Accused in GST evasion case granted bail due to health issues and lack of evidence of being the ultimate beneficiary.

Key Takeaways:

1. The court emphasized the importance of personal liberty and the presumption of innocence, stating that pre-trial detention should be an exception.

2. The decision highlights the need for a balanced approach in economic offenses, considering factors like the accused's health, family responsibilities, and the strength of evidence against them.

3. The court cited several legal precedents, including Sanjay Chandra Vs. Central Bureau of Investigation, AIR 2012 SC 830, to reiterate the principles governing bail decisions.

Issue:

Should Ashish Aggarwal, accused of evading GST by passing fake input tax credits, be granted bail considering his health conditions, family responsibilities, and the lack of evidence suggesting he was the ultimate beneficiary?

Facts:

Ashish Aggarwal was accused of passing fake input tax credits (ITC) worth around Rs. 77 crores through various firms, including M/s Maya Impex, which was owned by his mother but allegedly handled by him.

He was arrested on 29.10.2020 and had been in judicial custody since then.

Aggarwal was suffering from severe sleep apnea and hypertension, and his 66-year-old mother, who was bed-ridden with left-hand paralysis, blood clotting in the brain, and osteoporosis, was dependent on him.

The prosecution alleged that Aggarwal had admitted to his involvement in passing fake ITC during his statement recorded under Section 70 of the CGST Act.

However, Aggarwal had retracted his statement on the same day, and there was no independent corroboration of his alleged confession.

The prosecution failed to establish that Aggarwal was the ultimate beneficiary of the alleged fake ITC credits.

Arguments:

1. Prosecution's Arguments: The prosecution strongly opposed bail, arguing that Aggarwal had admitted to passing fake ITC worth crores of rupees through multiple firms. They claimed that if released on bail, he might hamper the investigation by contacting parties involved in the alleged network of fake billing. The prosecution relied on judgments like SFIO Vs. Nitin John Anr (Crl. Appeal No. 1381/2019 date 12.09.2019) and Ram Narain Popli Vs. CBI (AIR 2003 SCC 3257) to support their opposition to bail.

2. Defense's Arguments: Aggarwal's counsel argued that he was a first-time offender and had not been investigated since his arrest. They highlighted his health conditions, including severe sleep apnea and hypertension, which could lead to sudden cardiac or brain death. They also emphasized that Aggarwal's mother was bed-ridden and dependent on him. The defense argued that Aggarwal was not the ultimate beneficiary of the alleged evasion and that the prosecution had already secured Rs. 7 crores from other taxpayers involved in the case. They cited several judgments, including Sanjay Maheshwari Vs. Commissioner of Customs, A. Tajudeen Vs. Union of India, Adani Enterprises Ltd. & Anr Vs. U0I, Champsi M. Shah Vs. UOI, D.K. Shivakumar Vs. Directorate of Enforcement, and Make My Trip Vs. Union of India, to support their bail plea.

Key Legal Precedents:

1. Sanjay Chandra Vs. Central Bureau of Investigation, AIR 2012 SC 830: The Supreme Court reiterated that the grant of bail is the rule, and committal to jail is an exception. The seriousness of the offense should not be the only consideration in refusing bail.

2. SFIO Vs. Nitin John Anr (Crl. Appeal No. 1381/2019 date 12.09.2019): The prosecution relied on this judgment to oppose bail.

3. Ram Narain Popli Vs. CBI (AIR 2003 SCC 3257): The prosecution cited this case to support their opposition to bail.

Judgement:

The court granted bail to Ashish Aggarwal, considering the following factors:

Aggarwal's health conditions, including severe sleep apnea and hypertension, which could lead to sudden cardiac or brain death.

The responsibility of taking care of his 66-year-old bed-ridden mother, who was dependent on him.

The lack of evidence suggesting that Aggarwal was the ultimate beneficiary of the alleged fake ITC credits.

The prosecution had failed to establish that Aggarwal's release on bail would hamper the investigation, as the evidence was primarily documentary.

The court held that pre-trial detention was no longer required, as Aggarwal had not been investigated or interrogated while in judicial custody since 29.10.2020.

The court granted bail to Ashish Aggarwal on furnishing a bail bond of Rs. 1 lakh with one surety of a like amount, subject to conditions like joining the investigation on summons, not leaving the country without permission, and not influencing witnesses or tampering with evidence.

FAQs:

Q1: What is the significance of this case?

A1: This case highlights the importance of balancing the principles of personal liberty and the presumption of innocence with the need to address economic offenses. It emphasizes that pre-trial detention should be an exception and that factors like the accused's health, family responsibilities, and the strength of evidence should be considered in bail decisions.

Q2: What legal principles did the court rely on?

