drawn the attention of this Court towards internal page 2 of the charge sheet (page 31 of the bail application) and submits that the company M/s. Swissline Intertrade Pvt. Ltd. had paid tax amounting to ₹ 48.87 crores through ITC and ₹ 2.20 lakhs through cash. It had also paid cash ₹ 4.71 lakhs under RCM.

He further submits that Shri Bimal Kumar Jain is the Director of the Company. As per the case of the prosecution, he created the company M/s. Swissline Intertrade Pvt. Ltd. and invested money for the petitioner Ramesh Jain in M/s. Swissline Intertrade Pvt. Ltd., whereas the petitioner Ramesh Jain was the employee in the company and getting ₹ 20,000/- per month.

He further submits that petitioner Sanjeev Jain has been alleged to be the Director of M/s. Mohit Metals Pvt. Ltd, whereas the Director of the said Company is Sunil Dutta and the petitioner Sanjeev Jain was also an employee in the said company and getting ₹ 30,000/- per month. Sunil Duta is also a Director in M/s. Veto Merchandise, Hanuman Nagar, Gudia Market, Office No. 27, New Loha Mandi Road, Hotel Ka Saamne, Manchanda, Jaipur (GSTIN- 08AAOFV2648B1Z1).

He further submits that notices were issued to Ms. Saroj Bala, Sunil Dutta, Akhilesh Yadav and Bimal Kumar Jain, who are Directors of the Company, but they did not appear and the petitioners who cooperated and appeared before the respondents, have been arrested and made victim of the circumstances. He further submits that Bimal Kumar Jain was arrested by Enforcement Directorate in Money Laundering case where interim bail / parole was granted to him. If the Directors are not coming for recording their statement, then action ought to have been taken against them.

He further submits that as per the case of the prosecution, the petitioners Ramesh Kumar Jain and Sanjeev Jain are actively involved in availing wrong ITC, which goes to show that the petitioners are not the Directors of the company and they are only the employees of the company.

He further submits that after completion of investigation, charge sheet has already been filed. Now the petitioners are not required for any investigation or interrogation purposes. Petitioner Ramesh Jain is about 63 years of age who is suffering from acute Sleep apnea and a Certificate in this regard has been issued by the Doctor of Dispensary, Central Jail, Jaipur. The petitioners have no criminal antecedents to their discredit. They are not habitual offenders. There is no allegation against the petitioners for tampering with the witnesses. The petitioners have in judicial custody for long and the conclusion of trial will take long time, hence they may be enlarged on bail.

In support of his contentions, he has placed reliance on the following judgments:

i) Arnesh Kumar Versus State of Bihar reported in (2014) 8 SCC 273

ii) Sanjay Chandra Versus CBI reported in (2012) 1 SCC 40

iii) Pradeep Kumar Bansal Versus Union of India (order dated 4.11.2020 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 12093/2020)

iv) Shiv Kumar Sharma Versus Union of India (order dated 15.3.2021 passed by the Coordinate Bench of

this Court in S.B. Cr. Misc. Bail Application No. 3031/2021)

v) Hemant Kumar Singhal Versus Union of India and another connected case (order dated 4.11.2020 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 8676/2020)

vi) Anil Kumar Gupta Versus Union of India (order dated 19.2.2021 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 15605/2020)

vii) Anup Ashopa Versus Union of India (order dated 7.7.2020 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 4028/2020)

viii) Gaurav Maheshwari Versus State, reported in 2020 (38) G.S.T.L. 178 (Raj.)

ix) Gaurav Maheshwari Versus State (order dated 13.5.2020 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 1422/2020)

x) Ashwani Kumar Bagpatiya @ Golu Versus Union of India (order dated 5.3.2021 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 465/2021)

xi) Atul Chopra Versus State of Rajasthan (order dated 22.11.2019 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Second Bail Application No. 15418/2019)

xii) Rakesh Kumar Khandelwal Versus Union of India (order dated 14.10.2019 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 12440/2019)

