Case Note & Summary
The petitioner, Yogesh Jagdish Kanodia, was arrested on 30 December 2020 by the Assistant Commissioner of State Tax (Investigation-B), Mumbai, under Section 69 of the Central Goods and Services Tax Act, 2017 (CGST Act). The arrest was based on allegations that the petitioner, operating four business establishments, had indulged in fake purchase and sale invoices, claiming bogus input tax credit of at least Rs.11.54 crores and passing on wrongful input tax credit of not less than Rs.9.29 crores. The respondent contended that the offence fell under Section 132(1)(b)(c) of the CGST Act and, since the amount exceeded Rs.5 crores, it was punishable under Section 132(1)(i) with imprisonment up to five years and fine, making it cognizable and non-bailable under Section 132(5). The petitioner was produced before the Additional Chief Metropolitan Magistrate, Mumbai, who remanded him to magisterial custody. The petitioner filed a criminal writ petition before the Bombay High Court claiming that his arrest was illegal as the offence was bailable and he was entitled to be released forthwith. The court examined the scheme of Section 132 of the CGST Act, particularly sub-section (5), which classifies offences based on the quantum of tax evaded or input tax credit wrongly availed. The court noted that the Schedule to the Act specifies that offences punishable with imprisonment of five years or less are bailable. Since the maximum punishment under Section 132(1)(i) is five years, the offence is bailable. The court rejected the respondent's argument that the offence becomes non-bailable merely because the amount involved exceeds Rs.5 crores, as the classification under Section 132(5) is based on the punishment prescribed, not the amount. The court held that the power to arrest under Section 69 does not alter the bailable nature of the offence. Accordingly, the court allowed the petition and directed the petitioner's release on bail on furnishing a personal bond of Rs.1,00,000 with one or more sureties in the like amount, subject to conditions including cooperating with the investigation, not tampering with evidence, and not leaving the country without court permission.
Headnote
A) Criminal Law - Bailable vs Non-bailable Offence - Interpretation of Section 132(5) of CGST Act, 2017 - The court examined whether an offence under Section 132(1)(i) of the CGST Act, punishable with imprisonment up to five years, is bailable or non-bailable. The court held that the classification under Section 132(5) read with the Schedule to the Act makes it clear that offences punishable with imprisonment of five years or less are bailable. The court rejected the argument that the offence becomes non-bailable merely because the amount involved exceeds Rs.5 crores. (Paras 5-12) B) Criminal Law - Arrest under Section 69 of CGST Act - Effect on Bailability - The court held that the power to arrest under Section 69 of the CGST Act does not alter the bailable nature of the offence. The arrest is subject to the classification of the offence under Section 132(5) and the Schedule. Since the offence under Section 132(1)(i) is bailable, the petitioner is entitled to be released on bail. (Paras 13-15) C) Criminal Law - Right to Bail - Bailable Offence - The court directed that the petitioner be released on bail on furnishing a personal bond of Rs.1,00,000 and one or more sureties in the like amount, subject to conditions including cooperation with investigation and not tampering with evidence. (Paras 16-18)
Issue of Consideration
Whether an offence under Section 132(1)(i) of the Central Goods and Services Tax Act, 2017, punishable with imprisonment up to five years, is bailable or non-bailable, and whether the petitioner is entitled to be released on bail.
Final Decision
The court allowed the petition and directed that the petitioner be released on bail on furnishing a personal bond of Rs.1,00,000 with one or more sureties in the like amount, subject to conditions including cooperating with the investigation, not tampering with evidence, and not leaving the country without court permission.
Law Points
- Bailable offence
- Cognizable offence
- Non-bailable offence
- Interpretation of Section 132(5) CGST Act
- Arrest under Section 69 CGST Act
- Right to bail
- Input tax credit fraud
