Bail in case of offences which are punishable under Section 132(1)(b) and (c) of the Goods and Services Tax Act, 2017.

Case Title: Rohan Tanna v. Union of India

Court: High Court of Chhattisgarh

Petition Number: MCRC Nos. 6331 & 6692 of 2021

Category of Dispute: Bail Application in GST Offence

Date of Judgement: 21 December 2021

Relevant Sections: Sections 16, 132(1)(b) & (c), 67, 70, and 138 of the Central Goods and Services Tax Act, 2017

Takeaway: Custody versus Compounding — GST Bail amid Fake ITC Allegations

Facts of the Case

• Applicants Rohan Tanna and Abhishek Pandey were arrested on 20.07.2021 in relation to Crime No. 133/2020-21 by DGGI, Raipur Unit, under Sections 16 and 132(1)(b) & (c) of CGST Act, 2017 for generating fake ITC invoices without actual supply of goods (Para 2).
• Rohan Tanna was found managing M/s J.R. Traders and had created M/s Abhishek Marketing (80% share), while Abhishek Pandey held 20% stake (Para 3).
• The firms allegedly availed fake ITC totaling ₹7.60 crores through multiple fake invoices without corresponding movement of goods (Para 3).
• The applicants’ bail pleas were earlier rejected by the Sessions Court on 30.07.2021 and 05.08.2021 (Para 3).

Questions in Consideration

1. Whether the applicants are entitled to regular bail in view of the allegations of availing fake ITC under CGST Act, 2017? (Para 1)
2. Whether assessment under GST law is a prerequisite for invoking search and seizure powers under Section 67 of CGST Act? (Para 8)
3. Whether offences alleged are compoundable and if prolonged detention post charge-sheet justifies grant of bail? (Para 9)

Observations of the Court

• The Court held that under Section 67, proper officer needs only a “reason to believe” for conducting search and seizure; prior assessment is not a legal precondition (Para 8).
• Section 138 allows for compounding of offences even after prosecution; hence, the fact that offences are economic in nature does not bar bail, especially post charge-sheet (Para 9).
• Relying on precedents (Gurbaksh Singh Sibbia, Sanjay Chandra, P. Chidambaram), the Court observed that prolonged custody is not necessary post-investigation if no custodial interrogation is required (Para 9).
• The applicants were in custody since 20.07.2021, and the charge-sheet had already been filed; hence bail was justified on compliance with conditions (Para 9).

Judgement of the Court

• Both applicants were granted regular bail upon furnishing personal bonds of ₹1,00,000 with one surety, subject to compliance with appearance, non-tampering, and non-repetition of offence (Para 9).

Between Fine Lines

• Bail was granted in a serious economic offence case under GST for fake ITC claims, after considering that:

1. Charge sheet had been filed;
2. Offence is compoundable under GST law;
3. Prolonged custody was unjustified;
4. There was no ongoing need for custodial interrogation.
   This does not imply acquittal but protects liberty pending trial under judicial safeguards.

Summary of Referred Cases