Sunil Kumar vs State Of Haryana on 15 July, 2022

Summary of Judgment: Sunil Kumar vs State Of Haryana

1. Outcome
The High Court of Punjab & Haryana allowed the petitions and granted regular bail to the petitioners, Sunil Kumar and Vakil Chand, subject to their furnishing heavy bail bonds.

2. Core Issue
The central issue before the court was whether to grant regular bail to the petitioners, accused of creating a fictitious firm to fraudulently avail Input Tax Credit (ITC) under the GST Act, considering the period of incarceration already undergone, the slow pace of the trial, and the argument that the financial loss to the exchequer had been indemnified.

3. Key Facts
* Fictitious Firm: An FIR was registered alleging the creation of a non-existent proprietorship firm, M/s Aggarwal Cotton Industries, by petitioner Vakil Chand. The firm was registered under the GST Act, 2017, but was not physically present at its declared address. The rental agreement submitted for registration was also found to be fraudulent.
* Fraudulent Transactions: The firm declared a total outward supply of approximately ₹191.99 crores.
* ITC Fraud: The core of the offense was the fraudulent availment and utilization of Input Tax Credit (ITC) worth approximately ₹9.60 crores without any actual supply of goods or payment of tax, causing a significant loss to the state exchequer.
* Roles of the Accused:
* Vakil Chand: Alleged proprietor of the fictitious firm.
* Sunil Kumar: Implicated based on the disclosure statement of Vakil Chand; his role was allegedly to act as a dealer and find buyers for the fraudulent transactions.
* Custody Period: At the time of the hearing, Vakil Chand had been in custody since December 7, 2020, and Sunil Kumar since December 18, 2020, both having undergone more than 1.5 years of pre-trial detention.

4. Arguments

• Petitioners' Arguments (Defense):

  1. No Loss to Exchequer: The primary argument was that the recipients of the allegedly bogus bills had already deposited the tax along with interest. Therefore, the state exchequer has been indemnified, and there is no subsisting financial loss.
  2. Lengthy Incarceration: The petitioners have already been in custody for over 1.5 years, which is a substantial period, especially for an offense being tried by a Magistrate.
  3. Slow Trial: The trial was proceeding very slowly, with only 2 out of 17 prosecution witnesses having been examined. A prolonged trial would violate their right to a speedy trial.
  4. Special Law vs. General Law: The offense primarily falls under Section 132 of the CGST Act, 2017, which prescribes a maximum sentence of 5 years. The invocation of more stringent IPC sections was questionable.
  5. Clean Antecedents: The petitioners have no prior criminal history.

• Respondent's Arguments (State):

  1. Gravity of Offense: The petitioners conspired to cause a massive loss of ₹9.60 crores to the exchequer through a large-scale fraudulent scheme involving a turnover of over ₹191 crores.
  2. The State counsel did not dispute the facts regarding the petitioners' period of custody, the slow pace of the trial, or the claim that the wrongly availed ITC had since been paid by the purchasers.

5. Court’s Reasoning
The Court granted bail based on a confluence of factors, prioritizing personal liberty over continued pre-trial detention:
* Indemnification of Loss: The Court gave significant weight to the fact that the financial loss to the exchequer was seemingly rectified, as the State did not rebut the claim that the tax had been paid by the purchasers. This weakened the argument for continued detention based on financial harm.
* Principle of "Bail is the Rule, Jail is the Exception": The Court extensively quoted the Supreme Court's decision in Satender Kumar Antil, reiterating that the object of bail is to secure the accused's presence at trial, not to inflict pre-trial punishment.
* Presumption of Innocence: The Court emphasized that every accused is presumed innocent until proven guilty, a facet of Article 21 of the Constitution. Prolonged detention without conviction goes against this cardinal principle.
* Disproportionate Detention: The petitioners had already served 1.5 years in custody for a Magisterial trial where the connected GST offense carries a maximum sentence of 5 years. Continued incarceration was deemed punitive and unwarranted.
* Slow Progress of Trial: The fact that the trial was at a nascent stage and likely to be lengthy was a key consideration. The Court held that the magnitude of the crime cannot be the sole ground for indefinite detention.
* No Flight Risk: The State did not present any evidence or express apprehension that the petitioners were a flight risk or would tamper with evidence if released.

6. Statutory References
* Indian Penal Code, 1860 (IPC): Sections 406 (Criminal breach of trust), 420 (Cheating), 467 (Forgery of valuable security), 468 (Forgery for purpose of cheating), 471 (Using as genuine a forged document), and 120-B (Criminal Conspiracy).
* Code of Criminal Procedure, 1973 (CrPC): Section 439 (Special powers of High Court or Court of Session regarding bail).
* Central Goods and Services Tax Act, 2017 (CGST Act): Section 132 (Punishment for certain offenses).
* Constitution of India: Article 21 (Protection of life and personal liberty).

7. Precedents Cited
* Satender Kumar Antil Vs Central Bureau of Investigation and another: Heavily relied upon for the principles that "bail is the rule, jail is the exception" and the importance of the presumption of innocence.
* Sanjay Chandra v. CBI (2012) 1 SCC 40: Cited to emphasize that the object of bail is neither punitive nor preventative and that deprivation of liberty before conviction is a form of punishment.
* Nikesh Tarachand Shah v. Union of India (2018) 11 SCC 1: Referenced within the Satender Kumar Antil judgment regarding the purpose of bail.
* Gurbaksh Singh Sibbia v. State of Punjab (1980) 2 SCC 565: Quoted for the principle that the object of bail is to secure the attendance of the accused at trial.
* Gurcharan Singh v. State (UT of Delhi) (1978) 1 SCC 118: Mentioned to highlight that there is no fixed formula for granting bail and it depends on the facts of each case.