2019 (7) TMI 1876 - HC - GST

Seeking grant of anticipatory bail - availment of irregular Input tax credit - forged documents - offence punishable under sections 464 468 470 of the Indian Penal Code read with Section 132(1) (c) 132(1)(e) and 132(1)(i) of the Jharkhand Goods and Services Tax Act 2017 - HELD THAT - It appears that petitioner has been made accused in a case registered under sections 464 468 470 of the Indian Penal Code read with section 132(1)(c) 132(1)(e) and 132(1)(i) of the Jharkhand Goods and Services Tax Act 2017. State authorities have issued a notice prior to the institution of the case on 28.05.2018 after the inspection. Subsequent thereto the First Information Report has been lodged. It appears that the contention raised by the counsel for the petitioner that the case has been registered before adjudication of the matter and passing an order under section 74 of the JGST Act of 2017. The present application has been filed for grant of anticipatory bail under sections 438 and 440 of the Code of Criminal Procedure with allegations of sections 464 468 470 of the Indian Penal Code read with section 132(1)(c) 132(1)(e) and 132(1) (i) of the Jharkhand Goods and Services Tax Act 2017 - From the counter-affidavit it appears that petitioner has not made payment to the respective sellers from which the petitioner has purchased the materials rather he had made payment to another firm namely M/s Jai Hanuman Metallicks which is sufficient to substantiate that the petitioner has done total fake transactions to take huge amount of input tax credit on the basis of forged documents which needs detailed investigation. In view of such serious nature of the case and from the counter-affidavit filed by the Investigating Agency/State Police stating therein that accused petitioner has created fabricated rental paper and other document to show forged address in Jharkhand but during investigation no such place was found there it is apparent that the petitioner has created fabricated documents - the Investigating Officer has found that petitioner has created forged and fabricated papers without any inward supply of materials and by showing forged bill where no consignment number vehicle number or transport bills obtained the benefit of input tax credit of huge amount from the G.S.T. which is a very serious offence and also in view of the fact that huge financial amount is involved this Court is not inclined to exercise power under section 438 Cr.P.C. The prayer for anticipatory bail of the petitioner is hereby rejected.

Issues Involved:
1. Allegation of obtaining GST registration through forged documents.
2. Allegation of claiming forged input tax credit (ITC) without actual inward supply.
3. Allegation of issuing forged invoices for outward supply to claim ITC.
4. Allegation of wrongful adjustment of ITC based on fraudulent activities.
5. Legality of filing FIR without prior proceedings under sections 73/74 of the GST Act.
6. Petitioner’s claim of no monetary loss to the state and procedural lapses by authorities.
7. State’s opposition to anticipatory bail based on detailed investigation findings.

Detailed Analysis:

1. Allegation of obtaining GST registration through forged documents:
The FIR lodged on 08.06.2018 accuses the petitioner of obtaining a GST registration certificate using a forged rent agreement and other documents. The registration was allegedly obtained for M/s Sakambari Metalicks, with no actual office at the mentioned trade location, constituting a cognizable offense under section 132(1)(c) of the Jharkhand Goods and Services Tax Act, 2017.

2. Allegation of claiming forged input tax credit (ITC) without actual inward supply:
The FIR further alleges that the petitioner credited ?5,73,42,065.90 as input tax credit without any inward supply of goods, thus committing an offense under section 132(1)(c) of the Jharkhand Goods and Services Tax Act, 2017. The petitioner supposedly used forged documents to claim this ITC.

3. Allegation of issuing forged invoices for outward supply to claim ITC:
The petitioner is accused of issuing forged invoices between October 2017 and February 2018 to claim ITC worth ?2,39,56,138.42 under State/Central GST and ?3,43,99,080.27 under Integrated GST, constituting an offense under section 132(1)(b) of the Jharkhand Goods and Services Tax Act, 2017.

4. Allegation of wrongful adjustment of ITC based on fraudulent activities:
The FIR also alleges that the petitioner wrongfully adjusted the ITC based on fraudulent activities, punishable under section 132(1)(e) of the Jharkhand Goods and Services Tax Act, 2017.

5. Legality of filing FIR without prior proceedings under sections 73/74 of the GST Act:
The petitioner’s counsel argued that the FIR was filed without initiating mandatory proceedings under sections 73/74 of the CGST/Jharkhand Goods and Services Tax Act, relying on the judgments of the Madras High Court in M/s Jayachandran Alloys (P) Ltd. vs. Superintendent of GST and Central Excise and Ors., and the Delhi High Court in MAKEMYTRIP (India) Pvt. Ltd vs. Union of India & Ors. The counsel contended that the case was hurriedly filed and not maintainable at this stage.

6. Petitioner’s claim of no monetary loss to the state and procedural lapses by authorities:
The petitioner’s counsel submitted that no monetary loss was caused to the state as the transactions were electronic and remained in credit. The counsel argued that the state did not suffer any loss of interest and that the transactions were conducted via bank transactions. The counsel also claimed that the inspection team and DGCEI found no forged documents, and the office was already closed prior to the inspection.

7. State’s opposition to anticipatory bail based on detailed investigation findings:
The State’s counsel opposed the anticipatory bail, citing the counter-affidavit and detailed investigation findings. The investigation revealed discrepancies in the petitioner’s GSTR-2A and GSTR-3B statements, indicating contradictory claims of transit sales and stock remaining without a godown. The petitioner allegedly made payments to another firm, M/s Jai Hanuman Metallicks, instead of the respective sellers, suggesting fake transactions to claim ITC. The State’s counsel relied on the judgment of Vikas Goel and Another vs. Central Goods and Services Tax Commissionerate, Gurugram, where regular bail was dismissed.

Conclusion:
The court, after hearing both parties and reviewing the materials, found that the petitioner was accused of serious offenses involving significant financial amounts and fabricated documents. The court noted that the petitioner’s GSTR-2A and GSTR-3B statements were contradictory, and the investigation indicated fake transactions. Given the serious nature of the case and the need for a detailed investigation, the court rejected the petitioner’s prayer for anticipatory bail and vacated the interim relief granted earlier.

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