Bail Condition of INR 70 Lakhs Deposit for Alleged Wrongful ITC Availment is Unsupportable

Fact and issue of the case

The Hon’ble Supreme Court in the matter of Subhash Chouhan v. Union of India [Criminal Appeal No. 186 /2023 dated January 20, 2023] set aside the condition imposed by the Hon’ble Chhattisgarh High Court, of depositing an amount of INR 70,00,000/- for grant of bail to the assessee, in a matter of wrongful availment of Input Tax Credit (“ITC”).

Facts: Subhash Chouhan (“the Appellant”) was arrested on October 27, 2021 for alleged wrongful availment of INR 6,95,32,472/- as ITC by procuring invoices from fake and fictitious firm and also supplied goods without payment of tax and without issuing invoices to the tune of INR 27,70,559/-. The Hon’ble Chhattisgarh High Court vide order date June 21, 2022 (“the Impugned Order”) granted bail to the Appellant subject to certain conditions. One of the conditions was that the Appellant shall deposit a sum of INR 70,00,000/- in favour of the Revenue Department within 45 days from the date of release. The Appellant contended that the condition to deposit INR 70,00,000/- for bail is not sustainable. Further, the final assessment was not complete so the Appellant cannot be presumed to be under the legal liability to pay such amount.

Issue: Whether the condition to deposit INR 70,00,000/- as a pre-requisite to grant bail is sustainable? Held:

The Hon’ble Supreme Court in Criminal Appeal No. 186 /2023 held as under:

Observed that, such a condition cannot be imposed while granting bail.

Held that, the condition directing the Appellant to deposit a sum of INR 70,00,000/- is not sustainable.

Set aside the condition to deposit such sum of INR 70,00,000/-.

Sustained rest of the conditions in the Impugned Order.

Leave granted.

Heard learned counsel for the parties. The challenge in this appeal has been made to the Order dated 21.06.2022 passed by the High Court of Chhattisgarh granting bail to the appellant subject to conditions. One of the conditions was that the appellant shall deposit a sum of Rs.70 Lakhs under protest, in favour of the Principal Commissioner, CGST, Raipur within a period of 45 days from the date of his release. It is this condition, which is under challenge before us.

Observation of the court

It is further submitted that there is no final assessment in this regard under the GST Act. Hence it cannot be presumed that the appellant is under a legal liability to pay the said amount.

As an officer of this Court, Mr. K.M. Nataraj, learned ASG appearing for the Union of India/State has fairly stated that such a condition cannot be imposed while granting bail.

Considering the above facts and circumstances, in our considered opinion, the condition directing the appellant to deposit a sum of Rs.70 Lakhs is not liable to be sustained and is hereby set aside.

The rest of the conditions in the impugned order are sustained.

The appeal accordingly, stand allowed to that extent. Pending application(s), if any, shall stand disposed of.

Leave granted.

The appeal stands allowed in terms of the signed order. Pending application(s), if any, shall stand disposed of.

Read the full order from here

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