Ashu Gupta VS State of Haryana

The present document is a second petition filed under Section 439 of the Code of Criminal Procedure, seeking the grant of regular bail for the petitioner. The petitioner is involved in FIR No. 123, dated August 9, 2019, which includes charges under Sections 420 (cheating), 467 (forgery of valuable security), 468 (forgery for the purpose of cheating), and 471 (using a forged document as genuine) of the Indian Penal Code (IPC), along with Section 132 of the Goods & Services Tax (GST) Act, 2017. This FIR was registered at Police Station Sector 20, Panchkula.

The petitioner’s learned senior counsel has argued several key points in support of the bail application:

1. Custody Duration: The petitioner has been in custody for the past year.

2. Completion of Investigation: The investigation of the case has been completed.

3. Presentation of Challan: Following the completion of the investigation, the challan (charge sheet) has been presented before the competent court.

4. Pending Charges: Despite the investigation and submission of the challan, charges have not yet been framed against the petitioner.

The petition seeks the court’s consideration for granting regular bail on these grounds, emphasizing the prolonged detention without formal charges and the completion of investigative procedures, suggesting that further custody is unnecessary.

The present case is a second petition filed under Section 439 of the Code of Criminal Procedure, seeking regular bail for the petitioner in FIR No. 123 dated August 9, 2019. The FIR was registered under Sections 420 (cheating), 467 (forgery of valuable security), 468 (forgery for purpose of cheating), 471 (using forged document as genuine) of the Indian Penal Code (IPC), and Section 132 of the Goods & Services Tax (GST) Act, 2017, which was added later. The case is registered at Police Station Sector 20, Panchkula.

The petitioner’s learned senior counsel argued that the petitioner has been in custody for the past year, the investigation is complete, and the challan (formal charge sheet) has been presented in court, but charges have yet to be framed. This is the petitioner’s second bail petition; the first, CRM-M-23068 of 2022, was withdrawn on August 24, 2022.

The senior counsel elaborated that the FIR was based on a complaint by the Excise & Taxation Officer of Panchkula. The complaint alleged that the petitioner, as the proprietor of M/s Recycle With Us, committed fraudulent activities detected during a physical verification of the firm. Consequently, the FIR was filed under the aforementioned IPC sections, with Section 132 of the GST Act added later on April 12, 2022, through a report under Section 173 of the Code of Criminal Procedure.

The senior counsel argued that the GST Act is a self-contained code, stipulating that only a complaint can be filed before a Magistrate by a competent officer from the GST Department for issues under the Act. In this case, instead of following the prescribed procedure under the GST Act, an FIR was lodged under the IPC sections and Section 132 of the GST Act, alleging illegal receipt of Input Tax Credit. The counsel contended that this procedural error – lodging an FIR instead of filing a complaint before the Magistrate – undermines the validity of the case against the petitioner.

The petitioner has filed a second petition under Section 439 of the Code of Criminal Procedure, seeking regular bail in connection with FIR No. 123 dated 09.08.2019. The FIR includes charges under Sections 420, 467, 468, and 471 of the Indian Penal Code (IPC) and Section 132 of the Goods & Services Tax (GST) Act, 2017, registered at Police Station Sector 20, Panchkula.

The petitioner’s senior counsel argued that the petitioner has been in custody for one year, the investigation is complete, and the challan has been presented in court, although charges are yet to be framed. The counsel highlighted that this is the second bail petition; the first was withdrawn on 24.08.2022 in CRM-M-23068 of 2022.

The FIR was filed based on a complaint by the Excise & Taxation Officer, Panchkula, alleging that the petitioner, proprietor of M/s Recycle With Us, committed fraud detected through a physical verification of the firm. Initially, charges were under the IPC sections mentioned, and later, Section 132 of the GST Act was added through a report dated 12.04.2022 under Section 173 of the Code of Criminal Procedure.

The petitioner’s counsel contended that the GST Act is a self-contained code, which mandates filing a complaint with the Magistrate by a competent GST officer, not an FIR. Thus, lodging the FIR is seen as an abuse of the legal process, entitling the petitioner to bail. Additionally, the counsel argued that the GST Act offense is bailable as the alleged amount (Rs. 2,68,74,696) is below Rs. 5 crore. Given the petitioner’s one-year custody, bail should be considered.

