Facts of the Case

The Directorate General of GST Intelligence filed a petition under Section 482 of the Code of Criminal Procedure, 1973 challenging the order dated 17.08.2020 passed by the Chief Metropolitan Magistrate, Patiala House Courts, New Delhi, granting bail to the respondent, Kamal Kishore Aggarwal, in proceedings arising under Section 132 of the Central Goods and Services Tax Act, 2017.

The prosecution alleged that the respondent was deeply involved in clandestine supply of cigarettes resulting in evasion of GST amounting to approximately ₹72 crore. The respondent was arrested on 20.07.2020. During the bail proceedings, it was noted that the respondent had deposited ₹1.35 crore towards GST liability, which fact was not disputed by the Department. It was also noted that final adjudication of tax liability was yet to be completed and that filing of the criminal complaint was likely to take time.

Issues Involved

Whether the bail granted by the Chief Metropolitan Magistrate at an early stage of investigation in a serious economic offence warranted cancellation, whether the gravity of alleged GST evasion alone justified interference with the bail order, and whether prolonged investigation without filing of complaint and absence of misuse of liberty by the accused militated against cancellation of bail.

Petitioner’s Arguments

The Department contended that the learned Chief Metropolitan Magistrate erred in granting bail at the nascent stage of investigation in a case involving alleged GST evasion of ₹72 crore. It was argued that the deposit of ₹1.35 crore was insignificant compared to the magnitude of the offence and that the trial court failed to appreciate the seriousness and societal impact of economic offences. Reliance was placed on Supreme Court judgments emphasizing a strict approach in granting bail in financial crimes.

Respondent’s Arguments

The respondent opposed the petition and submitted that the complaint had not been filed even after several years and that no useful purpose would be served by subjecting him to incarceration indefinitely. It was argued that the bail order was passed after considering relevant factors and that there was no allegation of misuse of liberty, tampering with evidence, or non-cooperation with the investigation.

Court Order / Findings

The Delhi High Court observed that the learned Chief Metropolitan Magistrate failed to take a proper prima facie view of the allegations and gave undue weight to the deposit of ₹1.35 crore, which was disproportionate to the alleged evasion of ₹72 crore. The Court reiterated that economic offences constitute a distinct class and require a different approach at the stage of bail, relying on authoritative precedents including State of Gujarat v. Mohanlal Jitamalji Porwal and Y.S. Jagan Mohan Reddy v. CBI.

However, the Court also took note of the fact that even after a lapse of more than five years from the initiation of investigation in 2020, no criminal complaint had been filed against the respondent. It was observed that the investigation remained incomplete and that, in such circumstances, the respondent would have been entitled to default bail had he remained in custody. The Court further noted that there was no allegation that the respondent had misused the liberty granted to him on bail. The Court held that the Department’s lethargic approach in not completing the investigation could not justify interference with the respondent’s liberty at this belated stage.

Important Clarification

The High Court clarified that while the trial court erred in not adequately considering the gravity of the alleged economic offence at the time of granting bail, cancellation of bail is not warranted in the absence of misuse of liberty, particularly where the investigating agency has failed to complete investigation and file a complaint for an unduly long period.

Final Outcome

The petition filed by the Directorate General of GST Intelligence was dismissed. The bail granted to the respondent, Kamal Kishore Aggarwal, was not cancelled, and no interference was warranted after more than five years in the absence of misuse of liberty and in view of the prolonged and incomplete investigation by the Department.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/59517122025CRLMM17862020_171145.pdf

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