2021 (10) TMI 1364 - HC - GST

Seeking grant of Bail - non-existent transactions - Section 132(1)(b) (c) of the CGST Act, 2017 R/w Section 132(1)(i) and Sub-Section (5) of the Act - HELD THAT - As per the charge-sheet and the evidence collected by the Department, it has turned out that fake entities were created and no goods were in fact transported from one entity to another and fake bills were generated, hence, there are no change in the circumstances so as to entertain the third bail application. The third bail application is accordingly rejected.

Summary

Issues: Third bail application under Section 439 of Cr.P.C. for offence under CGST Act, 2017.

Analysis:
1. Background: The petitioner filed a third bail application under Section 439 of Cr.P.C. in relation to a complaint filed under the CGST Act, 2017 for offenses under specific sections of the Act.

2. Petitioner's Contentions: The petitioner's counsel argued that the State Authorities concluded that there were legitimate transactions involving the movement of goods and rightful claiming of input tax credit. Reference was made to a co-accused who had been granted bail by the Court previously.

3. Union of India's Opposition: The counsel representing the Union of India strongly opposed the third bail application, citing that a previous bail application had been rejected earlier with no change in circumstances. It was argued that the firms involved in transactions with the petitioner were non-existent at the specified location. Additionally, it was contended that State Authorities lacked the jurisdiction to investigate transactions once the CGST had initiated action and filed a charge-sheet. The admissibility of a certified copy of an internal note-sheet was also challenged.

4. Evidence Presented: The Union of India's counsel presented a letter from the Principal Commissioner CGST to the Commissioner of Commercial Taxes, highlighting fraudulent input tax credit claims amounting to Rs.150.6 crores. It was alleged that the bills were manipulated to show movement of goods that did not occur, constituting paper transactions for claiming input tax credit.

5. Court's Evaluation: The Court reviewed the contentions raised by both parties, along with the charge-sheet and evidence collected by the Department. It was established that fake entities were created, no actual goods were transferred, and fake bills were generated to fraudulently claim input tax credit. Consequently, the Court found no change in circumstances warranting consideration of the third bail application.

6. Judgment: The Court, after considering the arguments and evidence, rejected the petitioner's third bail application under Section 439 of Cr.P.C. in light of the fraudulent activities involving fake entities and paper transactions to claim input tax credit.

This detailed analysis encapsulates the key aspects of the judgment, including the arguments presented by both sides, the evidence considered by the Court, and the ultimate decision rendered in the case.