In response, Ms. Nidhi Garg, learned AAG, Haryana, submitted an affidavit by the Assistant Commissioner of Police, Panchkula, countering the petitioner’s claims. The affidavit addressed compliance with the Supreme Court’s guidelines in the Arnesh Kumar vs. State of Bihar case. Garg asserted that the guidelines do not apply here due to the nature of the charges under Sections 420, 467, 468, and 471 of the IPC, particularly since Section 467 IPC carries a maximum severe sentence.

In this case, the petitioner has filed a second petition under Section 439 of the Code of Criminal Procedure for regular bail. The petitioner is facing charges under Sections 420, 467, 468, and 471 of the Indian Penal Code (IPC) and Section 132 of the Goods & Services Tax (GST) Act, 2017. The charges are related to FIR No.123, dated August 9, 2019, registered at Police Station Sector 20, Panchkula.

The senior counsel for the petitioner argues that the petitioner has been in custody for a year, the investigation is complete, and the challan has been presented, though charges have not yet been framed. This is the second bail petition, with the first being withdrawn on August 24, 2022. The counsel highlights that the FIR was based on a complaint by the Excise & Taxation Officer, alleging fraudulent activities by the petitioner, proprietor of M/s Recycle With Us. The FIR includes IPC sections and Section 132 of the GST Act, added later.

The counsel contends that under the GST Act, only a complaint by a competent GST officer can initiate proceedings, not an FIR under IPC sections. The allegations pertain to illegally received Input Tax Credit, which should be addressed under the GST Act, making the FIR an abuse of legal process. Therefore, the petitioner should be granted bail. Moreover, the counsel asserts that the amount involved, Rs. 2,68,74,696/-, is below the Rs. 5,00,00,000/- threshold for non-bailable offenses under the GST Act, making the offense bailable and justifying bail due to the petitioner’s one-year custody.

Conversely, Ms. Nidhi Garg, representing the state, filed an affidavit from the Assistant Commissioner of Police, asserting that the guidelines from the Supreme Court’s Arnesh Kumar vs. State of Bihar judgment do not apply here. This is because Section 467 IPC, involved in the FIR, can lead to life imprisonment, making those guidelines inapplicable.

Ms. Garg further explains that the Taxation Department’s physical verification revealed that M/s Recycle With Us did not exist at the stated address, leading to the petitioner’s summoning and reply, which was found to be false upon further enquiry. Statements from individuals associated with the mentioned addresses confirmed that the petitioner was not conducting business there, contradicting his claims.

In conclusion, while the petitioner’s counsel argues for bail based on procedural errors and the nature of the alleged offense under the GST Act, the state’s counsel emphasizes the seriousness of the fraud allegations and the thorough investigation proving the non-existence of the petitioner’s claimed business activities.

This is a summary of the petition filed under Section 439 of the Code of Criminal Procedure for regular bail for the petitioner in connection with FIR No.123 dated 09.08.2019. The FIR includes charges under Sections 420, 467, 468, 471 of the IPC and Section 132 of the Goods & Services Tax Act, 2017, registered at Police Station Sector 20, Panchkula.

The petitioner’s senior counsel argued that the petitioner has been in custody for a year, the investigation is complete, and the challan has been presented, but charges are yet to be framed. The petition is the second attempt for bail after the first was withdrawn in August 2022.

The case stems from a complaint by the Excise & Taxation Officer, Panchkula, alleging fraudulent activities by the petitioner, proprietor of M/s Recycle With Us. The fraud was detected through physical verification of the firm, leading to the FIR under the aforementioned IPC sections and later under Section 132 of the GST Act.

The senior counsel contended that an FIR was inappropriate under these circumstances; instead, a complaint should have been filed with the Magistrate under the GST Act, making the FIR an abuse of the law. The counsel emphasized that the GST Act is self-contained and deals specifically with issues like illegal receipt of Input Tax Credit (ITC).