On the other hand, Mr. Shivangshu Naval, learned counsel for the respondent submits that this is a case of tax evasion. He submits that M/s. Swissline had filed GSTR 3B returns upto February, 2020 and the total taxable supplies shown in GSTR 3B returns were ₹ 300.09 crore. M/s. Swissline Intertrade Pvt. Ltd. had paid tax amounting ₹ 48.87 crores through ITC and ₹ 2.20 lakhs only through cash. It had also paid cash ₹ 4.71 lakhs under RCM. The cash : ITC ratio of M/s. Swissline Intertrade Pvt. Ltd. is 0.04 : 99.96. The petitioners are not the employees but they are shareholder Directors of the company. Petitioner Ramesh Jain is having 27% sharing in M/s. Swissline Intertrade Pvt. Ltd. Similarly, petitioner Sanjeev Jain is the Director of M/s. Mohit Metals Pvt. Ltd. and has 65% share in the said company.

So far as Section 138 of the Act of 2017 relating to compounding of offences is concerned, learned counsel for the respondent submits that compounding can be allowed only after making payment of tax, interest and penalty involved therein.

The petitioner Ramesh Jain had availed of wrongful input tax credit to the tune of ₹ 47,91,05,784/- and passed on fake / bogus ITC to the tune of ₹ 48,40,60,293/- without any purchase or sale of goods. Similarly, petitioner Sanjeev Jain had availed of wrongful input tax credit to the tune of ₹ 13,35,44,893/- and passed on fake / bogus ITC amounting to ₹ 12,64,19,263/- without any movement of goods.

He further submits that the petitioners have been charge sheeted under Section 132 of the Act of 2017. Section 132 of the Act of 2017 deals with punishment. He has drawn the attention of the Court towards clauses (b)(c) and (l) of sub-section (1) of Section 132 of the Act of 2017, which are reproduced as under:

b) Whoever issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax;

c) whoever collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

d) ..

e) ..

f) ..

g) ..

h) ..

i) ..

j) ..

k) ..

l) whoever attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to (k) of this Section shall be punished.

He has also drawn the attention of the Court towards sub- section (5) of Section 132 of the Act of 2017, which is reproduced as under:

“(5) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub- section (1) and punishable under clause (i) of that sub-section shall be cognizable and non- bailable.”

He submits that in view of sub-section (5) of Section 132 of the Act of 2017, the offence committed under clause (b) or (c) of sub- section (1) of Section 132 of the Act of 2017 are cognizable and non- bailable and the maximum sentence provided therefor is 5 years.

So far as Section 137 of the Act of 2017 with regard to non initiation of any action against the Company is concerned, learned counsel submits that the matter is still under process. While filing the charge sheet, the respondent had kept their right reserved to examine the witnesses and also to adduce more documentary evidence. If additional facts emerge from investigation, supplementary charge sheet will be filed. He further submits that since Bimal Kumar Jain had been arrested by the Enforcement Directorate, the respondent could not examine him. Other persons are also yet to be examined. He further submits that the petitioners created bogus entities only for the purpose of selling / purchasing fake bills. He further submits that petitioner Sanjeev Jain was being paid commission of 1-1.5% on every fake bill. He further submits that culpability of the accused persons is to be seen in entirety.

Learned counsel further submits that now-a-days, white collar crimes are increasing rapidly in the country. He further submits that the alleged offence committed by the petitioners is an economic offence.

In support of his submissions, he has placed reliance on the following judgments:

i) Serious Fraud Investigation Office Versus Nittin Johari and Another reported in (2019) 9 SCC 165

ii) Nimmagadda Prasad Versus Central Bureau of Investigation reported in (2013) 3 SCC 466.

iii) Bharat Raj Punj & Anr. Versus Commissioner of Central Goods and Service Tax Department and Others (order dated 12.3.2019 passed by the Coordinate Bench of this Court in S.B. Cr. Writ Petition No. 76/2019)

iv) Sumit Dutta Versus Union of India (order dated 20.4.2021 passed by the Coordinate Bench of this Court in S.B. Cr. Misc. Bail Application No. 5371/2021)

Heard. Considered.

