The Gujarat High Court has held that the reason that the investigation is “under process” is not a reason to extend the custody of an accused arrested under the GST Act, 2017 unless the department proves that the custody of the accused is necessary.
The applicant, Munavver Ismail Memon, a proprietor of M/s. N R Beauty World and doing his business of cosmetic items at Surat, was arrested in March 2022 for the offense of GST evasion worth Rs. 10 crore rupees. The applicant approached the Court seeking bail.
Justice Ilesh J. Vora relied on the decision in the case of P. Chidambaram Vs. Directorate of Enforcement wherein it was held that “even allegations of grave economic offence, it is not a rule that bail should be denied in every case and whether bail is granted or not, will have to be on the case to case basis of the facts involved therein and securing the presence of the accused to stand trial.”
Granting bail to the applicant, the Court held that “the department objected the bail application mainly on the ground that investigation is still under way. This Court is of considered view that, merely raising the contention that investigation is still going on is not enough, but, department should have point out that the further custody of the applicant is necessary. It is on record that, no liability is fixed or determined as per the statutory provisions of the Act. It is the right of the assessee to file an appeal against the assessment subject to deposit of the 10% disputed liability which may not exceed Rs.2 crore. In the facts of the present case, Rs.39,88,318/-, has been recovered during the course of investigation from the applicant. In such circumstances, when trial of the case would not likely to conclude in a reasonable time and the applicant is in custody since 24.03.2022 and considering the bonafide shown by the applicant to deposit the amount, I am inclined to release the applicant on bail subject to deposit of Rs.60 lakhs, before the Office of Chief Commissioner of State Tax, Ashram Road, Ahmedabad within a period of six months in six equal installments from the date of his release.”
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