Further, the senior counsel argued that even if the allegations of fraud involving Rs.2,68,74,696/- were true, the offense under Section 132 of the GST Act is bailable since the amount is less than Rs.5,00,00,000/-. Given the petitioner’s one-year custody, bail was requested.

Opposing the bail, Ms. Nidhi Garg, learned AAG, Haryana, provided an affidavit from the Assistant Commissioner of Police, Panchkula. She argued that the Supreme Court’s guidelines in Arnesh Kumar v. State of Bihar do not apply due to the nature of the charges, which include life imprisonment under Section 467 IPC.

The case involves allegations that the petitioner engaged in fraudulent activities, claiming to operate a business from locations where no such business existed. Physical verification and enquiries revealed that no firm named M/s Recycle With Us operated from the stated addresses, and transactions were found to be fake, with no actual movement of goods. The petitioner allegedly received ITC without physical receipt or supply of goods, committing fraud amounting to Rs.2,68,74,696/-.

A Special Investigation Team conducted a detailed investigation, verifying documents and records related to the firm and vehicles used in the purported transactions. The findings showed that the firm operated from April 2016 to April 2018 but was not functional at the claimed locations later. The petitioner made substantial sales without any physical movement of goods, as evidenced by E-way bills involving unsuitable vehicles for transporting large quantities of goods.

The senior counsel reiterated the petitioner’s entitlement to bail due to the self-contained nature of the GST Act, the non-applicability of Arnesh Kumar’s guidelines, and the significant custody period. Conversely, the state argued that the serious nature of the offenses and the fraud’s magnitude justified continued detention.

This document is a second petition under Section 439 of the Code of Criminal Procedure for the grant of regular bail to the petitioner in connection with FIR No.123 dated 09.08.2019. The FIR includes charges under Sections 420, 467, 468, and 471 of the Indian Penal Code (IPC) and Section 132 of the Goods & Services Tax Act, 2017 (GST Act), which was added later, and is registered at Police Station Sector 20, Panchkula.

The petitioner’s senior counsel argues that the petitioner has been in custody for one year, the investigation is complete, the challan has been presented, but charges have yet to be framed. The counsel highlights that this is the second bail petition, with the first one being withdrawn. The FIR was lodged based on a complaint by the Excise & Taxation Officer, alleging fraudulent activities by the petitioner, proprietor of M/s Recycle With Us. The FIR claims that upon physical verification, no such firm was found at the given address, leading to accusations of the petitioner committing fraud involving a substantial amount through illegal Input Tax Credit (ITC) claims.

The senior counsel contends that the GST Act, being a self-contained code, necessitates a complaint to a Magistrate by a competent officer rather than lodging an FIR under IPC provisions. They argue this makes the FIR an abuse of process and that the petitioner deserves bail. Additionally, the amount involved (Rs.2,68,74,696) is under the Rs.5,00,00,000 threshold, making the offense bailable under the GST Act.

On the contrary, Ms. Nidhi Garg, learned AAG, Haryana, submitted an affidavit by the Assistant Commissioner of Police, stating the FIR was correctly registered under IPC sections due to the serious nature of the allegations, including life imprisonment under Section 467 IPC. The FIR follows physical verification which revealed no firm at the claimed address, suggesting fraudulent ITC claims without actual goods movement, amounting to Rs.2,68,74,696. A detailed investigation uncovered that vehicles listed for transactions were inappropriate for the claimed goods movement, indicating falsified records.

The State’s counsel argues that granting bail might enable the petitioner to threaten witnesses as no prosecution witness has been examined yet. They also refute the petitioner’s claim that only a GST Act complaint should be filed, asserting that IPC offenses are distinct and validly registered due to fabricating bills to cheat the national exchequer.

In conclusion, the court considered the gravity of allegations, the distinct nature of IPC and GST Act offenses, and the maximum punishment under Section 467 IPC. The argument that no FIR could be filed and only a complaint under the GST Act is unsustainable, given the allegations of fraud and fabrication of documents to wrongfully claim substantial ITC benefits without any actual goods transactions.

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Punjab and Haryana High 

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