A2: The court relied on several legal principles established by the Supreme Court, including the presumption of innocence, the importance of personal liberty, and the principle that the grant of bail is the rule, and committal to jail is an exception. The court also considered the guidelines for granting or refusing bail in non-bailable offenses, such as the nature of the accusation, the gravity of the offense, the possibility of securing the accused's presence at trial, and the danger of tampering with evidence or witnesses.

Q3: What was the reasoning behind the court's decision?

A3: The court's decision was based on the following reasoning:

Aggarwal's health conditions and the responsibility of taking care of his ailing mother were compelling factors in favor of granting bail.

The prosecution failed to establish that Aggarwal was the ultimate beneficiary of the alleged evasion or that his release on bail would hamper the investigation, as the evidence was primarily documentary.

Pre-trial detention was no longer required, as Aggarwal had not been investigated or interrogated while in judicial custody since his arrest.

The court balanced the principles of personal liberty and the presumption of innocence with the need to address economic offenses.

Q4: What are the implications of this case for the parties involved?

A4: For Ashish Aggarwal, this decision means he can be released on bail, subject to certain conditions, while the investigation and trial continue. However, he must comply with the bail conditions and cooperate with the investigation.

For the prosecution, this case highlights the importance of presenting strong evidence to justify pre-trial detention, particularly in economic offenses where the accused may not be the ultimate beneficiary. They will need to continue their investigation and build a solid case against Aggarwal.

Q5:Does this case set a precedent for future bail decisions in economic offenses?

A5: While this case does not set a binding precedent, it reinforces the legal principles and guidelines that courts should consider in bail decisions, particularly in economic offenses. It emphasizes the need for a balanced approach, considering factors like the accused's health, family responsibilities, and the strength of evidence against them. Future bail decisions in similar cases may refer to this judgment as a persuasive authority.

Ld counsel for accused submits that accused is aged about 44 years of age and is suffering from severe Sleep Apnea and Hypertension. Ld counsel further submits that as per medical report of the accused, accused may lead to sudden Cardiac Death or brain death while sleeping and he has problem in breathings. Ld counsel further submits that his father had already expired and his mother aged about 66 years is suffering from Left Hand Paralysis, Blood Clotting in Brain and Osteoporosis and is bed ridden. Ld counsel further submits that no one is available in his family to look after him. He further submits that accused is first time offender and since the arrest of the accused on 29.10.2020, the investigation agency conducted no investigation from him. He further submits that the statement of the accused had already been recorded by the 10 which has been duly retracted on 29.10.2020 itself and therefore said statement cannot be read against the accused in view of he Article 20 (3) of Constitution of India. He also submits that the accused is not the ultimate beneficiary of the alleged evasion of GST and the best case against him even if case of department is considered as gosple truth is of Rs.7.63 Crors only. He further pointed out that as per reply of the department dated 10.11.2020 on an application u/s 91 CrPC, a sum of Rs. 7 Crores have already been secured. He also pointed out that accused may hamper the investigation, till date the department has not obtained any non bailable warrants or look out circular against the accused. He reply upon the judgment in the matter of Sanjay Maheshwari Vs. Commissioner of Customs, A. Tajudeen Vs. Union of India, Adani Enterprises Ltd., & Anr Vs. U0I, Champsi M. Shah Vs. UOI and D. K. Shivakumar Vs. Directorate of Enforcement and Make My Trip Vs. Union of India . Ld counsel for accused prays for grant of bail.

On the other hand, Ld SPP has strongly opposed the bail application on the ground that during investigation, it was revealed in the statement u/s 70 of CGST Act, Smt. Sushma Rani deposed that she is the Proprietor of the firm namely, M/s Maya Impex which is handled by his son i.e. Ashish Aggarwal. He further submits that accused in his statement has admitted that he was involved in passing off fake ITC to the tune of Rs.77 Crores, Rs.4 Crores through M/s. Aaditya Sales, Rs.22 Crores appmx. through M/s. Shiv Muskaan Traders, Rs.12 Crores approx. through M/s Nidhi One Foods. He submit that accused used multiple firms to pass on fake ITC and has also availed fake ITC without actual movement of good. He further pointed out that Rs.7 Crores secured from other taxpayers involved in this network of fake billing and no GST has been deposited by the firm being operated by Ashish Aggarwal.

Ld Sr. SPP also submits that Sanjay Kumar Garg, Proprietor of Devyani Agra Industries is cousin of accused Ashish Aggarwal and said firm of Sanjay Kumar Garg had availed admissible ITC to the tune of Rs.22 Crores from the firms controlled by accused Ashish Aggarwal and further passed inadmissible credit to the tune of Rs.29 Crores.

