2019 (1) TMI 1286 - DSC - GST

Grant of Bail - allegations that they were involved in generation of fake invoices by floating dummy companies/firms in the name of poor persons/third persons and of passing on the input tax credit to unscrupulous persons/firms/companies without actual supply of goods - Held that - In the present case, there are serious allegations against the applicant. Vide detailed order dated 22.12.2018, the application for cancellation of bail of applicant was allowed by Sh. Satish Arora, Id. ASJ, New Delhi and this order was affirmed by the Hon ble High Court. No ground for bail is made out - Bail application is dismissed.

Summary

Issues involved:
1. Bail application of the applicant
2. Allegations of involvement in generating fake invoices and tax evasion

Detailed analysis:
1. Bail application of the applicant:
The applicant was detained by the Central Tax/CGST officials and produced before the court along with a co-accused. While the co-accused was granted bail, the applicant remained in custody from 1.8.2018 to 20.8.2018. The respondent filed an application for the cancellation of bail based on a statement recorded from a witness. The court allowed the application and set aside the bail order, taking the applicant back into custody. The applicant, who is not a registered person under the GST Act, has not raised any invoices to attract the provisions of the Act. It was argued that the applicant did not threaten any witness and has health issues, including acute blood pressure, diabetes, and heart problems. The defense prayed for the applicant to be enlarged on bail. However, the standing counsel for the respondent contended that serious allegations exist against the applicant, and despite previous bail attempts, the court found no grounds for bail and dismissed the application.

2. Allegations of involvement in generating fake invoices and tax evasion:
The department alleged that the applicant and the co-accused were involved in generating fake invoices through dummy companies without actual supply of goods. This scheme aimed to pass on undue advantages of Input Tax Credit (ITC) to various entities, with the accused and co-accused receiving commissions. The fraudulent activity involved fictitious sales amounting to ?201 Crores and tax evasion exceeding ?27 Crores. The department presented details of the tax liability showing a total transaction amount of ?251.55 Crores, with ?42.09 Crores in GST passed on to buyers. The court considered these serious allegations, leading to the cancellation of the co-accused's bail and the dismissal of the applicant's bail application based on the detailed order issued by the court.

This judgment highlights the complexities of bail applications in cases involving serious allegations of financial fraud and tax evasion. The court meticulously examined the circumstances, witness statements, and the nature of the offenses before making decisions on bail applications, emphasizing the importance of upholding the integrity of the legal process in such cases.