Bombay High Court grants bail to tax fraud accused; says it is not heinous like murder, terrorism

The offence of tax fraud is not a heinous crime like murder or terrorism, the Nagpur bench of the Bombay High Court recently observed while granting bail to a man accused of ₹144 crore tax fraud [Rahul Kamalkumar Jain v. Director General of Goods and Service Tax Intelligence]..Justice Urmila Joshi-Phalke also observed that the accused applicant, Rahul Jain had already paid ₹81 lakhs towards the said amount of ₹144 crore. The judge noted that the investigation against Jain had been completed after his arrest and that he was not involved in a heinous crime like murder or terrorism. Therefore, the Court allowed Jain's release on bail.“The offence under the CGST Act, 2017 except with limited exceptions, are compoundable. In light of the above facts, detention of the applicant in jail is not required. The applicant is not involved in a heinous crime like murder or terrorism. The allegations of serious financial impropriety are levelled against the applicant," the Court observed in its January 25 order..The applicant was accused of committing tax fraud of ₹144 crores by availing input tax credit (ITC) without supplying any goods or services. Jain was alleged to have obtained a GST registration on fictitious documents and is said to have illegally claimed tax refunds. Jain argued that his arrest was not required as per the observations in the Supreme Court judgment in Arnesh Kumar case. The offences alleged against him were punishable with less than seven years of imprisonment, his counsel submitted. The prosecution argued that the observations of Arnesh Kumar would not apply to the officers of the GST department..The bench observed that regardless of the statute under which an arrest is carried out, the consequences would be the same.“The guidelines issued by the Honourable Apex Court thus are to be followed in the backdrop of severe congestion in the jail and denial of the bail is an exception, where the custody for investigation is not warranted. There is no reason why the aforesaid guidelines shall not be made applicable to the statute like in the present matter, where the power is conferred upon an officer to effect an arrest in case of offences where the penalty prescribed is less than 7 years imprisonment," the Court added.With these observations, the Court concluded that the Jain’s custody was no longer required and granted bail to him..Advocate Sahil Dewani appeared for the applicant. Advocate SN Bhattad argued for the tax authorities..[Read order]