Ld Sr. SPP also submits that the accused was apprehended after 60 days of intense efforts and if released on bail, he may hamper the investigation as he will be in contact with parties involved in this network and therefore the present bail application deserved to be rejected. He relied upon the judgement titled as SFIO Vs. Nitin John Anr (Crl. Appeal No. 1381/2019 date 12.09.2019) and Ram Narain Popli Vs. CBI (AIR 2003 SCC 3257).

Heard. Perused.

The personal liberty is a priceless treasure for a human being. It is founded on the bed rock of constitutional right and accentuated further on human rights principle. The sanctity of liberty is the fulcrum of any civilized society. Deprivation of liberty of a person has enormous impact on his mind as well as body. Further, article 21 Of the Constitution mandates that no person shall be deprived of his life or personal liberty except according to procedure established by law. Further India is a signatory to the International Covenant On Civil And Political Rights, 1966 and, therefore, Article 21 of the Constitution has to be understood in the light of the International Covenant On Civil And Political Rights, 1966. Further Presumption of innocence is a human right. Article 21 in view of its expansive meaning not only protects life and liberty, but also envisages a fair procedure. Liberty of a person should not ordinarily be interfered with unless there exist cogent grounds therefor. The fundamental principle of our system of justice is that a person should not be deprived of his liberty except for a distinct breach of law. If there is no substantial risk of the accused fleeing the course of justice, there is no reason why he should be imprisoned during the period of his trial. The basic rule is to release him on bail unless there are circumstances suggesting the possibility of his fleeing from justice or thwarting the course of justice. When bail is refused, it is a restriction on personal liberty of the individual guaranteed by Article 21 of the Constitution.

Further it has been laid down from the earliest time that the object of Bail is to secure the appearance of the accused person at his trial by reasonable amount of Bail. The object of Bail is neither punitive nor preventive. Deprivation of liberty must be considered a punishment unless it can be required to ensure that an accused person will stand his trial when called upon. The courts owe more than verbal respect to the principle that punishment begins after convictions, and that every man is deemed to be innocent until duly tried and duly found guilty. From the earlier times, it was appreciated that detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands that accused persons should be held in custody pending trial to secure their attendance at the trial, but in such case ‘necessity’ is the operative test.

In this country, it would be quite contrary to the concept of personal liberty enshrined in the constitution that any persons should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty under Article 21 of the Constitution upon only the belief that he will tamper with the witnesses if left at liberty, save in the most extraordinary circumstances. Apart from the question of prevention being the object of a refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an accused person for the purpose of giving him a taste of imprisonment as a lesson. While considering an application for bail either under Section 437 Cr PC, it must be kept in mind that the principle that grant of bail is the rule and committal to jail an exception. Refusal of bail is a restriction on personal liberty of the individual guaranteed by Article 21 of the Constitution. Seriousness of the offence not to be treated as the only consideration in refusing bail :

Seriousness of the offence should not to be treated as the only ground for refusal of bail. (Judgment of Sanjay Chandra Vs. Central Bureau of Investigation, AIR 2012 SC 830 relied).

But, the liberty of an individual is not absolute. The Society by its collective wisdom through process of law can withdraw the liberty that it has sanctioned to an individual when an individual becomes a danger to the societal order. A society expects responsibility and accountability from the member, and it desires that the citizens should obey the law, respecting it as a cherished social norm. Therefore, when an individual behaves in a disharmonious manner ushering in disorderly thing which the society disapproves, the legal consequences are bound to follow.

It can be noted that interpreting the provisions of bail, the Hon’ble Supreme Court in its various judgments has laid down various considerations for grant or refusal of bail to an accused in a non-bailable offence like:

• Whether there is any prima facie or reasonable ground to believe that the accused had committed the offence;

• Nature of accusation and evidence therefor,

• Gravity of the offence and punishment which the conviction will entail,

• Reasonable possibility of securing presence of the accused at trial and danger of his absconding or fleeing if released on bail,

• Character and behavior of the accused,

• Means, position and standing of the accused in the Society,

• Likelihood of the offence being repeated,

• Reasonable apprehension of the witnesses being tampered with,

• Danger, of course, of justice being thwarted by grant of bail,

• Balance between the rights of the accused and the larger interest of the Society/State,

• Any other factor relevant and peculiar to the accused.

While a vague allegation that the accused may tamper with the evidence or witnesses may not be a ground to refuse bail, but if the accused is of such character that his mere presence at large would intimidate the witnesses or if there is material to show that he will use his liberty to subvert justice or tamper with the evidence, then bail will be refused.

