Chartered Accountant granted bail in GST refund fraud case after 5 months in custody.

Key Takeaways:

- The CA was accused of uploading fake certificates to facilitate fraudulent GST refunds for companies.

- He had been in custody since May 17, 2022, and the chargesheet with 21 prosecution witnesses had been filed.

- The court held that further custody may not be required as the investigation is complete.

- Bail was granted with strict conditions like furnishing a bail bond, not leaving the country, and not intimidating witnesses.

Issue:

Whether the Chartered Accountant accused of facilitating fraudulent GST refunds should be granted regular bail after being in custody for over 5 months.

Facts:

- The petitioner, a Chartered Accountant, was arrested on May 17, 2022, in a case registered under Section 132(1)(i) read with Sections 132(1)(b)(c)(e)(f) of the Central Goods and Services Tax Act, 2017.

- He was accused of uploading fake CA certificates to facilitate fraudulent GST refunds for companies in exchange for professional fees.

- The investigation has been completed, and the chargesheet with 21 prosecution witnesses (all department officials) has been filed.

- The petitioner's laptop and relevant documents have already been seized.

- He is not involved in any other case and has been in custody since his arrest on May 17, 2022.

Arguments:

Petitioner's Arguments:

- He is a qualified CA who had borrowed the UDIN (Unique Document Identification Number) from a colleague to upload the certificates.

- As per Rule 89(m) of the CGST Rules, a CA certificate is not required for uploading refund claims.

- The entire investigation is complete, and no further recovery is to be made from him.

- He is not alleged to be the beneficiary of the excess Input Tax Credit received by the companies.

- The trial, being a Magisterial one, is likely to take considerable time.

Respondent's (Department) Arguments:

- A huge loss has been caused to the department, though some accounts have been frozen and companies have refunded amounts.

- The department is still investigating to identify all those involved, and proceedings against certain officials have been initiated.

- The respondent disputes the claim that a CA certificate is not required for uploading refund claims.

Key Legal Precedents:

The court cited and discussed the following key precedents:

1. Sanjay Chandra v. CBI (2011) - The Supreme Court held that the accused charged with economic offenses of huge magnitude may be entitled to bail on stringent conditions if the investigation is complete and the chargesheet is filed.

2. P. Chidambaram v. Directorate of Enforcement (2020) - The Supreme Court reiterated that while economic offenses are considered grave, bail should not be denied in every case. The court must consider the facts and circumstances of each case.

3. Satender Kumar Antil v. CBI and others (2022) - The Supreme Court observed that there is no straight-jacket formula for considering bail, and it depends on the facts and circumstances of each case.

Judgment:

The High Court allowed the petition and granted regular bail to the petitioner, subject to furnishing a bail/surety bond of Rs. 10 lakhs and the following conditions:

1. Not tampering with evidence during the trial.

2. Surrendering his passport and not leaving the country without permission.

3. Not changing residence without prior intimation.

4. Not pressurizing or intimidating prosecution witnesses.

5. Furnishing an undertaking to appear on each date unless exempted.

6. Not committing a similar offense.

7. Not coercing, inducing, threatening, or promising any person related to the case.

8. Complying with any other condition imposed by the Trial Court.

The court clarified that if the petitioner violates any condition, the department can seek cancellation of his bail. The observations made by the court are not a final expression on the merits of the case, and the trial will proceed independently.

FAQs:

Q1. What was the main allegation against the Chartered Accountant?

A1. The main allegation was that he facilitated fraudulent GST refunds for companies by uploading fake CA certificates in exchange for professional fees.

Q2. Why did the court grant him bail after 5 months in custody?

A2. The court granted bail primarily because the investigation was complete, the chargesheet had been filed, and his continued custody may not serve any purpose. The court also considered that he is not involved in any other case and is not alleged to be the beneficiary of the excess refunds.

Q3. What were the key conditions imposed by the court while granting bail

A3. The key conditions included furnishing a bail bond, not tampering with evidence, not intimidating witnesses, surrendering his passport, not changing residence without intimation, and appearing on each date of the trial unless exempted.

Q4. Can the bail be canceled if the petitioner violates the conditions?

A4. Yes, the court clarified that if the petitioner violates any of the conditions, the department can seek cancellation of his bail.

Q5. Does the court's decision indicate a final opinion on the merits of the case?

A5. No, the court clarified that the observations made while granting bail should not be construed as a final expression on the merits of the case, and the trial will proceed independently.