No bail is granted for offence committed under Section 132 of the Goods and Services Tax Act, 2017 where there is an apprehension of any threat to any witness.

Case Title: Ashu Gupta v. State of Haryana

Court: High Court of Punjab and Haryana

Petition No.: CRM-M No. 56039 of 2022

Date of Judgement: 03 March 2023

Category of Dispute: Bail Application in GST Offence

Relevant Sections: Sections 420, 467, 468, 471 IPC; Section 132 of the CGST Act, 2017

Relevant CGST Provisions: Section 132 (Offences related to ITC fraud)

Judge: Hon’ble Mr. Justice Jasgurpreet Singh Puri

Facts of the Case

1. FIR No. 123 dated 09.08.2019 was registered against the petitioner based on a complaint from the Excise & Taxation Officer, Panchkula for fraud under IPC sections and later under Section 132 of the CGST Act, 2017. It alleged that the petitioner, proprietor of M/s Recycle With Us, claimed fraudulent ITC without actual supply of goods. [Para 4]
2. Physical verification of the claimed business address found no existence of such firm. Enquiries revealed that the petitioner never conducted business from the stated address during the relevant period. [Para 8]
3. Investigation showed that bogus transactions amounting to ₹33.68 crore were recorded, and wrongful ITC worth ₹2.68 crore was claimed using vehicles unfit for transporting goods, e.g., two-wheelers and school buses. [Para 8]
4. The petitioner had been in custody for over a year and contended that the offence under Section 132 CGST Act was bailable (amount < ₹5 crore). He also argued that FIR under IPC was not maintainable for GST matters. [Paras 2, 5–6]

Questions in Consideration

1. Whether the FIR under IPC sections was maintainable when the allegations fall under the CGST Act, which is a self-contained code? [Para 5]
2. Whether bail could be granted in light of the prolonged custody and the quantum of ITC involved? [Paras 2, 6]

Observations of the Court

1. The Court held that IPC and GST Act offences are separate and distinct. Lodging an FIR under IPC provisions (especially with maximum punishment up to life under Section 467) is not barred by the CGST Act. [Para 11]
2. It was found that the earlier bail plea had been withdrawn in August 2022 and no change in circumstances justified reconsideration of bail. [Para 12]
3. The Court considered the gravity of the alleged offence, including fabrication of documents and large-scale bogus transactions. It agreed with the prosecution’s concern that granting bail might allow the petitioner to influence witnesses. [Para 12]

Judgement of the Court

The Court dismissed the second bail petition, holding that due to the serious nature of the allegations, magnitude of the offence, and potential threat to witnesses, the petitioner was not entitled to bail. [Para 12]

Between Fine Lines

• Even if GST offences are governed by a special law, concurrent IPC charges can be validly invoked for document fraud.
• Bail was denied despite custody of one year due to the gravity of fraud and fear of witness tampering.
• Fraudulent ITC of ₹2.68 crore through fictitious transactions using unfit vehicles was deemed a serious offence.
• Court emphasized that GST and IPC offences can coexist; FIR under IPC was not barred.
• The self-contained nature of the CGST Act does not oust IPC where elements of forgery and cheating exist.

Summary of Referred Cases