Furthermore, in the landmark Judgment of Gurucharan Singh and others v. State (AIR 1978 SC 179), it was held that there is no hard and fast rule and no inflexible principle governing the exercise of such discretion by the courts. It was further held that there cannot be any Inexorable formula in the matter of granting bail. It was further held that facts and circumstances of each case will govern the exercise of judicial discretion in granting or refusing bail. It was further held that such question depends upon a variety of circumstances, cumulative effect of which must enter into the judicial verdict. Such judgment Itself mentioned the nature and seriousness of nature, and circumstances in which offences are committed apart from character of evidence as some of the relevant factors In deciding whether to grant bail or not.

The object of pre trial detention of an accused is threefold. Firstly, it teed could be detained in custody if some recovery of weapon/equipments used in the crime are to be recovered and there is apprehension if released on bail, accused hamper the investigation and recovery thereof. The other consideration is that some co-accused are to be arrested who are absconding if accused is allowed to be released on bail, he may forewarn them. Another object is that accused has previous criminal antecedents and he/she is a habitual offender which increases his chances of committing similar offences which endangers life and property of the public at large.

In economic offences the object of keeping an accused in pre trial detention is to ensure that the accused has no opportunity to tamper with the documentary/ electronic evidence which may reveal the commission of any offence. Furthermore, it can be done to track the money trail which might be disturbed by the accused, if released on bail. The accused also be kept in pre trial detention if there is likelihood that he has the opportunity and wherewithal to influence and won over the witnesses of the crime by allurement or threat and commit similar crime again. Furthermore, the object of enactment of CGST Act is simpler tax system, reduction in prices of goods and services due to cascading effect of taxes, more efficient neutralization of taxes and simpler tax regime with development of common national market.

Ld. counsel for accused has pointed out the medical condition of accused wherein he stated to be suffering from Sleep Apnea and Hypertension. However, no circumstances have been explained which makes accused Ashish Aggarwal susceptible to aggravated diseases. However, Ld. Sr. SPP has not disputed that applicant is having responsibility of looking after his mother who is suffering from left hand paralyses, blood Clotting in brain and Osteoporosis. The said diseases makes the mother of the accused dependent in day to day life upon the accused who is the only son living with her. As per remand papers, accused was arrested on 29.10.2020 and since then he is in judicial custody. It has not been disputed by Ld Sr SPP that after remanding of accused to judicial custody, he has not been examined till date. Even though his statement was recorded immediately after his arrest by investigating officer, retraction of the same was filed before Ld Duty MM when accused was produced and therefore at th e stage of investigation, the statement of accused recorded by the 10 cannot be relied upon there is independent corroboration.

In the reply it is mentioned that M/s Maya lmpex is owned by Mrs. Sushma Rani but stated to be handled by accused Ashish Aggarwal. No documents showing such handling/managing of the affair of M/s Maya Impex are produced by the 10. No reasons have been given why no action was taken against Mrs. Sushma Rani and she has been let off only on the basis of her statement.

The plea of the Ld. Sr. SPP that one Sanjay Kumar Garg, Proprietor of Devyani Agro Industries has been arrested which alleged to have been involved in fake billing of GST and the said Sajay Kumar Garg happens to be cousin of Ashish Aggarwal and therefore there is complicity between both the accused is humbly rejected as being relative of a person does not makes the other persons liable for misdeeds of such person.

Ld Sr. SPP has failed to point out that what investigation will be hampered by the accused as all investigation is to be documents based and most of the record will be of the GST Returns/ITC Credit which are available in the records of the investigating agency.

No doubt, economic offences should be dealt with sternly, however mere allegations of economic offence does not dis-entitled any person from seeking personal liberty unless there are overwhelming material against such person. In the present case, no money trail has been brought on record which shows that accused Ashish Aggarwal is the ultimate beneficiary of alleged fake ITC credits.

The judgments cited by both the parties details the settled position of law and therefore not discussed separately. However, admittedly no prior show cause notice has been issued to the accused as ordained in Make My Case (supra) and Akhil Krishan Maggo (supra).

Hence, I am satisfied that pre trial detention of accused Ashish Aggarwal is no more required as firstly, he has not been investigated/interrogated while remained in judicial custody since 29.10.2020, secondly, all evidences against the accused are primarily documentary in nature and also the fact that he is not the ultimate beneficiary of alleged fake ITC Credits.

In view of the above discussion, I am of the considered view that accused Ashish Aggarwal is admitted to bail on furnishing bail bond In the sum of Rupees One Lakh with one surety of like amount subject to the conditions that he shall join the investigation/inquiry on summons/intimation issued by the investigating officer and shall not leave Me country without permission of the court.

Furthermore, he shall not make any attempt to either dissuade or influence any witness or temper with evidence in any manner whatsoever and in case he violates any of the conditions of bail, the investigating agency may move appropriate application.

Application is disposed off.

Copy of this order be also sent to all the parties through email whatsapp. Parties may join proceedings through court URL on Cisco Webex . It is further informed that the email id of the Court is readercmmphc@gmail.com