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Bail Granted in GST Fraud Case: P&H High Court Balances between Justice and Pretrial Detention

Introduction

A recent decision by the Punjab & Haryana High Court (‘Court’) in the matter of Jitender Bhalla alias Vicky v. State of U.T.[i] has elucidated the principle that despite charges not being framed if the investigation is complete, allegations are complex and a protracted trial is anticipated, bail can be granted to an accused in preventive custody for an extended period.


Facts

  • This case revolves around the petitioner’s prayer for bail after the trial court denied the same. The petitioner was charged under ss. 420, 467, 468, 471, 120-B, and later s. 201 of the Indian Penal Code, 1860 (‘IPC’). The case originated from a complaint filed by the Excise & Taxation Officer regarding fraudulent actions attributed to Sh. Rajeev Poonga. Sh. Poonga was accused of acquiring a Goods and Services Tax (‘GST’) number for a Dental Clinic but operating as a scrap dealer at an undisclosed location involving transactions totalling Rs. 25,04,35,164/-, raising unpaid taxes and interest up to Rs. 5,10,94,466/-. The petitioner, suspected to be a co-accused, was arrested on 19.12.2022 and was in custody for over 7 months.

  • The petitioner’s defense argued that he was implicated three years after the original FIR was filed and was not initially named. They highlighted the absence of any recovery from the petitioner and asserted that his continued custody was futile. Allegations were unsupported and lacked concrete evidence linking the petitioner which even otherwise was a matter of trial. In contrast, the State contended that the petitioner committed a substantial economic offense and might tamper with evidence or influence witnesses if granted bail.

Held

  • After evaluating both arguments and reviewing the case, the Court while granting bail to the petitioner, observed that although the charge sheet was filed, charges were not yet framed. The investigation was completed, yet further custodial interrogation was deemed necessary. The allegations against the petitioner were pending trial, a process that was progressing at a sluggish pace. Notably, the petitioner had already spent over seven months in preventive custody since 19.12.2022.

  • The Court noticed that the petitioner’s detention was based on suspicions of evidence tampering or witness influence, despite a lack of substantial evidence. The Court highlighted the non-violent nature of the alleged offence and the petitioner’s clean record. Taking into account factors such as the petitioner’s age, familial responsibilities, and fixed residence, the Court concluded that flight risk was unlikely. It also pointed out that the petitioner’s co-accused had been granted bail by the same Court.

  • The Court was of the view that continued pretrial detention would serve no meaningful purpose. Consequently, the petitioner was ordered to be released on bail, subject to fulfilling bail and surety bond conditions as determined by the trial court. Additionally, the prosecution was granted the liberty to seek bail cancellation in the event of the petitioner’s involvement in any further offence while on bail.

Analysis

‘Bail’ in India aligns with the constitutional right under a. 21 of the Indian Constitution. The principle of ‘bail, not jail’ guides the approach of courts, where bail is generally favoured, with exceptions applying in limited circumstances. While the discussed decision adheres to this approach, the petitioner’s seven-month detention raises concerns. Recent apex court cases, like Satender Kumar Antil v. CBI[ii] and Siddarth v. State of UP[iii], emphasize ‘Bail – a rule, and jail - an exception,’ yet the ground-level execution seems incongruent. This case underscores the need for a proactive approach from higher to lower judiciary levels to align practical application with this principle.


End Notes


[i] [2023] 153 taxmann.com 245 (Punjab & Haryana)

[ii] 2023 SCC OnLine SC 452

[iii] (2022) 1 SCC 676


Authored by Pranav Dabas, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.

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