In Anticipatory Bail Application No. 2206 of 2022 -BOM HC- ‘Economic offenses require thorough investigation’: Bombay High Court denies anticipatory bail to Photo Com Industries’ Director in alleged GST fraud case
Justice Anuja Prabhudessai [06-07-2023]

Read Order: Hira Gobind Bhatia v. State of Central Goods and Service Tax

Chahat Varma

New Delhi, September 19, 2023: The Bombay High Court has denied anticipatory bail to the Director of Photo Com Industries (India) Pvt. Ltd. in a case of alleged GST fraud.

In the case under consideration, the Anti Evasion Central Goods and Services Tax department had initiated an inquiry against M/s. Amarnath Enterprises, for fraudulently claiming ITC of 14.48 Crores. Priyesh Kumar, the proprietor of M/s. Amarnath Enterprises, was arrested during the investigation. In his statement, he claimed that he had established the proprietorship concern at the behest of the applicant, the Director of Photo Com Industries (India) Pvt. Ltd. Subsequently, the applicant received summons under Section 70 of the Goods and Services Tax Act. In anticipation of his arrest, the applicant filed a pre-arrest bail application before the Sessions Judge, Greater Bombay. However, the Judge, considering the seriousness of the offense, declined to exercise discretion under Section 438 of the Cr.P.C.

The single-judge bench of Justice Anuja Prabhudessai noted that the bank statement of M/s. Amarnath Enterprises showed a significant amount of money being transferred to the accounts of Shreeji Jewellers, Shrinath Jewels, and other entities. Statements from the proprietors of these entities indicated that the applicant had informed them that M/s. Amarnath Enterprises was his company. Consequently, they had given diamonds to the applicant, equivalent to the value of the funds received from M/s. Amarnath Enterprises.

The bench also observed that the records showed that the mobile number registered in the name of the applicant was associated with the bank account of M/s. Amarnath Enterprises from 16.08.2018 to 7.11.2019. This indicated that the applicant had access to the bank account of M/s. Amarnath Enterprises.

Thus, the bench held that the above facts and circumstances prima facie indicated the applicant's involvement in the alleged crime.

The bench emphasized that economic offenses have long-term and widespread consequences on a country's financial well-being and affect the national interest in various ways. These offenses are considered of a distinct class and fall under the category of grave offenses. Given their impact on a country's financial health, such offenses require thorough investigation.

In the present case, the affidavit filed on behalf of the Department revealed that the applicant had not cooperated with the investigation. Hence, the mere statement of the applicant that he was ready and willing to cooperate with the investigation did not serve any purpose. Given the nature of the offense, the bench opined that the custodial interrogation was necessary to facilitate effective investigation and uncover the fraud in all its facets.

For the reasons stated above, the bench declined to exercise its discretion under Section 438 of Cr.P.C. in favour of the applicant, and as a result, the application was dismissed.