HC modifies condition of bail order & allow submission of security for disputed amount of ITC availed

Case details:Amit Kumar Kataria v. State of U.P - [2021] 129 taxmann.com 13 (Allahabad)

Judiciary and Counsel Details

• • Sanjay Kumar Singh, J. 
  • Raghav Dev Garg and Anurag Khanna, Sr. Adv. for the Applicant.
  • Dileep Chandra Mathur, G.A. for the Respondent.

Facts of the Case

The applicant was sole proprietor of firm registered GST and involved in the business of manufacturing and supply of meter boxes and distribution boxes to Government utilities. He was arrested for offence under section 132 for fraudulently availing input tax credit. It filed application for bail. The Special Chief Judicial Magistrate, Meerut granted bail on fulfillment of several conditions and one of the condition was to deposit remaining amount of ITC Rs. 4.51 crores before the Department within three months. It filed application before the High Court to set aside this condition of bail order.

It was also submitted that he had already deposited 5 crores and there is no statutory provision for compelling the applicant to deposit the entire amount without completing the investigation/enquiry or without launching prosecution by filing complaint or without initiating any recovery proceedings under section 73 or 74 of CGST Act.

High Court Held

The Honorable High Court observed that condition imposed by Special Chief Judicial Magistrate, directing applicant to deposit remaining amount of ITC of Rs. 4.5 crores before department within three months while granting bail to applicant, was unsustainable. This condition was too harsh and unreasonable, particularly in situation where enquiry/investigation was still pending and applicant had already deposited Rs. 5 crores, out of disputed amount of Rs. 9.5 crores. Therefore, this condition was modified and the applicant had to submit security equivalent to remaining disputed amount.

List of Cases Referred to

• • Sandeep Jain v. National Capital Territory of Delhi [2000] 2 SCC 66 (para 8)
  • Amarjit Singh v. State of NCT of Delhi JT 2002 (1) SC 291 (para 8)
  • Sheikh Ayub v. State of M.P [2004] 13 SCC 457 (para 8)
  • Ramathal v. Inspector of Police 2009 Cr. L.J. 2271 (para 8)
  • Munish Bhasin v. State (Govt. of NCT of Delhi) [2009] 4 SCC 45 (para 8)
  • Sumit Mehta v. State (NCT of Delhi) [2013] 15 SCC 570 (para 8)
  • Dilip Singh v. State of M.P [Criminal Appeal No. 53 of 2021, dated 19-1-2021] (para 8)
  • Suresh Kumar P.P. v. Dy. Director, Directorate General of GST Intelligence (DGGI) [2021] 125 taxmann.com 61/84 GST 511 (SC) (para 17)
  • Vikalp Jain v. Union of India [2019] 110 taxmann.com 93 (All.) (para 17).