In the case of Arnesh Kumar (supra), Hon’ble Apex Court observed as under:

“a person accused of offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years with or without fine, cannot be arrested by the police officer only on its satisfaction that such person had committed the offence punishable as aforesaid. Police officer before arrest, in such cases has to be further satisfied that such arrest is necessary to prevent such person from committing any further offence; or for proper investigation of the case; or to prevent the accused from causing the evidence of the offence to disappear; or tampering with such evidence in any manner; or to prevent such person from making any inducement, threat or promise to a witness so as to dissuade him from disclosing such facts to the Court or the police officer; or unless such accused person is arrested, his presence in the court whenever required cannot be ensured.”

In the case of Sanjay Chandra (supra), the Hon’ble Apex Court observed as under:-

“Right to Bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the Court, whether before or after conviction, to assure that he will submit to the jurisdiction of the Court and be in attendance thereon whenever his presence is required.”

The Hon’ble Apex Court further observed:

“46. We are conscious of the fact that the accused are charged with economic offences of huge magnitude. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the economy of the country. At the same time, we cannot lose sight of the fact that the investigating agency has already completed investigation and the charge-sheet is already filed before the Special Judge, CBI, New Delhi. Therefore, their presence in the custody may not be necessary for further investigation. We are of the view that the appellants are entitled to the grant of bail pending trial on stringent conditions in order to ally the apprehension expressed by CBI.”

In the case of Pradeep Kumar Bansal (supra), taking into consideration the length of custody of the petitioner, the maximum punishment awarded under the Act of 2017 being five years, offences being compoundable, and absence of the criminal antecedents, a Coordinate Bench of this Court granted bail to the petitioner therein.

In the case of Shiv Kumar Sharma (supra), taking into consideration the fact that the petitioner was a senior citizen and was in custody for last about 5 months; all the evidence being documentary in nature and no apprehension shown by the prosecution about the accused petitioner of tampering with the evidence/witnesses and co- accused having already been released on bail, a Coordinate Bench of this Court granted bail to the petitioner therein.

On the other hand, in the case of Serious Fraud Investigation Office (supra), the judgment passed by the Hon’ble Apex Court in the case of Y.S. Jagan Mohan Reddy Versus Central Bureau of Investigation reported in (2013) 7 SCC 439 was referred, where Hon’ble Apex Court observed thus:

“34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public / State and other similar considerations.

In the case of Nimmagadda Prasad (supra), Hon’ble Apex Court observed as under:-

“Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”

In the case of Bharat Raj Punj (supra), the Coordinate Bench of this Court observed as under:

“20. The case set up by the Department is that the petitioner has claimed input tax credit on fake invoices, which fact is not controverted by the petitioner. Hence, Department has all rights to take any action permissible by law.”

In the case of Sumit Dutta (supra), a Coordinate Bench of this Court dismissed the bail application of the petitioner therein on the ground that the petitioner was partner in M/s. Veto Merchandise and a sum of ₹ 47 crore was claimed as Input Tax Credit without any movement of goods. His bail application was also dismissed on the ground that fake bills and invoices input tax credit was passed on to firms which were existing in papers.

Taking into consideration the submissions advanced by learned respective counsel and more particularly in view of the fact that the petitioners have already remained in custody for about 5 1/2 months, whereas the maximum punishment provided under the Act of 2017 is five years and also considering the fact that investigation is already complete and charge-sheet has been filed and also considering the age of petitioner Ramesh Jain and the fact that the petitioners have no criminal antecedents. Also in view of the present pandemic of COVID-19 situation in the State of Rajasthan, but without expressing any opinion on the merits of the case, I deem it just and proper to enlarge the petitioners on bail.

Accordingly, the bail applications are allowed and it is directed that accused petitioners (1) Sanjeev Jain S/o Ramesh Jain and (2) Ramesh Jain S/o Shri Bhimsain Jain shall be released on bail under Section 439 CrPC, provided each of them furnishes a personal bond in the sum of ₹ 5,00,000/- (Rupees Five Lakh only) together with two sureties in the sum of ₹ 2,50,000/- (Rupees Two Lakh Fifty Thousand only) each to the satisfaction of the trial Court with the stipulation that the petitioner(s) shall appear before the trial court on all subsequent dates of hearing and as and when called upon to do so.